No. 103, February 28th, 2008

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Betting on the province...

Jucu, a small village in the Cluj province has become in the latest months one of the most important investment targets in Romania. The arrival of Nokia in the TETAROM III industrial park has represented first page news in Romania but has disturbed the German economy, when the finish have announced the closing of the factory in Germany.

Other big names have announced their intention to relocate in the now-on famous Jucu. MERCEDES has decided to open a factory for lower class vehicles, while ACCENTURE plans to invest 500 million EUR.

Going over the successful story in Cluj, we have to remember the acquisition of the Craiova automotive factory by FORD and the relocation of an important division of PIRELLI to Slatina.

Mass-media is also filled with examples of important companies that chose to invest in the province, mainly outside the capital...

Frightened by the huge increase of the price of the land and higher costs of labor, foreign investors focused their attention on other Romanian regions, where they can find local authorities that are eager to support new development projects.

Such tendency may not affect the insurance market, although, according to the information released by National Institute of Statistics in 2006 insurance segment from Bucharest and Ilfov represented 53.5% of the national market, as a result, it's very likely that in the not so far future to witness a change...

Therefore, the growth of the standard of living for the population in the rest of the country, next to the relative saturation of the market in Bucharest, will force the insurers to reconsider the development strategy. And, because of this fact the province will represent the solution...

Therefore, at the beginning of spring we dare make a bet... the blossoming of the province.

by mihaela.circu@mxp.ro

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BCR Asigurari de Viata




Interview with Mr. Mihail TECAU,
President of the Executive Board,
BCR Asigurari

XPRIMM: How would you characterize, both quantitative and qualitative, the evolution of BCR Asigurari in 2007? What are the main objectives for 2008 set by the company you represent?
Mihail TECAU:
At the beginning of 2007 we were planning to maintain among the first five non-life insurance companies in Romania. Not only we have met this target, but we have clearly excelled it. We went up one place in the Romanian insurance market - we are now placing the third position, according the estimations.
Our plans for 2008 include continuing both our market position's consolidation process and the development of the companies' unique identity process, as expression of a dynamic, modern, reliable and stable personality.
In the context of an insurance market which battling for market share has sacrificed the main purpose of every business, the profit, in 2008 we will turn towards developing a healthy clients portfolio set to bring benefits both to our clients, through financial solidity and a fast claims settlement process, and to our company, by maintaining the claims rate within the normal parameters.
Other targets we have set for 2008 aim at growing the recognition and reliance rate of the BCR Asigurari brand; elaborating a communication platform with components for every target audience; gaining more clients and diversifying the products' portfolio with new products, adjusted to markets' conditions; maintaining in the first five companies on the Romanian insurance market.
We intend to grow the share of property insurance in our portfolio, maybe with the help of the introduction of the households' compulsory insurance and also the share of health, general liability, CARGO and motor insurance.
Regarding the motor hull insurance, which reports a reasonable claim rate, our main concernment will be keeping our clients and gaining more clients with the condition of a growing profitability for this insurance class, after the introduction of the Bonus-Malus system, the franchises and a more efficient claim settlement management.
However, the cautious follow up of the technical results of this insurance class and the pricing adjustment with the claim rate reported on different motor vehicles types will stand for our first challenge.

XPRIMM: What challenges do you expect this year at the insurance market level?
M. T.:
We expect an underwriting activity in profitability and solvency conditions, strongly connected with a healthy clients' portfolio and, respectively, the development of a viable and realistic communication platform with every type of clients BCR Asigurari has.

XPRIMM: BCR Asigurari had one of the most visible MTPL promotion campaigns. What was the budget allocated to this campaign?
M. T.:
The media channels we have chosen for spreading the BCR Asigurari's MTPL campaign have been selected taking into account also the general marketing strategy of the ERSTE-BCR Group: radio, written press, in store TV and product literature as well as an alternative media channel, namely a SMS campaign. This was supported also by offering a promotional product - a raincoat to offer you protection from bad weather.

XPRIMM: How do you think the application of the SOLVENCY II norms will affect the Romanian insurance market?
M. T.:
IFRS appliance by promoting an efficient financial management and a corporate governance culture among the insurance companies is an absolutely necessary premise for implementing, in optimum conditions, of SOLVENCY II Directive.
Presently, the whole European insurance market prepares itself for SOLVENCY II, reason for which the supervisory authorities from the member states, reunited through CEIOPS, are developing Impact Studies in order to predict and asses the economic consequences SOLVENCY II would have.
After these studies, the legislative project is modified as to fit the realities in the insurance sector and to benefit from the support of as many market players.
Applying this European Directive will influence all operational processes of the insurance industry as a whole, and by rapid correction of all solvency aspects it will radically change the general insurance supervision framework. As the regulation burdens' will transform into a competitive advantage.
Assuming this, we could consider Solvency II is one of the most important strategic projects of European insurers and reinsurers, wherefore the adoption deadline is 2012, as the identification of the most appropriate solution takes more time.

