Fidelidade loses 16 million with bankruptcy of Thomas Cook

  • Luís Alexandre
  • 30 September 2019

The bankruptcy of the tour operator Thomas Cook obliges the insurer Fidelidade to incur losses of 16 million euros by the end of this year.

Fidelidade will register by the end of the year losses of around 16 million euros because of the bankruptcy of the British tour operator Thomas Cook, revealed to the ECO official source of the insurer after questioned about the impacts of that bankruptcy that affected the Fosun group, the shareholder of Fidelidade itself.

“Fidelidade holds, through a non-insurance subsidiary, a 7% stake in the British tour operator Thomas Cook, listed on the London Stock Exchange. This minority position is purely financial in nature, with Fidelidade having no participation in the current management of this tour operator”, clarifies Fidelidade, led by Jorge Magalhães Correia. “The announcement of bankruptcy now generates the need to recognize losses of around 16 million euros by the end of the year, which represents only about 0.1% of the total assets under management held by Fidelidade. Despite the announced bankruptcy, the company still holds a number of very valuable assets that will be managed in the liquidation process”, confirms the company, after being questioned at the end of last week by ECO about possible financial impacts of the fall of Thomas Cook.

Fidelidade clarifies that “taking into account the continued decline in Thomas Cook’s share price in 2018, most of the potential loss attributed to this holding was immediately recorded in 2018, as a measure of prudence”. This anticipated recording of these potential losses, guarantees Fidelidade in a written response to ECO, did not have “a significant impact on the average profitability of Fidelidade’s investments, which continued to be higher than the market average (3.3% in 2018)”.

The scenario of Thomas Cook’s bankruptcy now in place, says Fidelidade, requires additional losses to be recorded and will not have a significant impact on the average return on investments in 2019 either. “As in all investment decisions, the growth expectations presented at the time of the initial investment, supported by a solid reputation, a large and loyal customer base, and great potential for adaptation to other geographies and business models were decisive in the decision taken then,” explains Jorge Magalhães Correia.

Fidelidade is not the only insurance company impacted by Thomas Cook’s bankruptcy. The operator has as relevant global shareholders such as Aviva, Standart Life Aberdeen and Life & General Group, as well as reference institutional investors such as UBS, Blackrock, Invesco, Barclays and Vanguard.