Lack of economic momentum key challenge for SEE insurers

By Georgi Georgiev

The insurance companies operating in Southeast Europe (SEE) had to cope with a restrained economic momentum in the region in 2014 when the effects of the financial crisis continued to dampen the recovery of consumer spending and overall business activity. Natural disasters hit several key Balkan markets, but fallout for the insurance industry was limited due to the low insurance rate.

Conditions in the SEE insurance sector did not improve last year – the combined gross written premiums (GWP) of the region’s top 100 insurers stayed nearly flat at around 6.4 billion euro in 2014 – with major players noting a certain slippage in the quality and rate of retail and corporate insurance coverage even in some of the region’s relatively well developed markets.

The outlook for the SEE insurance market in 2015 is cautiously optimistic with no long-term recessions expected in any markets. The industry still views SEE as a growth region with high potential, though increasingly competitive.

On the backdrop of the structural problems still dogging most of the SEE economies and the different speeds of growth from country to country, the companies that made the cut for the TOP 100 Insurers ranking for 2014 posted a combined net profit of 163.3 million euro compared to a revised loss of 137.5 million euro booked collectively by the entrants in the 2013 rankings*.

The total combined net profit of the region’s top five insurers dropped 26.6% to 31.8 million euro in 2014, mainly due to a widening of the loss booked by Croatia Osiguranje.

The top honors again went to Ljubljana-based Zavarovalnica Triglav which remained the region’s biggest insurer in 2014, booking a total of 592.6 million euro GWP and keeping its nearest competitor, up-and-comer Adriatic Slovenica, at a reasonable distance.

Zavarovalnica Triglav has enjoyed an uninterrupted run at the top ever since the inaugural edition of the ranking of the 100 biggest SEE insurers in 2010.

The runner-up in the 2014 edition of the rankings, Croatia Osiguranje, was pushed down to the third position by Slovenia’s Adriatic Slovenica which recorded GWP of 297.9 million euro versus 291 million euro for its Zagreb-based peer.

Zavarovalnica Triglav was also ahead of the pack in terms of net profit earned in 2014 with 45.6 million euro. The top three in terms of this performance indicator was an all-Slovenian affair with Adriatic Slovenica ranking second and Modra Zavarovalnica placing third, earning a net profit of 18.8 million euro and 17.4 million euro, respectively.

The only change in the top five spots in the 2015 edition of the TOP 100 insurers ranking was the switch-up between Adriatic Slovenica and Croatia Osiguranje. By clinging on to a Adriatic Slovenica position among the region’s big five, the Croatian insurer once again prevented a Slovenian sweep at the top.

Romania’s Pool-ul de Asigurare Impotriva Dezastrelor Naturale SA recorded the highest GWP growth rate in 2014, of just over 110% to 28.3 million euro.

Croatia’s Basler Osiguranje Zagreb d.d. paced the decliners with a GWP drop of 37.7% to 32.4 million euro. The company slumped by 17 places on the TOP 100 insurers ranking to the 50 position compared to its showing in the 2013 edition.

Five of the eight newcomers in the ranking’s 2014 edition hail from Slovenia with Bulgaria, Romania and Serbia accounting for one new entry each.

Romania and Bulgaria were the markets with the biggest presence in the 2015 edition of the TOP 100 insurers ranking, notching up 20 entrants each. The Romanian count is down by one from the last edition of the rankings while that for Bulgaria is flat.

The number of Croatian companies featured in the 2015 ranking fell by one from the previous year to 15, ensuring the no.2 ranking for that market.

*full data was not available by publication time for four companies for 2014 and for one for 2013