The National Bank of Hungary (MNB) on Friday said it had suspended the sale of mandatory car insurance policies by KOBE and placed restrictions on management of the insurerʼs assets.

The MNB also instructed the insurer to prepare a financial plan, correcting deficiencies.

The MNB said KOBEʼs insufficiently sound fee policy, risks related to its investment activities and the insurerʼs unfavorable reserves position justified the measure.

The sales suspension does not apply to KOBEʼs other insurance contracts, the market watchdog said.

The restrictions on the management of KOBEʼs assets was necessary to prevent an unjustified increase in investment risks, the MNB said. It explained that the insurer can invest only in specified instruments and must do so observing the maturity structure of its obligations.

The MNB took the step during a comprehensive investigation of KOBE.

KOBE had a 2.5% share of the general insurance market at the end of September, the MNB said. The insurer is not present on the life insurance market. Read the full story HUNGARY: MNB suspends KOBE mandatory car insurance sales