Gefion ordered to correct reporting error

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Unrated Danish Gefion Insurance has been ordered by the Danish Financial Supervisory Authority to publish information supplementing or correcting the company’s 2018 annual report, after it was adjudged to have wrongly recognised the value of a reinsurance contract on its balance sheet.

Responding to the order, Gefion said that it disagreed with the regulator’s decision saying it was “based on an incorrect assessment of the facts surrounding the conclusion of the reinsurance contract in question.”

It added: “Gefion Insurance has followed current practices for the recognition of the reinsurance contract in the audited annual report for 2018.”

However, it went on to say: “As the decision does not have any direct consequences for Gefion Insurance’s policyholders or cooperation partners, the company will now prepare and publish the supplementary/corrective information in accordance with the decision.”

The DFSA’s order laid out that the correction or supplement to the annual report must state that because of the adjudged error the company therefore had negative equity as of 31 December 2018.

It also explained that the reinsurance contract in question was only entered into in mid-May 2019, meaning its value could only be recognised in the 2019 financial year.

Gefion also faced censure from the DFSA for submitting its 2018 annual report late, failing to meet the 30 April deadline required by Denmark’s Financial Business Act.

The order marks the insurer’s latest run-in with the regulator. In December, the DFSA stipulated that it must have at least €5m of liquid assets by the end of the year amid concerns over “serious liquidity problems.”

Earlier this week, Insurance Age reported that Gefion had met the requirement following further investment from shareholders.

The episode concluded a turbulent year for the insurer, in which the regulator ruled in July that it could not expand its business until additional capital had been secured, after finding its solvency ratio was just 86% as of 31 May 2019.

It later received a €6m capital injection in October from pre-existing backer Fermat.

Gefion underwrites business in the UK and across Europe and is understood to have picked up business following the collapse of fellow Danish unrated insurer Alpha Insurance in 2018, with affected taxi drivers telling Post they had been sold Gefion policies.

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