OREANDA-NEWS. August 23, 2010. Ingosstrakh OJSIC expresses great indignation and strong protest at the unprecedented illegal situation that resulted after the interference by the State Commission for the Regulation of the Financial Services Markets in Ukraine, headed by Mr V. Volga into the business dispute arising from the insurance relations between INGO Ukraine JSIC, a subsidiary of Ingosstrakh OJSIC and its customer Newco LLC.

At present, the case is being reviewed by the Business Court in Kiev. An additional fire-safety and technical audit was conducted, other actions required by law are taken to settle the dispute in court. At the same time, there can be no doubt that INGO Ukraine, as a law-abiding entity will fulfil the eventual ruling of the court whatever it may be. Nevertheless, the State Commission for the Regulation of the Financial Services Markets in Ukraine deemed it possible to issue a directive for INGO Ukraine to pay indemnification to Newco without waiting for a court final decision, and as we have learned, it has also passed a resolution to suspend the property insurance license of INGO Ukraine (the license does not apply to the insurance of rolling stock, land, air and water vehicles, cargo and luggage).

Thus the position of the State Commission for the Regulation of the Financial Services Markets in Ukraine in this dispute is actually preventing justice from being served in the normal way and casts doubt on the commission’s objectivity.

The consequences for this resolution for INGO Ukraine will be very serious indeed and will cause it significant financial and reputational damage. This will inevitably have a negative impact on the trust in the company among its existing and potential customers; undermine its position when submitting tenders to large companies, including international ones. The Company will effectively be rendered incapable of properly conducting its business for a period of time. And this in a situation where INGO Ukraine is a recognised leader in the insurance market of Ukraine, has an impeccable reputation and in the twenty years of its existence has proved time and again to be a reliable insurer. The Company is routinely given top ratings among Ukrainian insurance companies in terms of the level of payments to customers. In 2008 INGO Ukraine paid 305,565 indemnifications, in 2009 it paid 373299 indemnifications. The gross indemnifications paid by the company in 2008 totalled UAH 503 million (USD 65 million), in 2009 it was UAH 274 million (USD 34 million). INGO Ukraine’s assets are UAH 529.5 million (USD 66.2 million), insurance reserves are UAH 321 million (USD 40.2 million).

Ingosstrakh as an investor helping ensure the financial stability of its subsidiary is outraged at the extraordinary circumstances of this case and demands that the dispute between the insurer and its customer be resolved in the only possible civilised manner, i.e. through civil court proceedings.

As of now Ingosstrakh has sent an official letter to the president of Ukraine V. Yanukovich, the Minister of Finances of Ukraine F. Yaroshenko and the General Prosecutor A. Medvedko, describing this unprecedented situation and requesting them to express an adequate opinion about these actions of the State Commission for the Regulation of the Financial Services Markets in Ukraine.

In addition, Ingosstrakh, as a foreign investor under Ukrainian law with all the rights and guarantees that foreign investors have under Ukrainian and international law, intends to take appropriate legal steps to protect its investments in the territory of Ukraine.