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Assets Admitted To Cover Gross Technical Reserves Case Study: Insurance – Reinsurance Company Astra Sa

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  • IRINELA – CONSTANTINA BADEA

    (DEPARTMENT OF FINANCE, FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION, BABES-BOLYAI UNIVERSITY, CLUJ-NAPOCA, ROMANIA)

Abstract

The aim of this paper is to analyze the asset structure and the coverage of gross technical reserves of the Insurance – Reinsurance Company Astra SA, for the period 2003 – 2014. Insurance companies are required to constitute technical reserves, in order to cope with the payment obligations to policyholders. These reserves may only be covered on account of certain assets, admitted by law. In Romania, Orders No. 8 and 9/2011, issued by the Insurance Supervisory Commission, contain Rules regarding the assets admitted to cover gross technical reserves, the dispersion of assets admitted to cover gross technical reserves and the liquidity coefficient. Order No. 9/2011, relating to general insurance, has been amended by Rule No. 22/2014. In this paper, we have analyzed the main elements of Astra’s assets, their share in total assets and we have calculated the coverage of gross technical reserves by total assets and liquid assets. In 2013 and 2014, the value of total assets was below the value of gross tehnical reserves, which demonstrated Astra’s financial instability, through negative capital and the inability to meet the obligations to policyholders. Failure to comply with the prudential indicators has been one of the main causes of Astra`s bankruptcy.

Suggested Citation

  • Irinela – Constantina Badea, 2015. "Assets Admitted To Cover Gross Technical Reserves Case Study: Insurance – Reinsurance Company Astra Sa," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 309-315, December.
    • Handle: RePEc:cbu:jrnlec:y:2015:v:6special:p:309-315
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    References listed on IDEAS

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    1. Paul M Achleitner & Jorg H Biebel & Daniel Wichels, 2002. "Does WTC Matter for the Investment Policy of P/C Insurance Companies?," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 27(2), pages 275-282, April.
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    Cited by:

    1. Vaduva Maria & Vaduva Cecilia Elena, 2018. "The Role Of Reinsurance In Insurance," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 167-174, February.
    2. Vaduva Maria & Vaduva Cecilia Elena, 2018. "The Role Of Reinsurance In Insurance," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 76-83, April.

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