XPRIMM News No. 123, December 18th, 2008

Nine questions for 2009

Many specialists anticipate a direct impact of the global crisis on the Romanian economy, in the second quarter of 2009. So far, the crisis has affected us only at a psychological level, by slowing consumption. So the first question would be:
How will the global crisis affect the Romanian insurance market?

After the first three quarters of 2008, the difference between the first two companies on the market was reduced to less than 0.6% market share. So the question arises:
Will we have the same leader of the market in 2009?

With the assumption that the same average pace of growth from 2008 will be maintained, we wonder if:
Will the insurance market exceed EUR 3 billion in 2009?
In terms closer to reality, a justified question would be:
Will the total loss of the market drop down in 2009?

After the acquisition of UNITA, the Austrians from UNIQA asked ASTRA to stop using the name of the group, while having to cope with the suspension, in full top season, of the right to sell MTPL insurance. Question:
Will the strategy applied by UNIQA in Romania succeed in 2009?

Another question: Will GROUPAMA succeed to cumulate the market shares of the companies owned in Romania?

By succeeding one must understand a concrete success, proven by the evolution on the market, not just on paper.
In the end, we can add some other questions to this short list:
What direct impact will the implementation of the Law on mandatory house insurance have on the insurance market?

How will the market react, specifically, to the limitation to 15% of the commission granted to brokers, on the MTPL segment?

Will life insurance increase its growth, above the average market growth?

We'll know, for sure, the answers to all the above questions, only at the end of next year.
May 2009 be a year full of opportunities and achievements!

by alex.rosca@mxp.ro

up

Interview with
Florina VIZINTEANU
CEO
BCR Life

XPRIMM: 2008 is almost finished. How would you describe the insurance market’s progress during this year?
F.V.: At the end of H1/2008, the gross written premiums in life insurance registered a superior growth rhythm then the general insurance one, meaning 24.93% (compared to the 21.72% on general insurance).
We believe that the reasons for this year’s market growth are mainly the pension funds promoting companies, who have also drawn attention upon the savings possibility through life insurance, especially for those who found out they were not eligible because of their age.
The third quarter continued the raising trend of the first six months. We shall see what will happen in the last quarter and than we will be able to analyze the international economical crisis effects upon the life insurance business in Romania.

XPRIMM: In Romania there are still few money spent on life insurance, even though, at least theoretically, there is an enormous growth potential in this direction. What could be the ways of encouraging life insurance industry development by exploating this potential? What are the products you consider to respond best to the present social-economic conditions?
F.V.: As I said before, we consider that the fiscal facilities will stimulate this market’s growth and we tend to think that it will be happening soon. We have the Executive’s approvals for voluntary pension funds and health insurance deductibility growth. It is right, as in any civilized country, that the state should support people to protect their life.
This is also incentive for the companies, which can offer its employees this kind of product as remmuneration benefit.
In life insurance it is essential to analyze the clients’ needs and identify the best solution for these needs depending also on the clients’ resources. In the last period we can feel a faster growth trend for the retirement saving products. Even more, we can observe a saving tendency during this crisis period

XPRIMM: How do you see 2008 for the voluntary pensions? What would be the basis coordonate?
F.V.: The year 2007 was the voluntary private pensions launching year, collateral with the mandatory ones. In this period the customer got information and promotional messages from two directions, fact that led to some confusions among the consumers.
If 2007 was the start year for the voluntary private pensions, we appreciate 2008 as a „laying down” year, when the nine voluntary private pension funds in the market attracted in the first nine months 123,290 participants compared to 50,887 as registered at the end of 2007, a growth of 142%.

