ERGO recorded positive results in the Baltic States, outperforming the region's market dynamic

27 August 2015 — Daniela GHETU
ERGO's Baltic subsidiaries reported for the first half year 2015 GWP amounting to EUR 89.3 million, 15% up y-o-y, a growth pace outperforming by far the average 6.2% increase in premium written seen in the Baltic markets during the period. Positive bottom line result amounted to EUR 5.22 million profit which is more than double than same period last year. At regional level, ERGO's market share increased to 13.2%. 

Commenting the 1st HY results of ERGO in the Baltic States Dr. BAGDONAVICIUS, Chairman of ERGO insurance companies in the Baltic States, emphasizes that such an excellent result has been achieved due to successful implementation of growth initiatives, stable net loss ratio and due to decreased net cost ratio. " 

Motor business (MOD, MTPL) was the main driver of the P&C insurance business growth, but positive dynamics were recorded for all lines except cargo/transport and carriers liability due to the geopolitical situation (Russian/Ukrainian crises). The GWP growth in Life Insurance Company was generated by significant volumes of annuities in Estonia, via bancassurance co-operations in Latvia and performance of specialized sales network in Lithuania. Even with tough competition ERGO has a leading position in the Health market in the Baltic States.  

ERGO in all the Baltic States has outperformed the market. During 1H 2015 Estonian insurance market grew by 4.6%, while ERGO significantly outperformed it and grew by 15.3%. ERGO in Latvia grew by 16.6%, while Latvian insurance market grew by 7.6%. ERGO also grew faster than the market in Lithuania: ERGO in Lithuania with its growth of 11.9% outperformed the market. Market growth was 6.4%. The number of valid contracts has increased by 17 %.

In the 1st HY of 2015 ERGO customers in the Baltic countries were paid EUR 44 million in claims, 17% up y-o-y. The biggest claim has been paid in Lithuania due to fire in amount of EUR 1.5 million.

Both ERGO risk carriers are well capitalized and are above the ERGO Group long term minimum requirement of 140% solvency ratio. In ERGO P&C company the Solvency I ratio increased from 207% to 224%. ERGO Life company is well capitalised with 141% Solvency I ratio. Significant growth of investment portfolio amounting by 328 million euros (319 million euros in 1-2 Q 2014) is related to growing Life business volumes.

Commenting the trends and prognoses of insurance market in the Baltic States Dr. BAGDONAVICIUS forecasts a growth of Baltic insurance market with some exceptions. "Forecasts of ERGO in the Baltic States show that economy of the Baltic States is recovering as well the volumes of P&C, Life and Health insurance businesses will continue to grow this year. Still we have to keep in mind the geopolitical environment. We are approaching new legal environment the EU's Solvency II Directive, which will enter into force on 1 January 2016, updating the approach taken to determine the capital that EU (re) insurance undertakings should hold against their risk profiles and thus requires a lot of efforts from insurance companies.

The biggest challenge for the whole insurance industry will be changing behavior of customers, the fast developing digital environment. The need to continuously offer innovative solutions to customers is no longer a prerogative of IT business alone. Working with our ERGO Group colleagues in various European counties, we are well aware of the fact that the insurance business must be dynamic and keep up with the accelerating pace of life and the latest technology trends, to focus on individualized services and be ahead of customer needs", says Dr. BAGDONAVICIUS.

ERGO companies operating in the Baltic countries are part of the ERGO Group - one of the major insurance groups in Germany and Europe. Worldwide, the Group is represented in over 30 countries and concentrates on Europe and Asia. In 2014 ERGO recorded a premium income of 18 billion euros. ERGO is part of Munich Re, one of the leading reinsurers and risk carriers worldwide.

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