Light-hearted days for Bulgarian insurers are over (updated)

In the crisis environment real professionals will be sifted from by happenstance comers - updated with the FSC 1Q figures

The growth of the Bulgarian insurance market in the first quarter this year is merely 4 percent, show the Financial Supervision Commission analyses. If someone thinks that any growth is good news in crisis environment, we must remind, that last year's annual gross written premiums (GWP) growth of the sector is 20%, compared to the previous year.
The non-life business has realized 3.7% growth in the quarter. This means that the GWP of the 20 licensed companies totals 374.436 million BGN, the data show. Last year's growth of the sector was 18.03%.
The year-on-year growth of the GWP in January has been 12.7% and in February - 4.5%
The 1Q gross technical reserves of the sector have grown by 25.7 percent year-on-year and have reached 1.238 billion BGN.
The assets of the sector have reached 1.698 billion BGN, which stands for 22.2%  year-on-year growth.
The direct non-life insurance premium income in the first quarter has been 370.646 million BGN.
First indications that the business is shrinking has appeared as early as in October, when the growth rate started to decline with the average 2% monthly. Expectations are that the trend will continue till the end of this year. Experts hope that the income figure will remain close to the realized in 2008, not lower.
The auto insurance has taken the underdeveloped Bulgarian market in tow for the last years and the insurance companies have not taken much pains to develop new market niches. Since the beginning of this year though the sales of new and also of used cars have literary collapsed, which affected negatively the premium income of the insurance companies. There are serious problems not only with autocasko insurance, but also with MTPL - despite its obligatory character, more and more car owners are not buying the policy. To lid the companies' misery, most of them report also increase in damages paid, which additionally aggravates the sector's not rosy situation.
Still,  in the first quarter autocasko and MTPL have the biggest share of the market, measured in direct non-life insurance GWP  - 71.5% as a whole, with autocasko holding 40.2% and MTPL - 31.3%.
The fastest growth in direct non-life insurance GWP register the products credits (362%) and water vessel TPL (87%).
The active reinsurance GWP in the first quarter stand at 393.3 million BGN, 389.955 million BGN of which are gathered by the professional reinsurer GP Reinsurance Ltd. The gross technical reserves of the active reinsurance is 5.625 million BGN.
The biggest share of the active reinsurance market in the first quarter hold the auto insurance products autocasko and MTPL (49.1%) and the property products - fire plus natural disasters and other property damages  (32.6%).
Another sector, suffering from the crisis, is the property insurance. The insurers used to cash decent premiums and profits, selling to house buyers property policies, required by the banks when mortgage loans are involved. Sufficiency has been achieved with not much effort, which has not pushed them to look for ways to attract as clients the thousands of the other home owners. So this alternative opportunity to develop the non-life insurance business has been gambled away.
Whatever possibility occurs to avoid signing any insurance contract, clients use it. Attracting new business is almost unthinkable. So, if the companies want to play this game, they have to employ tremendous efforts to retain their current clients. In case they manage to win them with friendly clauses, prices and services in the current hard circumstances, they would provoke customers loyalty, which will be paying back for a very long time. The current complicated times will filter out real professionals in the industry from by happenstance comers. Those who manage to cope with the situation now are doomed to success in the future.
In the crisis environment the only products that enjoy tremendous interest are the financial risk contracts. This is expected, having in mind the difficulties in finding financial resources now a days and the great inter-companies indebtedness in Bulgaria. The issue is that many insurance companies started to get their fingers "burnt" by offering these policies and have limited their offers to the minimum, which does not allow them to compensate the loss of premium income from alternative lines of  business.
On the non-life insurance market leader in terms of premium income for the first quarter of 2009 is Bulstrad with its 73.795 million BGN of GWP. The company though is reporting 4.6 percent  negative GWP growth, compared to the 1Q 2008 figures (77.346 million BGN). The shrinking of the income is due mainly to the drop of marine insurance contracts sales. Besides the GWP income, the managers of the company have to grapple with the increasing number of thefts since the beginning of the year.
DZI General Insurance keeps its second place from last year, reporting 54.312 million BGN of GWP. For the first 3 months last year its GWP have stood at  49.222 million BGN, which means that the year-on-year growth accomplished for the current quarter is 10.34 percent.
The surprise this quarter is the third place, taken by Lev Ins with GWP amounting to 41.072 million BGN. Except for the occupation of the third place, it should be noticed that the year-on-year growth rate of the company is 47.67 percent, the best result for the industry. The 1Q 2008 result for Lev Ins in terms of premium income has been 28.442 million BGN. The management explains the big success with the increased income from auto insurance, financial risk coverage and property policies. In the beginning of the year Lev Ins managed to attract a very big client - Trace Group, and to contract coverage of its business, which is connected with the building of the new metro lines of the capital city.
Fourth place on the market is for the recent big favorite Allianz Bulgaria. The GWP of the company stands at 37.856 million BGN, while 1Q 2008 figure has been 48.631 million BGN. The negative year-on-year growth is 20 percent, the biggest drop among the leading companies in the sector. The bad result is due to the auto insurance. The company is among the biggest insurers of new cars bought, having contracts with most of the auto importers. The big decline in car sales has led to the serious drop of the company's premium income. The casko policy of Allianz Bulgaria is distinctive with its high price and not too attractive clauses, which has been driving back the owners of not leased and of more than 4 years old cars. This was the company's policy - not to deal with older motor vehicles. The serious drop in the premium income though has made the management of the German-Bulgarian entity to redefine its policy and to seriously discount the auto insurance prices.  Besides striving to increase the sales of insurance contracts, the managers of the company have to fight against the sensitively increased number of stolen cars, bearing Allianz's polices, since the beginning of the year.
Armeec has taken the fifth place on the market with  32.289 million BGN premium income, compared with  26.614 million BGN for the first three months of 2008. This accounts for 20.94 percent growth - second rate among the top 5 companies in the sector.
It is a surprise that Bul Ins is not among the top 5 companies. The company has been "subscribed" for the fourth place for years, but its 28.853 million BGN of GWP for the quarter this time is enough for the 6th place in the sector. The realized by the company negative growth amounts to 8 percent.

