XPRIMM News No. 144, November 12th, 2009

Insurance and private pensions markets... in 2,000 editions...

For nearly 2,000 mornings, XPRIMM Stiri (the Romanian version of XPRIMM News) is writing, page by page, the insurance market history... We were, in our 7 years of existence, witnesses of spectacular growths of the profile companies’ businesses, live sensational acquisition processes, we watched spectacular careers, we commented the effects of various legislative changes... Together... We, the XPRIMM editorial team and You, the over 13,000 subscribers.

In 2002, when the first Edition of our Newsletter saw the light of day, the 52 insurance companies were struggling to overcome, cumulated, the threshold of USD 500 million in volume of business. Today, the annual underwritings of the market leader alone pass that threshold...

At least 5 insurance companies went bankrupt or had serious solvency problems in 2002... Now, in 2009, despite economic conditions, insurers are sufficiently strong to cope with any challenge...

One of the first news published in April 2002 in XPRIMM Stiri was related to the imminent introduction of mandatory household insurance... 7 years later... the discussions are still continuing.

So, XPRIMM Stiri has increased once with the market, and for us there is no greater joy than to hear about a piece of information: "It must be true, I read in XPRIMM”.

Thank you for being with us every morning and we ensure you that together we will write, many years from now, the history of insurance and private pensions!

by echipa@mxp.ro

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Interview with Ileana HORVATH,
President of the Board,
UNIQA Asigurari

XPRIMM: How do you estimate the insurance industry will evolve during 2009-2011? What would the best strategies for a company be so that it can handle this difficult period?
Ileana HORVATH: I appreciate that the insurance market will evolve differently on each insurance class. For life insurance, I estimate a stagnation in the near future. The most appropriate strategy to overcome this difficult period is to increase the volume of gross written premiums through all distribution channels, by improving existing products and even by launching new products, according to consumer needs. All these are objectives of UNIQA Asigurari. In addition, the company UNIQA Asigurari is permanently concerned in providing prompt and efficient services, coupled with rapid resolution of claims cases, along with financial stability, reliability and sustainable development.

XPRIMM: How did the consumers perception change regarding the insurance industry once the economic crisis has installed and how could insurance societies react to these attitudes?
I. H.: The Romanian market remains a market too little interested with regards to insurance. That is why, in this economic context, the consumers' reaction regarding the insurance industry is still a very weak one, as the ones that are interested are not very informed in this area and do not realize to what extent they are and can be affected by lack of insurance.

XPRIMM: How did the introduction of the amicable report influence the clients perception regarding the motor insurance segment and the services offered to them?
I. H.: The introduction of the amicable report had an unexpected effect for us, but in a positive way. Customers have perceived quite well these changes, furthermore for us, ths insurers, it is an advantage that they enter in direct contact with us and, this way, they discover insurance products they did not know anything about before. We thus have the chance of making a new client out of an injured party. Everything depends on us!

XPRIMM: Implementation of mandatory household insurance is regarded as one of the opportunities of 2009. What you expect from this project?
I. H.: The law of mandatory household insurance and the methodology, in terms of its implementation, are still being finalized by the ISC. For this reason, we cannot yet estimate the effects of its enforcement. We hope, however, that this mandatory household insurance product will be an insurance product known by everyone. And, from one product sold to a client, we can go to another product sold and so on...

XPRIMM: What potential do you consider voluntary household insurance to have in the current economic context?
I. H.: The current socio-economic context is not a favorable one for the ordinary citizens to engage in expenses that are not the usual daily ones (food etc.). Voluntary household insurance is not considered yet a necessity by the population, therefore it has a quite low development potential at this time.

by andreea.ionete@mxp.ro

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Ileana HORVATH,
President of the Board,
UNIQA Asigurari

2,000 times better informed
For over 7 years, XPRIMM Stiri (the Romanian version of XPRIMM News) has stood by all those interested in the industries of insurance and private pensions, seeking to promptly and exactly inform on the movements that occur in both markets.
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by media@mxp.ro, 09.11.2009

