xprimm.com: How would you describe the Slovak insurance market's evolution in 2011?
Julia CILLIKOVA: The Slovak insurance market registered a slight increase in premium during the year 2011. Total Gross Written Premium amounted EUR 2.04 billion, showing a 1.3 % increase in comparison to the previous year. Life insurance increased by 1.3 % to EUR 1,09 billion, while on the non-life segment the growth rate was of 1.2%, to EUR 0,95 billion. Please note that data are not yet auditated, so marginal amendments will probable occur in the coming weeks.

xprimm.com: What about life insurance?
Julia CILLIKOVA: Life insurance and pension insurance were the only business lines which registered a slight decrease. It is worth mentioning that Unit-Linked insurance recorded the highest growth, by 7.42%. No doubt, there is still some appetite to buy this products by consumers, so that by the end of 2011 Unit-Linked products accounted for 31% of all the life insurance. On the other hand, there was also a recognisable increase, by 51%, of claims in Unit-Linked products. However, looking at the new production figures, one would see the trend is a descending one, with a 2.7% decrease in premium and a 7% lower number of policies. The good news is that claims costs and number of surrended policies also decreased, what could indicate that the most surrended policies were older ones, with quite high of provision.

xprimm.com: Which was the driver line on the non-life side?
Julia CILLIKOVA: Property insurance was the main driver of the non-life sector last year. Premium increased by 6.1%, as both the number of prolonged policies and new production increased, the latest by 6.2%. On the claims side, the total costs decreased by 8.6%. Also, the loss ratio was of 31.4% at the end of 2011, 43% lower than in 2010.

Beside property insurance, each line of business in non-life insurance recorded a positive evolution in premium, except for Motor insurance. Although the number of new production and also prolonged policies increased, the overall premium in motor insurance decreased.

Still, the premium in MTPL increased by 0,9% in MTPL insurance first time since 2008. The number of policies increased by 5,6%, in that the increase of new production was by 3% and prolonged policies increased by 6,7%.

Unfortunately, on the Motor Hull segment we have witnessed again a drop in premiums, by 3.8%, and total number of contracts in force fell by 0.4%, mainly because of 3.7% decrease in the number of prolonged policies.

xprimm.com: What can you tell us about the claims paid by Slovak insurers?
Julia CILLIKOVA: Total cost of claims increased by 3.9% and reached EUR 1.18 billion at the end 2011. Claim costs in life insurance increased by 8.2% to the amount EUR 658.9 million, mostly because of higher surrending values and survival in Unit-Linked insurance. However, Y-o-Y index of increase of claim costs has been declining since 2008.

On the non-life insurance segment claim costs decreased by about 1%, to EUR 517.7 million. The loss ratio in non-life insurance decreased by 13.9% in comparison to previous year and reached 48.4%. This is the lowest value since 2006. The explanation of this result lies in the decreasing number of claims reported on the property insurance class.

As a result, the combined ratio decreased by 12.9% to the 81.4%. Higher premiums in connection to fewer reported claims also meant higher profit of earned premium. Still, there was loss reported in insurance of legal protection at the end of the year 2011.

xprimm.com: What other things do you consider, as supervisor, our readers should know about the Slovak's market evolution in 2011?
Julia CILLIKOVA: I think it is also interesting to note that total technical provisions decreased at the end of 2011 to EUR 4.64 billion. This is the first historical decrease in the technical reserves' amount in the Slovak market. This decrease was caused mainly by non-life insurance, where claim provision decreased by 9% (totally by EUR 67 million) due to decrease of RBNS provision. Also, the provision for Slovak Insurers Bureau decreased by about 25%.

On the other hand, we have registered the highest Y-o-Y increase in the last years, of 14.4%, for the volume of premiums ceded to reinsurance, which amounted EUR 275 million. Ceded premium in non-life insurance was 29% and it has been increasing since 2008, although the amounts recorded in 2002-2004 were not breached.