Premium Income - non-life insurance (in million BGN)

The picture of the life insurance sector is significantly worse than of the non-life. For the first time since official statistic of the market exists (1997) a negative growth is recorded - 4.2 percent drop. For the first quarter of 2008 the growth rate of the sector has been 23.9 percent. The first indications for worsening of the businesses environment have appeared as early as in October 2008. The last quarter of the same year the premium income has shrank by nearly 15 percent and the year has ended with 14.5 percent average annual growth.
The expectations of the experts are that this negative trend will continue and even get worse in the coming months. It is thought for sure that the drop will be measured in double digits, figures around 20 percent being mentioned. And it is not far from the logical, having in mind that too many people are loosing their jobs and income and consequently will not be in position to allocate money to life insurance policies.
The GWP of the life insurance sector for the first quarter of the year according to the regulator's data amount to 60.875 million BGN.
The GWP year-on-year growth for January is 3.3% and for February - merely 0.14%.
Not any company in the life insurance sector has registered direct reinsurance operations. The payed out benefits and compensations in the first quarter amount to 21.031 million BGN, their year-on-year growth is 16.3%. The gross technical reserves have increased with 24.6% to 475.153 million BGN.
The assets of the life insurance companies at the end of the first quarter stand at 924.829 million BGN, their year-on-year growth is 12.9%. The technical result of the sector is 2.788 million BGN, compared to 9 thousand BGN in the first quarter of 2008.
The biggest share both in gross premium income and in benefits paid is for the annuity product - 76% and 75.2% respectively.
The GWP has grown only from the extra (life or child or marriage) insurance and constant health insurance products - by 40.9% and 8.3% respectively.
The leader of the market with 12.347 million BGN premium income is Allianz Bulgaria Life. For the first quarter of last year it has gathered 14.299 million BGN of premium income, which means that its negative growth is around 14 percent. According to company sources, this trend has gone deeper in April and affects not only the investment life products but also the traditional life policies.
Second on the market with 9.57 million BGN premium income is DZI. Its drop in business is 15.4 percent, compared to 1Q 2008 result (11.313 million BGN).
The most serious premium income shrinking is reported by Uniqa (the third company among the top 5) - as much as 31.63 percent. Its 1Q GWP amounts to 8.842 million BGN, with reported 12.932 million BGN a year earlier.
Generali Life Insurance comes fourth, moving one step ahead from its last year fifth place. The company has reported 6.723 million BGN gross premium income for the first quarter this year, compared with 5.765 million BGN an year earlier, accounting for 16.62% yoy growth.
The fifth on the market is Bulstrad Life, which reports 34.45 percent yoy growth. This is the most serious growth rate among the leading companies in the sector. The GWP gathered by the company in the first three months amount to 5.764 million BGN, a year earlier they have been 4.287 million BGN.
AIG Life Bulgaria, which has taken fourth place last year, has reported 5.547 million BGN premium income for this quarter, compared to 6.867 million BGN same time last year, thus reporting 19% negative growth. The company's result now ranks it on the sixth place.

Premium Income - life insurance (in million BGN)

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