XPRIMM: You always promoted the idea that the voluntary private pensions should be seen as a component of an employees’ larger and more complex benefits package. How do insurers see this kind of approach? What would be, in your opinion, the optimum structure of such package, depending on the employees’ age and income? According to this structure, what would be your clients’ preferred packages?
F.V.: Because our clients portfolio is mainly based on the corporate segment, they clearly need to retain their employees through: benefit programmes for employees, an efficient human resources management instrument. In order for a benefit package to be attractive, it has to offer exactly what the employees need: protection against illness, injury, the possibility of supplimenting the after-retirement income, protection against unemployment, the protection of the employee’s family in case of his death, all that has to generally do with his life and safety, as well as the support for retiring.
This kind of packages are called employee benefits in BCR Life’s portfolio and gives the employer the possibility to combine the following benefits: protection plans in case of temporary work incapability, health insurance plans – hospitalizing, convalescence, surgery interventions, fractures, drugs expences, accidents estetical and functional consequences, heavy illnesses (cancer, infarct, renal insufficiency, organs transplant); saving and pension plans through accumulating and investment of the paid gross written premiums; key persons insurance – for the top management; death and unemployment protection plans; voluntary pension funds (presently deductible with an EUR 200/year limit per person, for the employer and also for the employee and starting with January 2009 with a deductible of EUR 400/year for the employer and also for the employee).

XPRIMM: The H1/2008 results highlight for BCR Life a very good growth rate for the traditional products. How do you feel about them? Is there a raising in the antipathy for risk? Is this the effect of bringing life insurance into the employee benefits packages?
F.V.: BCR Life sold until recently only traditional life insurance. We grew in the life insurance market (third place in only two activity years) because a marketing and sales strategy well related to the extraordinary distribution networks – BCR bancassurance network along with the know-how provided by SVERSICHERUNG, the bancassurance specialized Vennece-based ERSTE Group’s company.
In this period we lanched a unit-linked product with a multi-fund structure. Its name is ACORD – BCR and has three different risks investment programmes: low risk - BCR PIANO, medium risk - BCR FORTE and high risk - BCR FORTISSIMO. This way we are able to answer the present needs for lifestyle and lifecycle products. For the people that do not like risks, BCR PIANO offers the possibility to invest mostly into titles. BCR FORTE combines the instruments of placing titles, deposits, shares. People that risk a lot can invest through BCR FORTISSIMO into high rated shares and titles, deposits.

by daniela.ghetu@mxp.ro

up

Florina VIZINTEANU, CEO, BCR Life

Welcome the economic crisis

After a long falter from the part of politicians and economic analysts, the obvious is finally admitted in Romania: our country could not be any different from all the other EU members or from the emerging countries from Europe and worldwide. The economic crisis is also affecting Romania, starting October 2008, and it will certainly continue to do so throughout all the year 2009, if not in 2010, too. Of course, politicians have used the crisis as well as any other religious, economic, historical, social or sports event, to their interest and at their own will, either by exaggerating its effects, or by minimizing them.

Click here to read more!

Dragos CABAT

up

Non-Life Insurance: The leader under attack!
The non-life insurance market reached, during the analyzed period a total amount of EUR 1.5 billion in gross written premiums. The mentioned insurance field grew by 12.5% as compared to the similar period of the past year. The non-life market development was about 1 percentage point less than the market average growing rate. The amount of the non-life insurance market growing totaled more than EUR 164 million.
Click here to read more!
by alex.rosca@mxp.ro, 5.12.2008

LIFE INSURANCE: Three companies gain over 8 points market share
The life insurance sector has recorded an increase of over 5 points above the entire market average. The nominal growth expressed in EUR on this line of business is almost 18%, while the overall value of the market represents around EUR 55 milllion. Thus, the life insurance segment, with underwritings of almost EUR 364 million, has increased their share in the entire market.
Click here to read more!
by alex.rosca@mxp.ro, 10.12.2008

GROUPAMA gambles on BT Asigurari
The future company GROUPAMA Asigurari, the result of merging ASIBAN, BT Asigurari and OTP Garancia, will be based according to BT Asigurari's structure and organization principles. In this respect, McKINSEY, the merger project consultant, already had some regional discutions with the three insurers' reprezentatives.
Click here to read more!
by mihai.cracea@mxp.ro, 12.12.2008

Four life insurers, in block-start for 2009
The competition for gaining or keeping a place in Top 10 on the life insurance market will become taugher next year, as this year four companies have already manifested their interest in the Romanian life segment. Thus, UNIQA, AEGON, SOGECAP and ERGO are in block-start on the life insurance market for 2009, the companies that are about to be launched in Romania by the four European groups being in different stages of approval.
Click here to read more!
by andreea.ionete@mxp.ro, 17.12.2008