XPRIMM: How do you consider the competition pressure will influence the local hierarchy, provoked by the high interest of strategic investors in entering the Romanian insurance market?
M. T.:
Generally, the existence of competition generates a positive development of the insurance services in the clients' benefit, either individuals or companies. In every market, improving the services' and products' quality is stimulated by the growth of the competition.
On the other hand, taking into account that foreign insurance companies have already entered our market, the local companies will start applying the same principles and methods used in Europe, in order to raise the quality of insurance services. Otherwise, a predictable situation will be generated, namely a bigger risk of losing clients.
Both underwriting and especially post-sale services will be positively influenced.
As for the local hierarchy, it is not local anymore, as seen in the significant changes of the Top 10 companies' shareholders. However, we can appreciate the actual hierarchy might modify according to the following mergers and acquisitions. The moves on the market are interesting to watch and I think some concrete conclusion would be drawn by the half of this year.

XPRIMM: Thank you!

by mihaela.circu@mxp.ro

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Mihail TECAU
Mr. Mihail TECAU,
President of the Executive Board,
BCR Asigurari


Discount until February 29th
Friday, February 29th 2007, is the last day you can use the discount fee for participating to the 11th Edition of FIAR - The International Insurance - Reinsurance Forum.
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by mihaela.circu@mxp.ro, 19.02.2008

The new car's number is affecting the motor insurance claims ratio
In January 2008, the number of registered new cars raised up by 34.5%, to 29,495 cars from 21,931 cars in the same period of 2006, according to data provided by ACEA - The European Association of Automobile Producers.
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by andreea.ionete@mxp.ro, 18.02.2008

Rebranding at ASIROM
The Romanian based insurance company ASIROM will start in May a complex rebranding process, outlining the affiliation to VIENNA Insurance Group (VIG).
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by alexandru.ciuncan@mxp.ro, 25.02.2008

Over EUR 34 million for CARPATICA Insurance
The Romanian insurance company CARPATICA had subscribed, in 2007, a total amount of gross written premiums of EUR 34.2 million (RON 114.13 million), 5.99% more in comparison to 2006.
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by vlad.boldijar@mxp.ro, 26.02.2008

EUR 77 million for BT Asigurari
The Romanian BT Asigurari had subscribed, in 2007, a total amount of gross written premiums of EUR 77 million, according to a report published by GROUPAMA. In this context, the company reported an increase of 28.61% for BT Asigurari.
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by mihaela.circu@mxp.ro, 25.02.2008

Decreasing profitability for ING Life Insurance
ING Life Insurance reached, in 2007, an income of EUR 1 million only, after being the most profitable Romanian insurance company in 2006.
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by mihaela.circu@mxp.ro, 21.02.2008

The administrators with more than 20% market share, excluded for redistribution?
The Private Pensions System Supervisory Commission (CSSPP) launched to public debate the draft of the law project that is supposed to settle the continuous adhering of the participants, as well as the project regarding the technical conditions for collecting the contributions in the system.
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by mihaela.circu@mxp.ro, 22.02.2008

OMNIASIG insured the Romanian Lottery
The Romanian Lottery had insured its video lottery terminals, the online satellite communication network (VSAT) and lotto terminals, for EUR 53.28 million, paying policies of EUR 161,282 this year, at the Romanian insurance company OMNIASIG.
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by mihaela.circu@mxp.ro, 18.02.2008

GROUPAMA - 3rd place
The GROUPAMA - BT Asigurari transaction is situated on the third position in the Romanian Acquisitions Top in 2007, according to KPMG. In December 2007, GROPUPAMA had acquired the shares stock of BT Asigurari from Banca TRANSILVANIA for EUR 90 million.
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by mihaela.circu@mxp.ro, 19.02.2008

Over EUR 370 million for ALLIANZ-TIRIAC
The Romanian insurance company ALLIANZ-TIRIAC had reported, last years, gross written premiums of EUR 371 million, 17% up in comparison to 2006, according to ALLIANZ Group press release dated on February 21st 2008.
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by mihaela.circu@mxp.ro, 22.02.2008

