UPDATE: New findings suggest Olympic Insurance was already bankrupt in 2015

The Cypriot Auditor General Odysseas MICHAELIDES claimed that his office had spotted Olympic's insolvency issues during a 2014 audit. Yet, the situation broke out only four years later, when the company went bankrupt leaving some 200,000 clients uninsured.

He did not comment on whether the red flags were brought to the attention of financial authorities, but he did say Olympic would have trouble complying with EU directive Solvency II, which required a minimum solvency capital of EUR 30.7 million. The directive came into force in 2016, when Olympic's equity was already at EUR 31.5 million. Between 2015 and 2016 the company's liabilities rose from EUR 34.6 million to EUR 47.1 million.

Bulgaria and Cyprus continue to negotiate how to pay the EUR 43.5 million Olympic owes in insurance claims. Cypriot Financial Ombudsman Pavlos Ioannou reported that he received a letter from a Bulgarian official last week, requesting that Cyprus cover the EUR 28.5 million in damages owed to Bulgarian claimants.

A Bulgarian Commissioner said last Friday that former deputy chair of the Financial Supervision Commission (KFN), Ralitsa AGAIN-GURI, who resigned from her post after pressure from the Bulgarian government, was not at fault for the events following the bankruptcy of Olympic, which operated under the supervision of the Cypriot financial supervisory headed by Victoria NATAR.

The owner of Olympic's parent company, Spanish citizen Diego GONZALEZ, was named in a June 2015 statement issued by Spain's financial supervisory Comision Nacional del Mercado de Valores (CNMV), with a warning that GONZALEZ'S New York Securities Bank was not licensed to provide insurance services and additionally, he was prohibited from dealing in foreign currency.

Nevertheless, seven months later in 2016, the financial supervisory in Cyprus neglected to consider this information, and GONZALEZ was allowed to buy all shares of Olympic Insurance, totaling almost EUR 8 million. He then increased the remuneration of directors and management to EUR 203,831 from EUR 94,939 in 2015.

Due to this oversight on the side of Cypriot officials, it is likely they will be the one to foot the bill. The Cypriot Motor Insurance Fund, an emergency fund set up by insurance companies to underwrite claims in the case of insolvency, may be used to pay claims from Bulgarian clients of Olympic. The load will fall on the shoulders of Cypriot car owners, who may be forced to pay a 5% surcharge on insurance premiums from now on.

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