INTERAMERICAN becomes EUREKO Asigurari
The company INTERAMERICAN will begin, in the spring of next year, a wide rebranding campaign, the insurer's officials announce.
"Starting February of next year, we will change our name to EUREKO Asigurari, thus underlining our belonging to an extremely solid Western-European financial group", Frans van der ENT, CEO of INTERAMERICAN, said, exclusively for the XPRIMM Newsletters.
Click here to read more!
by oana.necula@mxp.ro, 8.12.2008

UNITA, oficially back in business
The insurance company UNITA can underwrite again starting today, December the 15th 2008. Thus, the company's interdiction to underwrite premiums has been revoked, according to the decisions taken by the Insurance Supervisory Commission at the end of the previous week.
Click here to read more!
by mihaela.circu@mxp.ro, 15.12.2008

The same 16 companies, MTPL authorized in 2009
The ISC Council approved, during the previous week, the maintaining of the authorization for practice of the mandatory MTPL insurance in 2009, for all the 16 companies that have operated on this market during 2008.
Click here to read more!
by andreea.ionete@mxp.ro, 9.12.2008

GROUPAMA between Bucharest and Cluj
The French GROUPAMA intend to retrace the next company’s, GROUPAMA Asigurari, operations from two strategic locations found at almost 500 kilometers one from another: Bucharest and Cluj-Napoca.
Click here to read more!
by oleg.doronceanu@mxp.ro, 18.12.2008

VIG completes acquisition of BCR Insurance companies in Romania
VIENNA Insurance Group (VIG) has completed the acquisition of the majority holdings in BCR Asigurari and BCR Asigurari de Viata, after receiving the approval of the Romanian supervisory authority.
"With the acquisition of the two BCR companies, VIG has taken a significant step further on its expansion course in the CEE", comments Gunter Geyer, CEO of VIENNA Insurance Group.
Click here to read more!
by andreea.ionete@mxp.ro, 18.12.2008

The business of motor insurance brokers surpasses the threshold of EUR 400 million
The amount of gross written premiums from motor insurance (motor hull, MTPL, Green Card - cumulated), in the first nine months of 2008, underwritten by the brokerage companies operating on the profile market, amounted to over EUR 400 million.
Click here to read more!
by vlad.boldijar@mxp.ro, 8.12.2008

Ten brokers own more than 70% of the life underwritings market
EUR 6.92 million is the value of underwritings in the life insurance segment of the brokerage companies that activate on the profile market, during the first three quarters of the current year, estimated by the INSURANCE Profile Magazine.
Click here to read more!
by vlad.boldijar@mxp.ro, 8.12.2008

IRASIG aims for the MTPL market in 2009
The insurance company IRASIG, led by Guglielmo FRINZI, ex-owner of GENERALI and ASTRA in Romania, proposes to enter the MTPL market in 2009.
Click here to read more!
by vlad.panciu@mxp.ro, 8.12.2008

OMNIASIG launches the 12th Claims Center in Romania
The company OMNIASIG VIENNA Insurance Group initiated the 12th Claims Center in Romania, in Pitesti, Arges District. This new Center works as a partnership and in common headquarters with the Road Police Bureau.
Click here to read more!
by andreea.ionete@mxp.ro, 4.12.2008

up

An decrease by 20%-30% for corporate insurance is expected in Russia
Russian insurance companies will be affected by the global financial crisis starting from 2009, were an decrease by 20%-30% in demand for corporate insurance is expected, said Ilya LOMAKIN-ROUMYANTSEV, head of the Federal Service for Insurance Supervision (FSIS).
Also, LOMAKIN-ROUMYANTSEV predicts a reduction in revenues for companies that are working in partnership with banking institutions, auto salons and construction companies as well as on property classes.
"In 2009, the retail segment will be the most stable source of income for insurers, head of FSIS commented.
However, it noted that Russian insurers were not significantly affected by financial crisis. "The insurance penetration rate in GDP in Russia is quite low in comparison with other countries, of about 2.5%, and the annual increase by 20% -25% in premiums is affected by strong inflation", the official quoted.
Another estimation made by RUMEANTZEV considers a decrease in ceded reinsurance premiums, due to increasing prices on the international market and the revaluation of reinsurance contracts with Russian insurers.
Russian insurance companies have wrote EUR 20.2 billion in premiums in the first nine months of the 2008, an increase by 23.3% compared to the similar period of 2007. At the same time, claims rose by 27.6% to EUR 12.4 billion, according to Federal Service for Insurance Supervision (FSIS). In January-September 2008, 814 insurers were registered, against 869 in similar period of 2007.
by mihai.cracea@mxp.ro, 12.12.2008

