REPORTClaim file number: RCL/000054/2014/CJ/B

Policy: RC 66100

Court File number: 11317/118/2009 at the Constanta Court of Appeal (stage: appeal)Respondent Claimant: Cardinal Motors S.R.L.Appellant insured: SOCOTEC INTERNATIONAL ROMANIA S.R.L.Through the civil sentence no. 2999/03.11.2014, pronounced by the Constanta Court, the court has admitted the court action of the claimant Cardinal Motors against the insured at Groupama - Socotec International, which it has obligated to the payment of the respective amounts: 336.120 EURO including VAT in the equivalent of lei at the National Bank of Romania Court rate from the date of the payment, representing the actual loss 318.818 lei representing the legal interest for the amount of 336.120 euro, at 31.12.2012, and in continuation until the date of the actual payment 200.000 euro in the equivalent of lei at the National Bank of Romania Court rate from the date of the payment representing loss of earnings 9.093,96 lei representing legal fees: stamp duty and experts fee.

For the total: 536.120 EURO + 327.911,96 lei, plus legal interest until the actual payment. Approximately: 610.000 EUROThe court has mentioned the fact that our insured is at fault because he did not accurately fulfill his obligations, obligations he assumed through the contract for assistance, technical control and site supervising he had with Cardinal Motors.

As a result of the initial court decision, the provision ( or reserve ) amount of 324.120 EURO was set on the claim file RCL/0000054/2014/CJ/B. The provision consists of: 336.120 euro 20.000 euro the deductible established in the insurance contract + 6.000 euro legal fees from the initial court decision + 2000 euro legal fees estimated with the appeal

According to the insurance contract conditions, Groupama can be forced to reimburse the amounts that our insured must pay to its clientsdue to the breach of the obligations he has as an assistant architect / site supervisor, as well as the legal fees of the insured and of the claimant. Also, the conditions state that any reimbursement claim appeared as a result of the loss of earnings, of profit, lack of performance of the product that was an issue of the contract is excluded. Also, the insurer cannot pay any deductibles foreseen in the contract (in this case 20.000 euro per event). Therefore, our company cannot be forced to pay the amount of 200.000 euro and the 20.000 euro representing the deductible.

Regarding the legal interest, the insurance conditions do not clearly specify their exclusion. In the insurance conditions there are excluded from payment only the fines, penalties and compensatory payments as well as any reimbursement resulted from the multiplication of the compensatory claims.

At present, the insured Socotec is being executed by Cardinal Motors for the entire amount stated in the initial court decision. Also, the bailiff has sent to Groupama an enforcement decision preventing our company from paying any amounts directly to the insured.

Starting with the month of December 2014, our company has been discussing and negotiating with our insured the amounts to which he has been obligated to pay. In order to help it and also to get a suspension of any possible execution, our company had granted, on the basis of an agreement, the amount of 150.000 lei representing the collateral in the court file. The payment of the amount was exclusively made in order to facilitate Socotecs legal position in the stage of appeal. During the first negotiation with Socotec and Cardinal Motors from 22.04.2015, Cardinals request was that of obtaining the 75% out of the 660.000 euro, meaning 495.000 euro.

In the 28.04.2015, there was another meeting in order to negotiate again with Cardinal Motors and Socotec, and during this particular meeting, Cardinals request was that of 330.000 euro.Resuming the amount to which Groupama could be forced to reimburse, I underline:

316.120 euro (consisting of 336.120 euro 20.000 euro deductible foreseen in the policy)

318.818 lei the legal interest for the amount of 336.120 euro, at 31.12.2012, and in continuation until the date of the actual payment

9.093,96 lei legal fees from the initial court decision 15.459 lei stamp duty in the appeal stage 15.459 lei stamp duty in the final stage of the court 10.000 euro lawyers fees, estimated for both partiesTOTAL: approximately 406.000 euroIn order to avoid further expenses generated from the appeal, final stage of the court and enforcement of the decision, I propose closing an agreement of reimbursement up to 300.000 EURO, including the 150.000 lei already paid as collateral in the court file.29.04.2015Flaviu Bodea