FWU Life Insurance Lux S.A. on 19 July 2024 informed the Supervisory Authority for the Insurance Sector (CAA) that they no longer comply with the minimum capital requirement and the solvency capital requirement, said a issued by the CAA. Germany-based FWU AG, the sole shareholder of FWU Life Insurance Lux S.A., on 19 July also filed for insolvency with the district court in Munich due to its over-indebtedness.

As a result, the Luxembourg insurance commission’s executive board decided on 23 July “to freeze the representative assets with the credit institutions in order to protect the interests of policyholders and beneficiaries.” FWU Life Insurance Lux S.A. must now submit a “realistic” short-term scheme that will restore its eligible basic own funds at least to the level of the minimum capital requirement within three months, noted a CAA press release issued on 24 July.

The insurance undertaking has one month to submit their plan. If this scheme is not submitted or approved by the CAA, the “executive board will evaluate on the withdrawal of FWU Life Insurance Lux S.A. licence.”

The CAA also noted that the safeguards in place to “ensure fair treatment of policyholders and beneficiaries do not allow FWU Life Insurance Lux S.A. to pay out any contractual benefit.”

Headquartered in Munich, FWU was founded in 1983 and offers services including unit-linked life insurance and asset and investment management. It provides investment products in Italy, Spain, France, Belgium, Luxembourg, Austria, the United Arab Emirates, Saudi Arabia, Kuwait, Pakistan, Malaysia and Indonesia, according to its website.

The latest annual accounts available on the Luxembourg business registry--which are from the financial year ending 31 December 2022--state that the profit balance carried forward (gewinnvortrag) for FWU Life Insurance Lux S.A. was €13,386,000.

The company closed its financial year as of 31 December 2022 with a profit after taxes of €2,899,000 (previous year: €1,815,000).

Aim to use insolvency proceedings to stabilise operations

Delano asked FWU for comment and received a press release from Pluta Rechtsanwalts, the provisional insolvency administrator in response. The communiqué noted the following: “The reason for the application is the over-indebtedness of FWU AG. FWU Life Lux (FLL) had discontinued its new business as of 3 July 2024. Together with legal and audit consulting firms Deloitte et al., FWU AG worked on a comprehensive reorganisation concept, which included in particular liquidity measures to maintain the solvency of FWU AG and the continuation of the company. However, it was not possible to implement all the necessary reorganisation measures in time and to the required extent, so that the insolvency application was necessary.”

“In addition, FWU Life Austria (FLA) has decided to suspend new business for the time being until September. Both companies (FLL and FLA) in the FWU Group will continue to operate for their customers.”

CEO Manfred Dirrheimer commented in the press release: “The current situation is a major challenge. In view of the changed economic conditions of our major investments and the resulting consequences for FWU AG, filing for insolvency could not be averted. The aim now is to use the provisional insolvency proceedings to stabilise business operations and examine all options in the interests of the customers and employees of FWU AG, FWU Life Lux, FWU Invest and FWU Life Austria.”

Updated at 15:00 with comment from FWU.