Very precise rules for the lottery
The redistribution lottery for the employees below 35 years old which didn't chose a pension fund before January 17th 2008 has already some very clear rules.
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by liviu.huluta@mxp.ro, 26.02.2008

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The Fourth International Risk Management Conference in Almaty
EURASIA Insurance Company, the leading player of the insurance market of Kazakhstan is organizing on 17-18 April 2008 a traditionally and highly appreciated event of the region - the Fourth International Risk Management Conference in Almaty.
The conferences discussions will focus on assessments of the probability of a world economic recession and the related fall of world prices, including the cost for energy sources. During the Conference panel discussions and speakers will provide their analysis of the consequences following the liquidity crisis, which has spread over all world capital markets; as well as their own forecasts.
Strengthening of the world economic diversity is also an important topic of the event, including the reversal of the gain in trading of goods from West to East, the growing importance of developing markets in the functioning of the global economy, resources, nationalism and other factors undoubtedly which will determine the future of both east and west.
Examples of national and local applications of Risk Management systems (such as the inflation processes in early warning system), will be provided and discussed at the Conference.
International insurance and re-insurance companies, reinsurance brokers, banks, multi-national companies, audit companies of "Big Four", international rating agencies and many others will provide their reports and exchange opinions at the Conference, helping the attendants to determine the best Risk Management standards.
The PRIMM Insurance&Pensions Magazine is a Media Partner of the Conference.
by oleg.doronceanu@mxp.ro, 20.02.2008

UNIQA expands outside the Austrian market
UNIQA Group Austria reports strong premium growth in the Serbian market, with health, accident and property insurance lines leading the way with growth rates increases of more than 100%, Business Insurance reports.
The insurer has been active on the Serbian market since the end of 2006, following the acquisition of 80% of ZEPTER Osiguranje. UNIQA Osiguranje now operates 58 branches across Serbia and employs 550 people. The 2007 financial year was extremely successful, with a preliminary growth in premiums of over 50% to EUR 20.4 million.
"We are extremely satisfied with our results in 2007. We have achieved the highest growth on the market and we have fulfilled our plans on both top and bottom line. We are committed to further development of new products and distribution channels", noted Zoran VISNJIC, Chairman of the Management Board at UNIQA Osiguranje.
At the same time, UNIQA said its life insurance portfolio in Serbia grew by 55% during 2007, and the company also started selling motor insurance at the end of 2007.
UNIQA also became the first insurance company in Serbia that successfully separated the operations of its life and non-life business during 2007, in line with the regulations of the National Bank of Serbia.
UNIQA now generates around one third of its premiums from markets outside of Austria. Overall, according to preliminary results for the fiscal year 2007, UNIQA had a premium volume of EUR 5.3 billion, which represents a growth of 3.3% compared to the year before, the company said. The company is present in 20 European countries, from Baltic Sea to Mediterranean and Black Sea
by oleg.doronceanu@mxp.ro, 22.02.2008

COOPER Gay enters on the Ukrainian market
COOPER Gay, one of the world's largest insurance brokers, has entered in the Ukraine market and intends to reinsure in the European insurance companies practically all kinds of risks, according to kommersant.com.
Ukrainian specialists connect the entry of the English broker with the accession of the Ukraine into WTO as non-residents will get direct access to insurance of large risks.
However, market's leaders aren't expecting an inflow of new players, as the insurance legislation in Ukraine is not settled yet. It's very possible that the new insurance Law will allow brokers to intermediate only space and aviation risks, experts consider.
"We reinsure design-assembly risks, property, cargoes, sea and air vessels, different kinds of the responsibility, portfolios of the companies and other risks in London syndicates of Lloyd's, in European companies as MUNICH Re, HANNOVER Re, SCOR, TRANSATLANTIC Re, SWISS Re", Reinsurance Director of COOPER Gay for Eastern Europe, Vladimir KOZHATKIN has declared. "Temporally we shall work virtually from Moscow and as our business will grow we'll start to employ the personnel in Ukraine", COOPER Gay's representative added.
COOPER Gay was founded in 1965 and is present in 20 countries of the Europe, America and Asia. In 2006 reinsurance broker wrote USD 1.18 billion in premiums and made a profit of USD 133.7 million.
by oleg.doronceanu@mxp.ro, 26.02.2008

