A spokesman for the AB Insurance Group said the company had signed an agreement July 8 with a Pacific Overseas' representative, Multinational Consultants Ltd., on the sale of controlling stakes in the group's subsidiaries ASA Kindlustus and AB Elukindlustus.
The two insurers have run into trouble with construction of their new headquarters. AB Elukindlustus has invested almost 24 percent of its portfolio or 9.25 million kroons ($648,000) in the bonds of Maakri Ehtus, the construction company managing the project. ASA Kindlustus has invested 18 percent of its reserves or 8.8 million kroons in the project.
The companies had to sell Maakri Ehtus' bonds because the new insurance law forbids investing technical reserves anywhere else but in first degrees mortgages or deposits in commercial banks of Estonia or European Union countries.
The Insurance Supervisory Body gave the company some time to redeposit the reserves and find a strategic investor.
Nuevo Mundo Seguros is set to buy 67.9 percent of the shares in ASA Kindulustus and 74.2 percent in AB Elukindlustus.
"Under the agreement the sale of the shares will be conducted by way of restoring the companies' technical reserves, and ownership in the companies will go to the buyer on August 31," said Aleksandr Zaporozhtsev, head of ASA Kindlustus' financial department.
"The Insurance Inspectorate has looked at the agreement signed between AB Kindlustuse Grupp and Pacific Overseas and has approved it," he said.
The inspectorate's director general, Ellen Ridaste, confirmed that the conditions under which the Venezuelan company had agreed to buy shares in the two Estonian insurers are acceptable.
She said the buyer of majority shares in ASA Kindlustus and AB Elukindlustus had guaranteed that it would help the companies avoid liquidity problems during the period until the purchase and sale agreement is signed. It has also undertaken to have the required 80 million kroons in an account in a respectable bank.
"These conditions are acceptable to us and I don't see any reason why we shouldn't trust the buyer until the main agreement is signed. We will wait until the agreement becomes a fact and provisional guarantees are provided, so nothing bad will happen," Ridaste said.
Nuevo Mundo Seguros is one of Venezuela's largest insurance companies. Previously owned by the state, the company is now in private hands.
In 1998, the company took in premiums equivalent to 1.1 billion Estonian kroons. Its reserves exceeded 500 million Estonian kroons. Nuevo Mundo Seguros is also represented in the United States and several countries of Central Europe.
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