Bulgaria's 10-month general insurance market up 24% on year
Bulgaria's general insurance market rose by 24% in the first ten months, said the country's financial regulator, according to reporter.gr. The premium income of the 20 general insurers rose by 24.1% in the first ten months and amounted EUR 500.1 million on the year, while the premium income of 17 local life insurers increased by 23.5% to EUR 112.4 million in the period, said the FSC. BULSTRAD insurance company remains the leader on the non-life segment with a market share of 16.16 %, followed by IMI General Insurance (13,18%) and ALLIANZ Bulgaria (11,56 %).
At the same time, Bulgaria's general insurance market is expected to rise by 25% in 2008, said Ralitsa AGAIN, deputy chair of the country's Financial Supervision Commission (FSC), according to media reports. The premium income of Bulgarian general insurance companies is seen growing by 22% to EUR 770.4 million in 2008.
The country's insurance market is dominated by car insurance policies, which generated 70% of the total premiums in the period.
by oleg.doronceanu@mxp.ro, 15.12.2008

VIENNA Insurance to purchase Moldavian insurer DONARIS - Group
Austrian-based VIENNA Insurance Group (VIG) intends to purchase the Moldavian insurer DONARIS-Group, market sources told XPRIMM. The value of the transaction is still unknown and a final decision in this regard will be passed soon at the shareholders meeting of the DONARIS, according to the same sources.
Contacted by XPRIMM, VIG's officials refused to confirm the transaction.
DONARIS-Group was founded in 1998, major shareholders of the companies being EUROMAG Aktiengessellschaft and ROMALINA. The company has 31 representative offices across Moldova, and authorized capital of EUR 436.15 thousand.
The insurer ranks the fifth position among the local companies pointing a market share of 5.6% in the first nine months. In the same period, the company wrote EUR 2.24 million in premiums, up by 14.26% compared to the equivalent period a year ago. Assets totalized EUR 2.18 million and total profit represented EUR 73.89 thousand. Insurance portfolio of the DONARIS is dominated by the motor insurance, that amopunted 75% of the total written premiums and property 14.7%.
VIG would be the sixth foreign investor on the local market, after Australian Group QBE, that purchased ASITO in 1998 and sold it's business last year; Austrian Group GRAWE, which acquired life insurer DONARIS and a majority stake in CARAT Insurance Company; Ukrainian Group UNIVERSALNA became the sole owner of ASCARGO; Romanian DELTA Asigurari bought SERVASIG, in 2007, renamed later in IPB DELTA Asigurari and Russian insurer ROSGOSSTRAKH that purchased in the early spring MOLDASIG.
VIENNA Insurance Group is one of the leading insurance groups in CEE headquartered in Vienna, being present in 22 countries. The Group reported important growth in premium income in the CEE region, totalizing EUR 2.89 billion in the first three quarters of the current year. This corresponds to an increase of 36.2 percent over 2007.
by oleg.doronceanu@mxp.ro, 17.12.2008