AEGON strengthen its position in Central and Eastern Europe
The second-biggest Dutch insurer AEGON has signed an agreement to acquire ANKARA Emeklilik, a Turkish life insurance and pension provider from POLIS Bakim, marking its first step in the fast-growing Turkish life insurance and pension market, according to money.com. The price was undisclosed.
"Turkey offers attractive long-term growth prospects as it has a low life insurance penetration and the private pensions market has an attractive growth potential", AEGON's officials stated. The deal is subject to regulatory approval and is expected to close in the first half of 2008.
ANKARA Emeklilik has around EUR 35 million in assets under management and over 54,000 pension fund members. It sells its products and services through a variety of different channels and has an agreement in place to distribute through a nationwide network of 236 branches belonging to SEKERBANK.
This transaction is also in line with the company's strategy to strengthen its position in Central and Eastern Europe, mainly in Russia, Ukraine and Turkey, according to the future CEO of AEGON, Alexander WYNAENDTS. The insurer aims to grow its VNB (value of new business) to EUR100 million by 2010 from that region, both organically and through new acquisitions.
by oleg.doronceanu@mxp.ro, 27.02.2008

VIG has finalized its entry into the Baltic State
The VIENNA Insurance Group (VIG) has finalized entry into the three Baltic State insurance markets. With approval from the relevant authorities, VIG has taken over a 100 percent share of SEESAM Life Insurance SE from Finnish company SUOMI Mutual Life Assurance Company.
"With the acquisition of SEESAM, we are now represented in a total of 23 markets", Gunter GEYER, CEO of the VIENNA Insurance Group has declared. "The strong and sustained economic growth of the three 'Baltic tigers' offers outstanding prospects for the future, especially in the life insurance business. The increase in wealth is also bolstering demand for pension products, which plays to the strengths of the VIG thanks to our expertise and experience in this area".
SEESAM with its headquarters in the Estonian capital Tallinn was founded in 1993. The life insurance company subsequently expanded into the markets of Latvia (1999) and Lithuania (2001). In 2006 the company achieved a premium volume of EUR 13.6 million in all three Baltic States with a combined population of approximately 7 million, which represents an increase of 26.2 percent in comparison with the previous year.
In Latvia and Estonia SEESAM ranks an excellent fourth place in the life insurance market and in Lithuania the eight place. The insurer has ten branches in all three countries and provides services for 45,000 clients with a staff of approximately 200 employees. Besides classical life insurance policies, unit-linked policies and term insurance are also offered.
VIENNA Insurance Group is the leading Austrian insurance group in Central and Eastern Europe. Among the international competitors, VIG is among the market leaders.
Outside its Austrian home market, the Vienna Insurance Group operates in 20 countries, being among the market leaders in Austria, the Czech Republic, Slovakia, Romania, Bulgaria, Albania and Georgia.
by oleg.doronceanu@mxp.ro, 27.02.2008

Moscow International Reinsurance Congress
Reinsurance markets of the CIS, Baltic and CEE countries are one of the world's most rapidly growing regions with gross written premiums totaling over EUR 57 billion in 2006.
Topics as strengthening and developing the reinsurance industry in the region, integration of national reinsurance markets in the global market as well as fostering modern technologies and raising investment appeal of the region are the main goals of the Moscow International Reinsurance Congress.
The event is organized by the Russian Polis - Information Group jointly with the Transsiberian Reinsurance Corporation on March 25-26, 2008.
The PRIMM Insurance&Pensions Magazine is a Media Partner of the Conference.
The event aims not just to outline the challenges that the reinsurance professionals faced throughout the last year but, more important, find the ways to meet them and, in particular, discuss the prospects for cooperation with reinsurers from CIS and other nations.
The list of invited speakers includes national regulators, experts and senior managers of national and international reinsurance, brokerage and insurance companies from Western and Eastern Europe as well as CIS and the Baltics.
oleg.doronceanu@mxp.ro, 31.01.2008

All-Russia Conference on Reinsurance, at the 12th Edition
The 12th All-Russia Conference on Reinsurance, one of the most important insurance events in Russia and CIS is getting closer. This year, between the 27 and 28th of march, the insurers, reinsurers and brokers with business in Eastern Europe and Asia have made their schedule to participate at the 12th edition of the reinsurance conference held in the President Palace, Moscow.
The PRIMM Insurance&Pensions Magazine is a Media Partner of the Conference.
The 12th All-Russia Conference on Reinsurance has become a major forum for exchanging opinion, formulating the reinsurance community's consolidated positions on key issues, establishing contacts between businesses and people and conducting dialogue between professionals and government authorities.
The attendance of the last year's conference included over 442 members from 185 companies and government agencies from 18 countries - Azerbaijan, Bahrain, Belarus, Czech Republic, France, Germany, India, Indonesia, Kazakhstan, Latvia, Malaysia, Poland, Russia, Switzerland, Transdniester Moldavian Republic, Ukraine, United Kingdom and Uzbekistan.
The conference captured the attention of insurers' unions and associations, business community, government authorities, and numerous editions and electronic media.
by oleg.doronceanu@mxp.ro, 27.02.2008

