Icelandic Insurance Company Facing Difficulties Skip to content

Icelandic Insurance Company Facing Difficulties

Icelandic insurance company Sjóvá is currently facing financial difficulties, allegedly due to investments made by its former owner, Milestone. ISK 10 billion (USD 89 million, EUR 58 million) must be added to Sjóvá’s portfolio of assets before its equity ratio can be considered positive.

Photo by Geir Ólafsson.

According to Morgunbladid’s sources, Sjóvá may not fulfill the minimum demands on solvency with the amount of equity stipulated by law to be able to operate in the insurance market.

Árni Tómasson, chairman of the Glitnir Bank resolution committee, said the Sjóvá’s operations on the insurance market is going well and that that part of its operations is in a strong position.

“On the other hand it is clear that due to the circumstances on the market there has been extensive loss in the company’s investment operations,” Tómasson told Morgunbladid. “We have been working on reorganizing the company in the past months and now we are finally about to complete that project.”

“The goal of the reorganization is to secure the interests of customers and maximize the company’s value,” Tómasson continued. “We assume that with the reorganization the company will end up with a strong balance sheet and solid insurance operations.”

“We don’t expect the reorganization to affect the company’s daily operations or customers, and the company will continue to provide the same good service that it has provided until now,” Tómasson concluded.

Allegedly, Sjóvá’s difficult situation can be traced back to when its former owner, Milestone, transferred assets to it in 2007.

The assets, among them foreign real estate and domestic securities, were transferred to Sjóvá to equalize accounts payable that had been accumulated between the companies in relation to Milestone’s acquisition of Moderna in Sweden.

Milestone was able to finalize the acquisition because of the strong position of Sjóvá’s claims fund, which Milestone used as collateral.

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