EXCLUSIVE: Cristian CONSTANTINESCU retires as Head of ALLIANZ-TIRIAC Asigurari
Cristian CONSTANTINESCU, General Manager of ALLIANZ-TIRIAC Asigurari, will retire from the position held in the company starting the date of May 1, 2010.
In this context, the position of Chief Executive Officer of the insurance market leader is to be taken over by an expat, Ranga BIR, currently Regional Chief Business Officer of ALLIANZ New Europe. After this date, CONSTANTINESCU will remain a member of the Management Board of the company and Counselor of the new CEO, untill the middle of 2011, sources within the company say.
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by octavian.constantin@mxp.ro, 11.11.2009

The life ascension is reducing the VIG drop in Romania
The companies in Romania members of VIENNA Insurance Group (VIG) recorded in the first nine months of 2009 a decline of 8% of underwritings, in European currency, compared 3Q/2008, up to a little less than EUR 456 million. The unfavorable evolution of the non-life segment, due to restructuring of the portfolio, was offset by a significant growth of business on the life segment, following the consolidation of one of the latest acquisitions of the group in Romania, BCR Asigurari de Viata.
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by andreea.ionete@mxp.ro, 11.11.2009

6% decrease of the ALLIANZ-TIRIAC business after the first nine months
The insurance market leader in Romania, ALLIANZ-TIRIAC, decreased by 6% in underwritings income, after the first nine months of the year, to EUR 229.6 million (RON 971 million). For the whole year 2009, the company estimates that the decreasing evolution of the volume of gross written premiums will be kept around that percentage.
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by andreea.ionete@mxp.ro, 10.11.2009

ASTRA Asigurari's profit climbs up to RON 4.17 million
ASTRA Asigurari has posted a net profit of RON 4.17 million in the first 9 months of 2009, as compared to the value recorded in the same period last year, which amounted to RON 1.3 million.
The volume of total gross written premiums (life and non-life) registered by the company after the first 9 months of 2009 went up to RON 611.38 million, out of which RON 604.16 million represents the volume of gross written premiums in general insurance, up 22% compared to the first three quarters of 2008.
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by andreea.ionete@mxp.ro, 12.11.2009

General insurance supports a double-digit growth for GENERALI Asigurari
GENERALI Asigurari has ended the first three quarters of this year with an increase of 16% of businesses, up to a volume of underwritings of RON 370 million, from RON 319 million in Q3/2008, on the the background of an evolution over the expectations of the general insurance segment. In these conditions, GENERALI Asigurari estimates that 2009 will end with dynamics above the market.
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by andreea.ionete@mxp.ro, 10.11.2009

ING Viata drops 9% in the first nine months
The business of ING Asigurari de Viata during the first nine months of this year decreased by 9%, to RON 387.6 million, compared to RON 426.8 million in the same period last year, amid lower appetite of customers for unit-linked products.
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by andreea.ionete@mxp.ro, 12.11.2009

ALLIANZ-TIRIAC increases MTPL tariffs by 20% - 100%
ALLIANZ-TIRIAC will increase the MTPL rates for all policies starting from January 1, 2010, by 20% up to 100%, according to the General Manager of the company, Cristian CONSTANTINESCU. Moreover, increases in MTPL tariffs will be applied by all insurers, an increase of about 30% being necessary to cover both recent exchange rate fluctuations, as well as a potential devaluation of the Romanian leu next year.
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by andreea.ionete@mxp.ro, 10.11.2009

BCR Asigurari launches the web-portal for electronic issuing of MTPL
The company BCR Asigurari VIENNA Insurance Group launched, at the beginning of this month, the web-portal of electronic issuing of MTPL policies, procedure that will be mandatory starting January 1, 2010.
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by andreea.ionete@mxp.ro, 02.11.2009

