Sura Insurance Exposure ‘Very Low’ in US$2.6 Billion Hidroituango Conciliation Lawsuit
Medellin-based multinational insurance giant Seguros Sura announced August 16 that while it’s partly vulnerable to EPM’s new US$2.6 billion “conciliation” lawsuit against Hidroituango contractors and insurers, its net exposure is “very low.”
“Seguros Sura is not the insurer of Hidroituango’s construction damage policy [actually, that policy is covered by Mapfre insurance]; it acts as reinsurer in a minority portion,” according to Sura.
“This reinsurance policy was not subscribed by Seguros Sura, but by RSA Colombia, which was subsequently received as part of the RSA operation that Suramericana acquired between 2015 and 2016 in six Latin American countries.
“The company was summoned to a preliminary settlement for two compliance policies taken out by two [Hidroituango construction] contractors and not directly by EPM, largely reinsured.
“Seguros Sura Colombia, from its general insurance company, is analyzing based on technical and legal criteria the request for prejudicial conciliation before the Office of the Attorney General [of Colombia], formulated by the Vice Presidency of Legal Affairs of Public Companies of Medellín (EPM), with a claim of COP$9.9 trillion (US$2.6 billion) against all those summoned.
“The [Sura] general insurance company is linked to this process by two compliance policies taken by two of the consortia, the controller and the supervisor of the work, also summoned by EPM to the conciliation.
“One of the policies has an insured value limit of about COP$22 billion (US$5.8 million) and the other has coverage of up to COP$38 billion (US$10 million).
“Both amounts are the maximum responsibility that would correspond to Seguros Sura and in a greater proportion they are reinsured, thus leaving a low exposure of what the company would have to assume directly in the event of this event,” according to the company.
“As we reported in 2018, Sura is not the insurer of the project, it is only reinsurer with a minority stake of 13%.
“This implies that the relationship in this case is not directly with EPM, but with the leading insurer, from whom we have received information as one of the reinsurers regarding the handling of the loss associated with the construction damage policy. In fact, the final exposure of Seguros Sura in this policy is very low, as it is also reinsured in a large proportion.
“In addition, as has become public knowledge, the insurance company of the damage policy [Mapfre] already made a first disbursement of US$150 million to EPM, in December 2019. Seguros Sura Colombia, from its general insurance company, has paid the corresponding proportion to its minority stake as a reinsurer.
“Finally, it should be noted that this minority stake was not subscribed by Seguros Sura either, but by Royal & Sun Alliance (RSA) Colombia, a company that subsequently became part of an operation acquired by Suramericana in six countries in the region between 2015 and 2016, widely known at the time,” the company added.