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Russian Polis

DACIA - most popular Romanian brand
DACIA is the most popular and trustworthy brand in Romania among Internet users, a GEMIUS and EVENSYS study shows. In a general approach, Romania's Internet users consider that NOKIA's brand is to be trusted, COCA COLA is the most popular and GOOGLE is the most present brand on the Internet.
DACIA was classed as most trustworthy Romanian brand with 17% of the user's options, followed by ARCTIC (Romanian households producer) with 6.1%, BCR (The Romanian Commercial Bank - Erste) - 5%, DORNA (milk and dairy - 4.4%) and beer producer URSUS (4.3%). DACIA's brand also takes lead in terms of popularity, receiving 34.2% of the choices while ARCTIC gets only 5.8% and URSUS 5.5%.
Romanians seem to trust NOKIA (18.7%) more than COCA COLA (14.3%), MERCEDES (10.8%) and NIKE (10%). At its turn, GOOGLE is the most popular brand present on the Internet. The study was conducted in February 2008 and some 2,092 questionnaires were filled online.
by HotNews.ro, 27.02.2008

Tourism market to grow 30% in 2008
The Romanian tourism market is estimated to grow by 30 percent this year, close to the level of neighboring EU members, due to the development of the business tourism segment.
Analysts on the market estimate an average 60-70 percent occupancy ratio for 2008-2011, similar to the current level.
"Turnover of tourism agencies, the development of business tourism, the increase in the number of plane tickets (sold) has lead to this market growth", Traian BADULESCU, the spokesman of the National Association of Tourism Agencies (ANAT), said.
Besides the development of the business tourism segment, Romania could become an important tourism destination in the coming 5-10 years.
According to a study by the National Institute for Research and Development in Tourism (INCDT), tourism markets in the countries neighboring Romania who joined the EU in 2004 have had some 40% average annual growth of the tourism market.
by Business Standard, 27.02.2008

Romania is second in the EU for industrial new orders
Romania is second in the European Union (EU) in terms of rhythm of growth on industrial new orders, up 31.5% in the last month in 2007 compared to December 2006, according to a report by Europe's statistical bureau, EUROSTAT, following Poland, whose industrial new orders doubled in December 2007.
The average of industrial new orders in the Euro zone rose in 2007 by 8.2% year-on-year, while in EU27 states it advanced by 10.1%. In December 2007, new industrial orders advanced by 2.1% in the Euro zone, compared to December 2006, and by 7.5% in EU27. The highest increases were registered in Poland, Romania and Lithuania, while the largest decreases were registered for Bulgaria, Ireland and Portugal.
Even while Romania is among top states in terms of industrial new orders in 2007, the country is 13th in the EU in terms of advance in industrial production. Industrial production in EU27 and the Euro zone advanced last year by 1.2% and 1.3% year-on-year, while Romania registered a 0.1% point drop, according to EUROSTAT data.
by Business Standard, 25.02.2008

Bankers are expecting higher interest on loans
Foreign currency loans will increase by at least 50% in 2008, in spite of restrictive measures applied by the National Bank of Romania (BNR), likely to lead to a 1% rise in interest rates.
BNR recently increased the key rate to 9% and decided on higher provisions for foreign currency loans. The provision rise "will lead to a similar increase in costs paid by clients for loans", BANCPOST President, Mihai BOGZA, told Business Standard.
This January, loans granted to companies and individuals rose 66.8 percent year-on-year, up to RON 154.25 billion (EUR 42.34 billion), due to a spectacular 89.1 percent increase in foreign currency loans, up to RON 84.91 bln (EUR23.3 billion).
By March 26th, banks will have to increase their provisions for foreign currency loans by 2-3 percentage points. On that same day, BNR is likely to increase the monetary policy rate by a further 0.5 percentage points, up to 9.5 percent, amid strong inflationist pressures. "If the National Bank increases the key rate by 0.25 percent, it its possible that banks will not adjust interest on loans and deposits, but if the increase is of one percent, the move will be adopted by lenders, with the percentage increase being adjusted in relation to each bank's policy", BOGZA said.
by Business Standard, 28.02.2008

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