Romania: a market waiting for the favorable moment to valorize its potential
Among the insurance markets in Central and Eastern Europe, Romania ranks 5th as volume of gross written premiums, after Poland, Czech Republic, Hungary, Slovenia. In the non-life insurance segment, our country manages to climb the third step of the podium, after Poland and the Czech Republic. Furthermore, Romania is present with 3 companies in the first 20 positions of the top of the non-life insurers in the region: ALLIANZ-TIRIAC (13th place), OMNIASIG (15th place) and ASTRA (20th). In Top 100 non-life, the number of Romanian presences is 14. On the life insurance segment, ING Asigurari de Viata ranks 27th, while in Top 100 Romania is present with 9 companies.
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by daniela.ghetu@mxp.ro, 12.11.2009

The effects of introducing the bonus-malus system
"The effect of the introduction of the bonus-malus system in Romania, from January 1, 2010, will be an immediate one: drivers will be aware that, if they drive more cautiously, they will pay less for the MTPL insurance policy. On the other hand, I hope it will not reach to extreme situations, in which drivers refuse to admit guilt even when all evidences incriminate them", said Sorin GRECEANU, General Manager of FPVS - Street Victims Protection Fund, in the radio-show "Think BIZ", on November 3.
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by oana.radu@mxp.ro, 04.11.2009

Private health insurance should have a definite place in the anti-crisis strategy
In the conditions of a lack of funds that has exceeded the boundaries of the public health system, affecting, at the same time, the private operators, the fact that authorities ignore the potential of private health insurance as additional source of financing of the health care system is unacceptable, according to the CEO of SIGNAL IDUNA, Sinziana MAIOREANU.
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by andreea.ionete@mxp.ro, 09.11.2009

WB: 5% of GDP, the damages caused by natural disasters
Economic losses caused by natural disasters could reach 5% of GDP, as Romania is one of the EU countries with high exposure to climate change, according to a recent World Bank report.
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by andreea.ionete@mxp.ro, 30.10.2009

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BNR governor is optimistic about the economic evolution of Romania
The National Bank of Romania revised 0.2 percentage points upward the inflation projection for 2009, from 4.3 to 4.5 percent, especially on the background of the growth of the tobacco prices, BNR Governor Mugur ISARESCU announced on Friday, on the occasion of the presentation of the quarterly report on inflation. According to AGERPRES, the inflation projection for 2010 was maintained at 2.6 per cent. Romania registered a remarkable savings leap in the first half of the year, explained through the panic prompted by the international financial crisis, but also through the evolution favorable to interest rates, BNR official added. “In the first half of this year, the leap had its explanation in the evolution of both the international and internal situation, so a sort of panic, the people saved more money, but also in the evolution of the interest rates which have stimulated savings,” BNR chief explained. Referring to the second half of 2009, ISARESCU pointed out that the September figures point to a visible tempering, especially of the deposits on term in RON, definitely connected also with the reduction of the interest rates.
Mugur ISARESCU stressed that the savings are a determining factor of the consumer demand, which registered a fall. According to him, it has become even more obvious than in the preceeding quarters that the fall is connected with the durable goods trade. “As for the trade with everyday use goods, we notice a slight revival. A determining factor of the consumer demand is saving”, Mugur ISARESCU stressed.
The current account deficit has adjusted over expectations, up to four percent, a context in which an adjustment of the exchange rate is not necessary”, BNR official said.
by nineoclock.ro, 6.11.2009

