Budapest, 4 July 2018 In order to protect customers, the MNB has temporarily suspended the distribution in Hungary of five life insurance products - that are related to investment units - of NOVIS Poisťovňa a.s. that offers cross-border services in Hungary. The insurance company is not allowed to sell these products until the deficiencies in the provision of product information are remedied, or until the resolution that closes the consumer protection inspection by the central bank is made, at the latest. In the case of existing customer contracts, NOVIS Insurance Company shall fully satisfy its service obligations.

The Magyar Nemzeti Bank (MNB) is carrying out an official targeted inspection at the Bratislava-based NOVIS Poisťovňa a.s. (NOVIS Insurance Company). The objective of the inspection is to identify whether the insurance company meet the Hungarian rules - regarding general good and public interest - in the provision of information before the signing of a contract and in other information related to the contract.

In the Order published today under the on-going inspection in order to protect the interests of customers, the central bank temporarily suspended the distribution of life and pension insurance products of NOVIS Insurance Company (NIVO II, Everest Pro, Everest Pro Plusz, and Wealth Insuring ) distributed in the area of Hungary and related to investment units.

The suspension shall remain in force as long as the insurance company does not provide clear, accurate and plain information in its product sales documents on the real contents of its offer regarding the preservation of the capital paid in and regarding the yields. At the same time, the suspension - with the Order announced today - will only last until the decision that closes the MNB investigation is made.

In the period of the suspension, the NOVIS Insurance Company shall not allowed to sign new contracts in Hungary in the affected life and pension insurances, and shall inform the interested parties about this. However, in the case of earlier concluded customer contracts, the insurance company shall satisfy all of its obligations and services agreed in the terms of the contract. The present action of the MNB does not affect the existing customers of NOVIS Insurance Company, either, so they shall pay the premiums in the usual way, and the possibility of using the personal income tax benefit will not change, either.

The activity of the NOVIS Insurance company was approved by the National Bank of Slovakia, and this bank - and not the MNB - is responsible for its prudential supervision (business reliability). Based on the legal regulations of the European Union, the company operates in Hungary as an insurance company offering cross-border services, based on notification. Although the MNB has limited possibilities to take any steps against insurance companies that offer cross-border services, in exceptional cases, the domestic and the EU legal regulations allow for the MNB to take action against illegal activity that seriously threatens the security of the domestic insurance market or the customers' interests. The MNB have been cooperating with other European supervisors via an EIOPA Cooperation Platform.

In the case of traditional life insurances of savings type, the insurance company bears the risk of the investment, and it agrees in the terms and conditions to pay (technical) interest in addition to preserve the capital. However, in the case of unit linked life insurances, the customer bears the investment risk, and he/she will decide on the extent of the risk that may be related to the asset funds to which he will deposit the insurance premiums. If the selected asset funds have no capital (and yield) guarantees related to them, then, in an unfavourable case, the customer may  lose the capital amount of the paid premiums, as well. Based on all these points, the information provided by the insurance company about the capital risks and yield of life insurances are of high importance.

Magyar Nemzeti Bank