UNITY Re: Strong growth expected in the Russian reinsurance business
"This dynamic meets the expectations of some experts who last year forecasted a further gradual market growth after observing the 2011 GPW results appeared to be in line with those of 2010 - the first stabilization period succeeding to about 5 years of a permanent premium drop", explained GARMASH, also showing that "the overall increase of the 2012 reinsurance premiums coincided with an obvious increase of the outward reinsurance premium's share, which is also a bit different evolution from what we have observed for previous years. Taking into account the relatively significant growth of outward reinsurance, in absolute value, this joint dynamics could reflect some additional risk retention within the domestic market capacities, as well as a visible improvement following the 2009-2010 crisis and new legal regulations in place since January 2012."
According to GARMASH, this growth is observed in the volume of premiums ceded to reinsurance "in 1H2012, total outward reinsurance premiums reached the sum of RUB 58.98 billion (EUR 1.4 billion), going up by 22.2% compared to 1H2011. In 2009 and 2011 the volume of this premiums was about RUB 96-98 billion, with a slight decrease in 2010 to RUB 86 billion. Therefore, we can expect that by the end of the year reinsurance premiums ceded will reach RUB 110-115 billion, which is a strong growth."
Also, the number of companies specialized in conducting reinsurance activities decreased from 55 in 2003 to 18 in 2011 (they hold a share of 25% of the reinsurance market total), while by the end of 1H2012 the number dropped to 14. In terms of reinsurance premium, the market share of Russian companies exclusively specialized in reinsurance is 26.6%. The same trend was recorded also for re/insurance companies, their total number has decreased by 26 companies in the last 12 months, to 110.
UNITY Re company holds the leading position among Russian specialist reinsurers for 2010-2012. In October, 2012 the company increased its paid-up capital from RUB 500 million (EUR 12 million) to RUB 700 million (EUR 17 million) by the capitalization of the retained earnings. According to the company's strategy of continuous development, in the near future the capital will be increased next.