XPRIMM: How do you comment the results achieved by your market in 2014 in terms of development and profitability?
Walter LEONHARTSBERGER-SCHROTT: Croatia entered the European Union on July 1, 2013. Since then, the aim is to raise Croatia's competitiveness to compete in the large EU market and maximize the opportunities that membership brings. The prolonged crisis is testing this progress, as well as Croatia's aspirations, as the country is now entering its seventh year of recession.

The economic environment affected also the Croatian insurance market. Gross written premium of the insurance companies decreased by -5.68% compared to 2013. The main factors that affected the business on were closure of many companies, high unemployment and stagnation in construction. Significant impact had also the regulation of prebankruptcy procedure.

The market liberalization of motor third party liability insurance also lead to higher competition and decrease of prices and gross written premiums which inevitably had negative impact on the profitability.

XPRIMM: How did perform your own company in 2014 as compared with the market general trend?
W.L-S: WIENER osiguranje Vienna Insurance Group wrote gross premiums of HRK 563,5 million, representing an increase of 2.03% in comparison to 2013, while the market was dropping down by 5,68%, which places the Company on fifth place among insurance companies in Croatia. Among the Top 5, the Company is the only insurer with growth in life and non-life business in comparison to the previous year.

The Company is continuously focused on increasing its cost and process efficiency, which has resulted in good financial performance also in 2014. Although implemented the growth strategy, the Company was following selective underwriting policy in order to be even more earning oriented, regardless of possible premium losses. This management principle will be continued also in the following years.

XPRIMM: Which are the most challenging aspects of the insurers' activity, possibly in need of further improvement? What are the expected measures in this regard?
W.L-S: The changes to the European insurance supervisory system referred to as Solvency II present great challenges for the whole insurance industry in Croatia, especially the risk assessment and future treatment of local Government Bonds denominated in foreign currencies.

XPRIMM: Which are in your view the most "promising" business lines in your market and how is your company intending to take advantage of the opportunities offered by these lines?
W.L-S: The insurance density in Croatian in general is still on a quite low level. The Company sees good potential in property insurances. Considering Croatia as maritime country, also the marine business is quite promising.

The Company plans to enhance the already good developed cooperation with the Erste bank.

XPRIMM: The motor insurance segment was affected, in the entire CEE region, by a highly competitive environment leading to an aggressive price war and a scarce profitability of the segment. Which is the current situation in your market in this respect? How does your company cope with the motor insurance market's challenges?
W.L-S: The liberalization of the MTPL market in Croatia started in 2014 and is getting every day more challenging. The Company is intensively monitoring the trends on the market and making analyses of the portfolio in order to be in line with the market trends although following a selective underwriting policy. Big efforts are made in the improvement of the risk selection and segmentation to keep MTPL business profitable.

In addition, the management and the employees of the Company are aware, that further savings of the overall operating cost have to be achieved.

XPRIMM: Property insurance has still a low penetration across the CEE region, although the frequency and intensity of the weather related events are significantly increasing. Please comment on the current situation in your market.
W.L-S: This "definition" is perfectly describing the situation in Croatia which still has low penetration combined although high intensity of weather related events. The reasons for this is not lack of awareness but the economic environment in the country.

XPRIMM: How do you assess the 2015 perspectives? Do you expect some significant changes in the market / legislation etc.? What are the strategic development targets for your company in the next years?
W.L-S: The whole market will be strongly affected by two trends in 2015, the preparations for solvency II with impact on the financial market and possible yields to be earned, such as the ongoing liberalization of the MTPL business. The Company's financial stability and business principles ensure that also this transitional period will be overbridged by combining the strategic goals of profitability and growth.