Car insurance creates losses for Asirom in 2004

Asigurarea Romaneasca-Asirom has reported losses of 5.8 million euros (236.2 billion ROL) for FY2004 due to the poor performance of its car insurance policies. This is the first time since 1990 that the company has turned in losses.

According to data submitted by the company to the RASDAQ, last year”s accounting losses were the net result of profits of 1.2 million euros (51.5 billion ROL) made from life insurance and losses of 7 million euros (287.7 billion ROL) from general insurance. The losses were caused by the negative results seen for car damage and theft insurance, half of which came from policies taken out by individuals.

According to the Asirom general manager, Ion Bratulescu, the losses from damage and theft policies occurred as a result of “euro-denominated subscription (i.e. therefore affected by the depreciation of the euro) and a higher damage rate”.

The company report shows the main causes behind the general insurance related losses to include “the lack of high-quality management specialised in the field of insurance”, investment management based exclusively on setting up banking deposits at a time of unfavourable exchange rates and falling interest rates, and the increased costs associated with the claim settlements.

Other factors are also mentioned as having contributed to the losses include the policy of image promotion to the detriment of product promotion, which was not reflected in increased insurance premiums, and a failed non customer-oriented marketing strategy.

The company”s gross premiums underwritten on the general insurance segment in 2004 came to 105.3 million euros (4,270.7 billion ROL), around 5% lower in euros compared with 2003.

For life insurance, however, gross premiums underwritten were almost 4% higher year-on-year at 21.9 million euros (890 billion ROL).

The company”s 2004 results determined the board of directors to adopt a new organisational structure and change its management team.

Asirom has 637.8 billion ROL (17.6 million euros) in share capital. It is 38.14% owned by InterAgro, which in turn is owned by businessman Ioan Niculae.

Other significant shareholders include Broadhurst Investments with 19.7%, Astra Romana refinery, 17.8%, and Postelnicu Tiberiu Bica, 11.5%.

The company is listed on the second tier of the RASDAQ and has a market capitalisation of 77.7 million euros (2,806 billion ROL). ioana.leaua@zf.ro