By Emilio Parodi
MILAN (Reuters) – Prosecutors in Milan are probing allegations of false accounting in relation to the crisis of Italian life insurer Eurovita, a person with knowledge of the matter said on Friday.
Owned by Cinven, Eurovita this year became the first Italian insurer to be placed under special administration by the country’s authorities after the British investment firm failed to inject enough cash to replenish Eurovita’s capital buffers.
Speaking on condition of anonymity because they are not authorised to talk to the press, the person said prosecutors were also looking into allegations of a crime which entails “unlawful transactions involving the shares of a company or holding company”.
No individuals are currently under investigation, the person said.
Eurovita, Cinven and lawyers for Cinven declined to comment.
Under Italian law, false accounting can carry a prison sentence of between three and eight years. The other crime can be punished with a sentence of up to one year.
Reuters last week was first to report Milan prosecutors had opened an investigation into the Eurovita crisis following input from the country’s insurance supervisor IVASS.
In common with other life insurers who invested people’s money into government bonds, Eurovita’s capital buffers have been eroded by the falling value of those bonds as interest rates rose.
Adding to the problem, the higher rates prompted savers to redeem their policies to reinvest the cash.
In Eurovita’s case, news of IVASS’ decision to appoint a special commissioner to run it hastened redemptions, prompting IVASS to impose a freeze which is still in place.
To shield policyholders Italy has orchestrated a rescue which is expected to be announced later on Friday and that involves the country’s top insurers and the dozens of lenders that distributed Eurovita’s products.
(Reporting by Emilio Parodi; writing by Valentina Za; Editing by Keith Weir)