CEE region - the driving force behind VIG's outstanding growth in premium income
In the first three quarters of the current year, the VIENNA Insurance Group reported a total growth in premiums of 36.2% in the CEE region over 2007, to EUR 2.89 billion; witch is the fastest-growing market for the VIG.
"Our Group companies in CEE prove to be the driving force behind our outstanding growth in premium income. Organic growth was particularly strong in the Czech Republic, in Romania and in Poland and so far we have not detected any decline in the demand for insurance products in the CEE region", CEO Gunter GEYER comments. The premium volume achieved in property/casualty segment in the CEE markets rose by 33.5%, to EUR 2.04 billion. The share of total property and casualty premiums contributed by Group companies in the CEE region is approaching the two thirds mark (60.5 percent). At the same time, on the life insurance segment the first three quarters of 2008 saw a 43.2% growth - with premiums written amounting to EUR 844.35 million. The share of premiums in this segment accounted for by the Group companies in the CEE region equals approximately 35%.
So, in the Czech Republic, the group companies achieved double-digit premium growth of 19.5% in the reported period, pointing total premiums written of EUR 1.01 billion. The Group companies in Slovakia also recorded an increase of premium development in the first three quarters of 2008. They achieved a total of EUR 422.82 million in premiums written, growing 16.5% compared to the prior-year period.
At the same time, Polish Group companies generated premiums written in the amount of EUR 609.14 million, gaining an excellent 55.9%. The Romanian Group companies of the Vienna Insurance Group (OMNIASIG S.A., OMNIASIG Asigurari de Viata S.A. and ASIROM S.A.) achieved premiums written in the amount of EUR 494.80 million in the first nine months of the current year, or an increase of 64.0 percent over the prior-year period.
In other CEE markets, such as Bulgaria, Croatia, Serbia, Turkey, Ukraine and Hungary premiums written in the first nine months of 2008 came in at EUR 353.88 million. This corresponds to an increase of 59.2 percent over the same period of the prior year.
"Based on its knowledge of its CEE markets, the VIENNA Insurance Group assumes that the premium growth it will be able to achieve in this region in the next few years will again be clearly above that of Western Europe on account of insurance markets in the CEE region being not yet as saturated as those in Western Europe" commented VIG officials.
In the first three quarters of the current year, VIG's total growth in premiums pointed 19.6 percent to EUR 6.02 billion and a profit rising by 25.5 percent to a total of EUR 406.78 million.
"Depending on the development of the capital markets in the fourth quarter of 2008, the Group will be able to achieve the forecast Group profit (before taxes, consolidated) in the amount of approximately EUR 540 million", noted Gunter GEYER.
by oleg.doronceanu@mxp.ro, 10.12.2008

Croatian insurance market pointed EUR 1.23 billion in premiums
According to the Croatian Financial Services Supervisory Agency (HANFA), Croatia's insurance industry recorded a gross premium charged of EUR 1.23 billion in the first eleven months of 2008.
Compared with the same period last year, the insurance industry increased total premium by EUR 78.51 million. Compared with end of October, the premium rose EUR 93.93 million. Such figures indicate a slowdown compared with the past few years. By the end of 2007, insurers were recording double-figure growth.
While insurance companies mostly managed to sustain a stable trend in non-life insurance, with a EUR 67.99 million growth year-on-years, life insurance premium charged was up by only EUR 11.21 million in comparison to 2007. Motor insurance segment accounted for 30.6% of the total premiums, while the life insurance represented 21,4%.
by oleg.doronceanu@mxp.ro, 17.12.2008

up

How will the economy look in 2009?
An average gross salary worth EUR 518, an average exchange rate of RON 3.83/ EUR 1, some 5 percent unemployment, 5.1 percent inflation, and economic growth of a mere 3.78 percent, the latter less than half compared to 2008, according to estimates made by analysts, bankers and managers in the "Economy in 2009" yearbook published by Business Standard. Foreign direct investments, which exceeded EUR 8 billion in the first 10 months of 2008, are expected to drop to EUR 5.5 billion next year, as strategic investors are more concerned with cutting costs due to the global financial crisis, and less focused on expanding their operations, with few exceptions. Cost control will be the key issue of company and bank strategies next year.
Most executives have made plans to make the best use of liquidities, and to limit a loss of speed anticipated in most economic sectors. "In this financial crisis, everyone is considering costs and personnel cuts. The number of those who are to lose their jobs varies between 500,000 and one million," according to a co-President of the European Drinks group, Ioan MICULA. The sectors likely to register the best growth in 2009 are mutual funds (24 percent year-on-year, insurance (10-20 percent annual growth), and express delivery services (10-30 percent growth). Double digit growth is also expected in retail, consulting, PR and the distribution fields. On the other hand, the auto industry, household appliances, stock market brokerage and agriculture could register sharp declines, down as much as 40-50 percent compared to 2008. This is a result of an increasingly visible trend: the crisis is leading Romanian consumers to focus on basic and cheaper products.
by standard.ro, 17.12.2008

