Brussels, 20/05/2010 (Agence Europe) - On Thursday 20 May, the European Commission finally approved a €1.5 billion recapitalisation provided by Belgium for the restructuring of the insurance company, Ethias. The Commission concluded that Ethias' restructuring plan provides for appropriate measures to restore the company's viability, while addressing competition distortion brought about by the state support.
Ethias, which was initially a group of mutual companies and the third largest insurance firm in Belgium with a total balance sheet of €28.6 billion at the end of 2008, ran into severe difficulties in the wake of the financial crisis, mainly due to a loss of customer confidence and a serious lack of liquidity due to the sudden surge in withdrawals of funds by its clients. Its life-insurance activity for private individuals and investment in highly volatile financial assets, whose value plummeted with the crisis, lay at the origin of these difficulties.
On 12 February 2009, the Commission had provisionally authorised capital injection of €1.5 billion for a period of six months from the Belgian state as rescue aid, on condition that Belgium present a restructuring plan for the company. In exchange for this injection of capital, Ethias had to change its corporate structure from a mutual to a limited liability company with 75% under state control. Under the new structure, most of the former owners (policyholders of the mutual companies) lost their collective control of the company as well as their share in future profits, thus bearing a large part of the restructuring cost. Under the restructuring plan, Ethias should, moreover, divest itself of Nateus, an insurance subsidiary in Belgium, and adopt rules of conduct on the pricing of its insurance products. Such restructuring will result in a balance sheet reduction of 38% by the end of 2013 as compared to the company's size at the end of 2008.
The Commission finds this plan in line with its communication on the restructuring of the financial sector and compliant with Article 107§3(b) of the treaty of the European Union. (F.G./transl.jl)