On June 30, 2016, an agreement was signed between JSC Aldagi Insurance Company and Sveti Development LLC on insuring the non-fulfillment of contractual obligations the full period of which was determined from 30.06.2016 till 30.06.2019.
In order to conclude an agreement, Sveti Development LLC submitted the schedule of construction and an appropriate cost estimate. In accordance with the terms of the insurance contract, the insurant (Sveti Development LLC) took on obligations to execute work in full accordance with the schedule and calculation submitted. If the insurant had had a delay in the agreed schedule for the period of more than 90 days, the insurer company would have additionally given it 90 days to fix the delay. In case if the notice period expires without any results, precondition of the insurer's liability issue were the following steps from the insurant: it should have given such an amount under the insurer’s authority that equals the difference between the presented budget and the work already executed, and it should also have given the insurer full power and authority to find other contractors and any relevant parties who will be involved in the construction project, complete the construction process and, if necessary, raise/invest their own funds to fulfill this obligation if the amount specified in the cost estimate would not have been enough.
On January 24 of the current year, after Aldagi Insurance Company JSC recorded a 90-day delay, according to the insurance contract, Sveti Development LLC was given an additional 90-day period to fix the construction delay in the schedule and was also required to pay the existing insurance premium. Also, on February 21 of the current year, the insurer addressed the insured party with an additional letter and demanded to satisfy the debts of the insurance premium and gave the insured company 30 calendar days set by the law to settle this issue. In the same letter the insurer indicated the consequences in case of non-compliance with the requirements, in case the existing debt is not satisfied, the contract will be terminated early.
On February 23, 2018, Sveti Development LLC, upon a written request, terminated the insurance contract between the parties early, however, indicating that it was important for the insurer's interests that future key costs be invested into its construction business to fully implement its obligations. Due to the above mentioned circumstances, the insurance contract concluded between Aldagi Insurance Company JSCi and SVETI Development LLC on June 30, 2016 was terminated early and consequently all the insurer's rights and obligations according to this contract were also terminated.
Similar to the contract with Sveti Development LLC, an insurance contract was concluded with Sveti Group Ltd (construction in Batumi) on similar terms, which was also terminated early by February 23 of this year upon the initiative of Sveti Group LLC.