GREECE: Insurance market in the turmoil of dept crisis. 1H/2012 results

From the beginning of 2012, the state and expectations of the Greek insurance industry have remained shrouded in the big "cloud" represented by the country's financial crisis.

Let's recall the insurers, as key investors in Greek government bonds, will take part in the private sector involvement (PSI) that is ultimately negotiated between the government and its private sector creditors.

Through the PSI plan, most insurers - if not all - will now have access to the capital they need or can acquire it quite quickly from their major shareholders.

The harsh economic and financial environment caused a contraction of the insurance sector. Last year results show that premiums decreased by single-digit amounts in the first three quarters (compared to the same period of 2010).

The fall was slightly higher in the life segment than in the non-life segment. Taking this result into consideration, we can observe that, in spite of all the challenges, large numbers of households can still afford to pay for both non-life and life insurance and see them as an essential expenditure.

Therefore, in some cases, companies managed to slightly increase their premiums or suffered fewer claims; in others, profitability has been boosted by reducing operating costs.

The insurance sector made remarkable efforts to bounce back in this economic turmoil but, unfortunately, by the end of the first half of 2012, the financial results published by HAIC (the Hellenic Association of Insurance Companies) paint the Greek insurance market in rather dark colors.

In 1H/2012, the Greek insurance market managed to total EUR 2.25 billion, this meaning a 7.85% drop compared to the same period of 2011. The negative growth of only a single digit was mainly due to Unit linked products in the life segment, which kept the market alive, with a 49.91% increase (reaching EUR 222.57 million).

The non-life segment registered the biggest decrease by far: a 11.4% drop compared to 1H2011. The motor insurance segment registered a remarkable fall, going down by 15.8%, its major lines of Motor Hall and MTPL insurances decreasing by 22.81% and 3.81% respectively.

As far as life insurance is concerned, the results are now negative, but they are still controllable: a 2.81% drop and gross written premiums totalizing EUR 986.59 million in 1H2012. As we have previously stated, Unit Linked products prevented the insurance market from reaching into a worse situation, but the same cannot be said for other major life insurance segments, such as Annuities and supplementary insurance, which, in spite of maintaining a 26.19% market share, dropped by 10.71%.

Taking all this into account, while looking at the data that we currently have at hand, we can affirm with certainty that the PSI program has failed, creating substantial losses for the insurance companies activating on the Greek market. In this first half of 2012, we have seen the companies mainly focusing not on how to improve their services in order to bring better products to the costumers and reestablish a healthy insurance market, but on how they will manage to absorb these losses, either by capital increases or by separating themselves from the non-profitable sections and eventually sell the healthy part of the company (ATE ASFALISTIKI) in order to survive.

Acces www.xprimm.com and download 1H2012 Greece insurance market statistics.

Follow XPRIMM Publications on LinkedIn, for more data on the insurance and financial industry.

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