BNR Governor: Romania’s economic growth to amount to 8%
Romania’s economic growth could amount to 8 percent this year, according to National Bank of Romania (BNR) Governor Mugur ISARESCU for NEWSIN agency. In the first nine months of 2008, gross domestic product (GDP) advanced 8.9 percent.
The current account deficit, which could amount to 13 percent of GDP, remains one of the most serious problems in Romania’s economy, but is a result of the country’s rapid development in recent years, he added.
Last year, the current account deficit was 14 percent of GDP.
Furthermore, ISARESCU said that the budget deficit could exceed 3 percent of gross domestic product, unless measures are taken to correct economic imbalances. “Instead of a multi-annual budget, we had years with several budgets. Rectifications drove up the budget too optimistically,” he said.
By the end of the first 11 months in 2008, the budget deficit widened to some 3 percent, the maximum level permitted for an EU member state. The 2009 draft budget passed by the outgoing government includes a 2 percent budget deficit.
Spending cuts and higher taxes were proposed as possible solutions to narrow the deficit. ISARESCU said that increasing main taxes is "dilemmatic", as the impact of such a measure is uncertain. Instead, the next government should take a very close look at budget spending, according to BNR’s Governor.
by standard.ro, 15.12.2008

MERRILL LYNCH: The recession will bring investors in Romania
The global recession will “push” investors to countries that will register real gross domestic product (GDP) growth, such as Romania, where economic growth will amount to 4.5 percent in 2010 from 3.9 percent in 2009, according to a report by the MERRILL LYNCH.
Romania’s economic growth will reach 8.5 percent in 2008, according to MERRILL LYNCH estimates, quoted by the Mediafax news agency. "The lowest growth rates are expected in the United States, Spain, Turkey, Taiwan, Italy, and Belgium. The highest growth rates will be registered in Qatar, China, India, Peru, Nigeria, Panama, Egypt, Indonesia, Slovakia, and Romania", shows the report.
Merrill Lynch expects the inflation rate in Romania to drop to 4.7 percent in 2010 and to 5.5 percent in 2009, from 8.1 percent in 2008. Annual inflation in Romania amounted to 7.39 percent in October, considering the key rate is 10.25 percent. Merrill Lynch analysts expect the National Bank of Romania (BNR) to lower key interest down to 8.75 percent in 2009 and to maintain this level through 2010. "The biggest risk in our scenario is the possibility that economic growth and capital flows bounce back faster than expected. Also, the initiatives of international lenders in their attempt to support emerging countries could fail, which would affect the currencies of those countries", the report indicates.
by standard.ro, 12.12.2008

Romanian leasing market to grow up to 10 percent in 2009
The local leasing market is to grow up to 10 percent in 2009, in an optimistic scenario, if the financing level remains similar to this year's on the auto, equipment and real estate segments, according to the General Secretary of Financial Companies Association (ALB), Adriana AHCIARLIU. However, AHCIARLIU emphasized that this is her own opinion and not that of ALB.
"The average annual growth is 5-12 percent in Europe. Romania's leading market becomes mature in terms of demand-supply ratio. Romania could register growth in the trend of European leasing markets not impacted by the crisis", she said.
As for 2008, the leasing market could reach EUR 5.5-5.7 billion by the end of the year, below the initial EUR 6 billion estimate, which means 11 percent growth, AHCIARLIU said.
In 2007, the market rose 51.6 percent, up to EUR 4.94 billion.
by standard.ro, 10.12.2008

up

THE EDITORIAL STAFF:

President: Sergiu COSTACHE CEO: Adriana PANCIU
Business Development Director: Alexandru D. CIUNCAN

Editor in Chief: Mihaela CIRCU
Scientific Advisor: Daniela GHETU
International Column Coordinator: Andreea IONETE
Private Pensions Coordinator: Mihai BOBOCEA
Senior Editors: Vlad PANCIU, Oleg DORONCEANU
Editors: Vlad BOLDIJAR, Oana NECULA, Mihai CRACEA, Andreea STATE, Andra BADESCU

General Secretary: Lidia POP

Accounts Manager: Georgiana OPREA
IT Department: Octavian GRIGOR, Dorin PALADE

e-mail:  xprimm@primm.ro

PUBLISHED BY: Media XPRIMM

Reproduction or use without permission of editorial or graphic content, in any manner, is prohibited. The Editorial Staff is not responsible for the truthfulness or the accuracy of the presented data. The Editorial Staff has the right to present the data in it's own manner. In what concerns the use, in any manner, of the information contained in this e-mail, Romanian laws apply.

Copyright©2008 MEDIA XPRIMM