Investor announcements
CIG Pannonia Life Insurance Plc. (registered office: H-1097 Budapest, Könyves Kálmán körút 11.B, company registration nr.: 01 10 045857, hereinafter referred to as Company) hereby informs the Esteemed Shareholders and other members of the public primarily about related to the Company's subsidiary involved in the consolidated circle, CIG Pannónia Első Magyar Általános Biztosító Zrt. (EMABIT) and collectively, on a consolidated level, about the operation of the CIG Pannónia Group (Group) on state of play of the strategic review of Italian affairs1.
The Managing Board of CIG Pannónia Life Insurance Plc. and EMABIT have carried out a strategic review of Italian affairs, covering both litigation and non-litigation strategic items considering the passage of time, the progress of the procedures previously initiated by the Company, the review of the reserving methodology, thus, with regard to the implementation of any corrections that may prove necessary.
The purpose of the Boards is to ensure that the Group is prepared in every respect for the prudent management of any future risks arising from Italian affairs through the review. During the review, the reserves were also assessed within the framework of the evaluation of the ongoing litigation. As a result of the process, EMABIT decided to increase the individual reserves, taking into account legal requirements, the interests of the Group, and the principle of best estimates, with the assurance of the implementation of this decision by the Company's Managing Board, as the founding sole shareholder:
(i) decided to increase the share capital of EMABIT by HUF 3,000,000,0002 and
(ii) in order to further supplement the subordinated loan capital of the Company and thereby indirectly the EMABIT's equity capital, it initiated negotiations with the responsible owner holding qualified influence in the Company, the Hungarikum Biztosítási Alkusz Zrt.–vel (székhely: 8086 Felcsút, Fő utca 65.; cégjegyzékszám: 07-10-001617) (Alkusz), in accordance with the investment and borrowing regulations applicable to it as the guarantor. Since Alkusz has stated, in relation to the prudent ownership expected by the Hungarian National Bank and declared during the authorization of its influence acquisition, that "…it intends to support the reconstruction and recovery of the EMABIT owned by CIG Life Insurance with all lawful legal instruments in accordance with its legal status, while simultaneously mitigating the damages suffered in the Italian market." As a result of the negotiations, the Company entered into a subordinated credit facility agreement (the "Agreement") with Alkussz, as the lender, on December 23, 2024, for an amount of HUF 4,000,000,000, in order to fully comply with the reserve requirements mandated by law and to ensure the retention of any potential future obligations, as well as to enable the Company, if necessary, to support its EMABIT activities with additional funding3 during the availability period4, while maintaining the required and expected capital adequacy. The Company notes that no drawdown has occurred under the Agreement to date.
The Company emphasizes that the provision/availability of the aforementioned resources, based on the prudent implementation of the necessary measures, is fully ensured for the financing along the growth trajectory of operations, as well as for the comprehensive provisioning related to exposures arising from Italian affairs, alongside the necessary, expected, and secure compliance with the required capital adequacy.
Disclaimer: All information contained within this article is for information purposes only, and shall not be considered an official translation of the official communication referred to herein. This document does not include the integral wording of the official communication referred to herein, the original Hungarian language version of it remains to be the solely legally binding material in the subject matter. For further information, please do not hesitate to contact us.
1 Italian cases: the collective name of the risks that have existed and still exist in EMABIT's Italian claims cases and their management, primarily covers the strategy for the management of these cases and the management of ongoing legal cases, the situation and review of existing claims reserves and recourse reserves.
3 the pricing of the Loan under the Agreement (including, in particular, the applicable interest rate, the availability fee and the early repayment fee) is in line with the market standard and has been adopted in accordance with the framework of the advisory report supported by the Parties BIG4
4 the period from the date of signing the Contract and until the disbursement of the Loan if any, but for a maximum of 2 years, i.e. until 31 December 2026