The profit of Romanian banks - EUR 158 million
Romanian banks registered a profit of RON 680 million (some EUR 158 million) in the first three quarters of 2009, five times less than the result posted in the first nine months of 2008. The First Vice Governor of the National Bank of Romania (BNR), Florin GEORGESCU, said that capital increases in the banking system totaled EUR 468 million in the past year, of which EUR 225 million in the past six months.
Calculations made by BUSINESS STANDARD indicate that lenders could post earnings worth over EUR 185 million in 2009 from the interest rate difference alone for money withdrawn from BNR and lent to the Ministry of Finance. The budget deficit forecast for the end of this year is 8.1 percent of gross domestic product (GDP), namely more than RON 40 billion (some EUR 9.3 billion), of a total of RON 497.3 billion (approximately EUR 115.7 billion). At an average interest rate of 10 percent, interest-related costs amount to RON 4 billion (EUR 0.9 billion). At a two percentage point profit margin, banks will obtain some RON 800 million, the equivalent of EUR 185 million. Practically speaking, banks could gain EUR 50 million more than the latest estimate, from the loan granted by UNICREDIT to the state. Thus, indirect capitalization on the part of the state is helping the banking sector to end 2009 in the black, in spite of the significant deterioration in the quality of their loan portfolio, which registers a nonperformance ratio in excess of 18 percent, compared to 10.1 percent in September 2008. These percentages indicate the share of loans classified as loss, questionable, and substandard in total loans.
Loans classified as loss made up for 8.5 percent of total loans at the end of September, according to data presented by GEORGESCU. In other words, nonperforming loans in this category total almost RON 17 billion (some EUR 4 billion).
by standard.ro, 11.11.2009

FDI expected to amount to EUR 5 billion in 2009, half the 2008 level
Foreign direct investments (FDI) totaled EUR 9.5 billion last year, according to data provided by the National Bank of Romania (BNR). This figure was revised upward from the preliminary data in February, which estimated FDI at EUR 9.02 billion.
Investors targeted the manufacturing industry (31.3 percent of total FDIs), metallurgy (6.9 percent) and the food, beverage, and tobacco industry (4.6 percent) as its most attractive segments. Significant amounts were invested in activities related to financial brokerage and insurance (20.5 percent of total FDIs), construction and real estate transactions (12.6 percent), trade (12.4 percent), and IT&C (6.7 percent).
Due to the financial crisis, FDI in Romania dropped sharply. Only EUR 3.15 billion were invested in this country in the first eight months of this year. Overall, FDI are estimated to amount to EUR 5 billion this year, half of last year’s level.
The top five countries in terms of share in total FDI at the end of 2008 are: Austria (18.8 percent, compared to 21.4 percent in 2007), the Netherlands (17.2 percent, compared to 16.3 percent in 2007), Germany (15.4 percent, compared to 11.7 percent in 2007), France (8.8 percent, the same as in 2007), and Italy (7.3 percent, compared to 6.1 percent in 2007).
by standard.ro, 10.11.2009

INS: Annual inflation continued to go down in October
Annual inflation fell in October for the eight month in a row, from 4.94 pc to 4.3 pc - the lowest level since July 2007, but the monthly rate slightly increased from 0.39 pc to 0.44 pc, according to data released by the National Statistics Institute (INS) yesterday. The annual inflation rate stood at 3.99 pc in July 2007, but subsequently went up and reached 4.96 pc in August the same year.
October’s monthly inflation stands at the highest level since March 2009, as consumer prices in July and August registered decreases by 0.07 pc and 0.19 pc respectively. The National Bank of Romania (BNR) set the inflation target for 2009 at 3.5 pc, with a variation interval of plus/minus one percent point, and it estimates inflation will stand at 4.5 pc in December. In October 2009, the monthly inflation rate was driven by price hikes for services (+0.94 pc), non-food goods (+0.46 pc) and food goods (+0.15 pc).
In the services sector, the most significant increase in October was registered by the “other services” category, up 3.52 pc from September, followed by “cinemas, theaters, museums, expenses with education and tourism” (+2.51 pc) and by about 1 pc hikes of "air fares and telephony". The only decrease in the service sector, by just 0.04 pc, was registered by rental fees. In the “non-food goods” category, “tobacco and cigarettes” held the top position, with a 1.2 pc price hike, the same as “books, newspapers and magazines.” To the opposite end, decreases by 0.16 pc at most were reported for “automobiles and spare parts”, and for “medical items and medicines”.
by nineoclock.ro, 9.11.2009

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THE EDITORIAL STAFF:

President: Sergiu COSTACHE CEO: Adriana PANCIU
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