"FSC pulls the plug": License of "DallBogg: Life and Health" revoked due to a hole in reserves

The Financial Supervision Commission (FSC) has revoked the insurance license of ZAD "DallBogg: Life and Health" AD – a company that serves over "900,000" clients in Bulgaria and abroad. The decision was made at a meeting this morning and is motivated by a serious established deficit in the company's technical reserves and failure to comply with imposed restrictions on asset disposal.

"This is the most severe measure possible. In order to reach it, we had to have very serious grounds. Within 1 year, we established many worrying things," stated FSC Chairman "Vasil Golemanski". He emphasized that the decision is the result of consecutive audits and the company's inability to present and implement a realistic plan for restoring its solvency.

Main motives: inadequate plan and a hole in reserves

Golemanski pointed out four key reasons for the license revocation. "According to a decision from April 9, the insurer had to present a short-term realistic plan for restoring eligible basic own funds or for limiting the risk profile in order to ensure coverage of the minimum capital requirement. On May 11, the insurer presented such a plan, which the FSC reviewed and evaluated thoroughly, finding that it was obviously inadequate. We do not approve this plan. This is one of the main reasons for the license revocation," he explained.

The second pillar of the decision is the state of the technical reserves. "As a result of the audits, a significant hole in the insurer's technical reserves was established. I am talking about almost 280 million euros," Golemanski added. According to him, the law clearly defines the procedure by which the company must restore its solvency within "3 months".

Deadlines, plan, and mandatory actions of the regulator

As the start of the three-month period, the FSC accepts "April 2" – the date on which the finding report for the insufficiency of technical reserves was drawn up. "After that, the law requires that within one month of notification, the company must present a restructuring plan. Within one month after the presentation of this plan, the Commission must rule on it," explained Golemanski.

He emphasized that the regulator does not have wide discretion. "Here we have no other discretion - either to approve the plan within this period, or not to approve it. In this specific case, we are not approving it. In this situation, after the non-approval of the plan, the FSC is obliged to revoke the license. This is the only possible measure," stated the chairman of the oversight body.

Violated enforcement measures and ban on asset disposal

Golemanski also pointed out another group of grounds – non-compliance with imposed compulsory administrative measures. "Another ground for the license revocation is that the company has not fulfilled several compulsory administrative measures imposed on it by the Financial Supervision Commission. Among them is the measure imposed on April 2 regarding the non-disposal of assets. Within this two-month period, we established that despite this measure, the company made various payments that are in violation of the imposed ban," he said.

Back in April, the FSC banned "DallBogg: Life and Health" from renewing or concluding new insurance contracts. In practice, this means that the company cannot generate new revenue, while existing policies continue to be active until their full insurance cycle expires. After that, they cannot be renewed unless the regulator changes its decision.

900,000 clients between the regulator and the insurer

The Financial Supervision Commission points to "the risk that the company will not have money to serve its clients" as a leading motive. Against this backdrop, the decision to revoke the license is presented as a protective measure for policyholders and for the stability of the market.

On the part of "DallBogg: Life and Health", the position is different. The company claims that it "has money" and has "liquidity", accusing the regulator of "deliberately manipulating the data". Thus, the dispute between the supervisory body and the insurer moves from a purely technical level to a conflict of trust, while over "900,000" insured individuals await clarity on what will happen to their contracts and coverage.