Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

State Selloff Of Insurer Postponed

A Moscow arbitration court has ordered a one-month delay in the controversial privatization of insurance company Rosgosstrakh in response to an appeal by customers who say the value of their pre-1993 policies was wiped out by inflation.


But Rosgosstrakh officials said Tuesday the ruling will not affect the overall process.


"The privatization is already under way and employees have subscribed for 20 percent of the company," said Rosgosstrakh spokeswoman Irina Aristova. "This may create a slight delay but there is no legal basis to stop it."


The next step will involve selling a 50 percent stake in the company to the public in September, with a further 30 percent stake going to Rosgosstrakh managers late this year or in early 1998.


The controversial program, which allows Rosgosstrakh employees to buy half of the company's shares for roughly 2 percent of the price offered to outside investors.


According to the Kommersant daily newspaper, a union consisting of 52 million depositors and policyholders asked the court in early February to halt the privatization on grounds that at least 18 trillion rubles ($3.1 billion) in savings has been lost to inflation. A hearing has been set for March 25.


But the worthless bank deposits and insurance policies have been deemed an internal state debt and bear no relation to either the bank or the insurance companies, according to Kommersant.


"Rosgosstrakh had nothing to do with the investors' lost savings," said Aristova. "It is a federal debt."