Big profits see insurance market almost double

The insurance industry concluded last year with a net gain almost double in comparison to the previous year, following a reduction of the life insurance companies’ losses and a purging of ailing companies on the market.

Twenty-nine out of forty insurance companies operating on the Romanian market concluded last year in the black, with total profits made reaching 982bn ROL (26 million euros).

The total losses of the remaining 11 companies operational in 2003 reached 231bn ROL (6 million euros), meaning that the net gain of the insurance industry overall stood at 20 million euros in 2003 compared with 9 million euros in 2002.

Losses in that year reached 17 million euros, with 13 companies ending the year in the red.

The decline in the number of loss-making companies is partly due to the purging of a number of bankrupt companies from the market (such as Metropol). However, it is also related to the reduction of losses and to the newfound profitability of certain life insurance companies, which entered the Romanian market five or six years ago.

Last year’s most profitable insurance company in terms of net profit volume was Allianz-Tiriac, due to its profits of 9.5 million euros (325bn ROL). Asirom and Asiban followed next, logging 4-5 million-euro profits.

Last year’s top performer in terms of the profit margin (a ratio of net profit/gross premiums underwritten) was BT Asigurari (former SAR Transilvania) at 12%, followed by Asiban at 10%. Allianz-Tiriac registered a 6% margin, while Asirom, Omniasig and ING Nederlanden gained 3 ROL for every 100 ROL subscribed by their clients.

Only five companies logged net profits of more than 1 million euros, while 15 posted 100,000 to 1,000,000 euro net profits. The other nine saw mediocre profits, reflecting their positions on the market, each of them accounting for less than 1% of it.

Subsequently, the companies that matter on the market either registered big profits or big losses. The heaviest losses on the market were those posted by the UK’s Aviva, standing at 96bn ROL (2.6 million euros), a figure much lower than that accumulated during the previous year, however (4 million euros). These losses actually reflect the high level of investment made in Romania by the British company, which is still developing operations. The life insurance business entails large investments in the initial years, with profits usually starting to come in five or six years later. This also goes for AIG Life or Interamerican, or other companies that invested in the sector. The total insurance market, if considering the gross volume of premiums subscribed, totalled 713 million euros last year, up 18% from 2002. Life insurance totalled 165 million euros, up 17%, while general insurance stood at 548 million euros, up 18%.

sorin.pislaru@zf.ro