Friday 18 October 2019

Old policies force funeral insurance group Yarden to dig into reserves: FD

Photo: Depositphotos.com

Funeral insurance group Yarden is in trouble and its financial buffers have sunk to ‘alarming levels’, the Financieele Dagblad said on Monday.

The third biggest Dutch funeral group has made several efforts to strengthen its capital base, on the orders of the Dutch central bank, but these have so far failed to book the desired results, the paper said.

Yarden, which has a workforce of 700 and one million policy holders both insures against funeral costs and operates crematoria, and has run into trouble with a portfolio of old policies.

The portfolio is made up of ‘natura’ policies, which guarantee to provide a complete funeral, including coffin, car and cake, rather than a fixed amount of money, but the value no longer reflects the cost of a funeral, the FD said.

In 2007 the company changed the conditions of the policies, limiting them to a fixed amount of money – €3,733. Policyholders went to court and won, forcing Yarden to provide full funerals instead.

The company has set aside €84m to pay for this, but insiders told the FD that the true figure should be nearer €200m.

Yarden director Ron Bavelaar told the FD that the company does not have a liquidity problem. The solvency ratio is under pressure from ‘the make-up of the portfolio, low interest rates and new rules for funeral insurers,’ he said.

Yarden and the central bank have been working to build up the buffers for two years, he said.

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