Newspaper Insurer Press Issue no 22 (26 November -10 December 2008) with an accent put on the highlights, hot topics and comments

Dear readers, in the overview of issue no 22 of the newspaper «Insurer Press» we put an accent on the highlights and hot topics news and events. We make you acquainted with the analyses and thoughts expressed by the leading insurers and also keep you informed about all that happened within the period between the last two issues of the newspaper.

Happy new returns and best wishes to all who celebrate their birthday! Let’s wish all lots of love, good health and happiness to our contributors, friends and well-wishers!

Under the regular heading «Between two issues» on page 2 a place is given to the news from the Financial Supervision Commission (FSC). There we also inform you about the conference Bulgaria and the Global Economy, held on 28 October 2008, in Sofia, and traditionally organised by the Capital weekly newspaper for exchange of economic views between leading industrialists from Bulgarian and foreign companies, and key cabinet ministers. The forum joined together representatives of the business circles and the state administration, and was attended by the by the Deputy Prime Minister and Minister of Foreign Affairs Ivailo Kalfin, the Minister of Finance Plamen Oresharski, the Bulgaria’s Central Bank Governor Ivan Iskrov.   The Chairman of the Financial Supervision Commission Apostol Apostolov delivered a presentation with theme «The financial crisis and its impact on Bulgaria».

 „There is not any systematic risk for the financial markets at the moment – both the institutions and the participants are stable and working well”, commented  Mr Apostolov.

One curious news is the  first visit in Bulgaria of the ING Renault F1 Team’s test driver Lucas Di Grassi.

On the same page we carry the short reviews of interesting articles in similar editions treating the Insurance and Social Security issues, delivered by Petar Andasarov.

            On page 3 Vesselin Tonev, Director, Life Insurance products, Insurance Joint Stock Company DZI is explaining why the “DZI Life + (Mixed Life insurance (Tariff 26)” is the most important product on the life insurance market”

             The Cover Story of this issue «The financial crisis of today is not the last waltz for the private pension funds» is developed on pages 4, 7 and 9 by Ileana Stephanova.

 The fiasco, suffered by the Private Pension Insurance Market is due to the slight drop of the profitability of the universal funds – 19% in the professional funds and 22% and 23 % in the voluntary. The income in the previous year was reported to be 16% -17 %.

The generalized data are showing that as from the beginning of the year, the total net assets of the three type of funds, have increased with 2.73%, in contrast to the voluntary and professional funds, which marked a drop by 15.8 and 5.6 per cent respectively. In the separate funds, the losses, accumulated during the present fiscal year towards 6 October, vary from 12.7% up to 36.3%, the still unofficial calculations indicated. This is a consequence from the financial crisis.  One of the reasons for the certain losses suffered by the funds at this moment, is that the stock market they are realizing their main income upon, is undergoing collapses almost every day. There is still a hope, that within 12-18 months the profitability should have regained its level.

In this connection Bisser Petkov, Deputy Chairman of the Financial Supervision Commission, Head of "Social Insurance Supervision" Division, is explaining that the information about the number of early withdrawn contributions arrives not sooner than the final deadlines for their collection. Such being the case, for the nine months of this year, the exodus from the pension insurance in the supplementary pension funds is considered to be BGN84 million, including the pensions of the order of BGN 36 million, paid up to about 2 000 pensioners.

Who was the biggest looser? The people who hurried up to withdraw their money from the individual batches as soon as the first tremors of the crisis, Nikola Abadzhiev, chairman of the Bulgarian Association of Complementary Pension Insurance Funds (BACPIF) considered.

According to Sofia Hristova, Executive Director, Allianz Bulgaria Pension Company, these were not real losses but temporary revaluation of the assets of the pension funds.

According to Bulgarian regulations, the risk in the voluntary fund shall be borne by the insured individuals  and the pensioners,  therefore the role of each pension company shall be to compensate with own funds the eventual losses which are due to lower profitability, explained Daniela Petkova, Executive Director, Doverie Pension Insurance Company, and this already happened on the market.

The Financial Supervision Commission (FSC) have proposed reduction of the Asset management fees for the mandatory funds. This was announced before the journalists at the Parliament by Apostol Apostolov, Chairman of the Financial Supervision Commission.

On pages 7 and 9 , in the column Survey,  some representatives of the supervising authority, the Bulgarian Association of Complementary Pension Insurance Funds and the business, share their opinions about the current situation in the supplementary pension insurance.

Page 5 is devoted to Allianz. Yanislav Tzankov, Executive Director,  Allianz Leasing Bulgaria AD, emphasized that the number of clients keeps increasing. He is talking about the successes and the activities of the company. According to him the Bulgarian prefer the financial to operative leasing, as contrasted with the foreigners.

On page 6, under the heading  «The challenges against the leader’s development » of the material of Yoanna Stephanova from the 10^th Southeast Europe Economic Forum.

With its 70% share of the premium income, the motor insurance is the indisputable leader on the Bulgarian General Insurance Market. However, this leadership cannot guarantee that everything in this segment is done to perfection, but just the contrary. As «Insurer press» newspaper repeatedly wrote, the powerful competition between the companies leaded to the dumping prices of the motor insurance products. The further negative „effect” could be seen through the official data, duly collected and published by the Financial Supervision Commission (FSC). According to the data for the first half of FY 2008 г. Motor insurance generated the bulk of the premium revenue, accounting for about 68,8% per cent share of the general insurance market in the country. The growth of this segment is traditionally high. Ever since 2003 this growth has been reported to be 20% yoy, with the exception of FY2006, while for the first half of this year it is 30 per cent. This 30-per cent growth has been formed only by the licensed insurance companies in Bulgaria. FSC does not collect data about the policies, sold out by the foreign insurance companies, acting on the Bulgarian market under the stipulations of the free movement of services within the EC. The high growth is an indication that even under the conditions of high competition, the Bulgarian insurance companies are able to hold their clients and to keep developing, Ralitsa Againe commented.  

On the same page we publish the interview with Mrs Againe, offered especially for the newspaper «Insurance Press». She shared: „My expectations are for a repeated occurrence of last year’s events – frequent changes of the tariffs and drop of the prices. We are ready to act if occasion should demand to prohibit unreasonable decisions from the part of the insurance companies, which could jeopardize their own stability thereby”.

The burst of the financial crisis in the civilized word is one of the most important themes not only for the newspaper «Insurance Press», but for the whole Bulgarian society as well. It is present in some form in any piece of reporting in the media in the country, our newspaper included. Recently it is hardly probably to find an interview in the newspaper «Insurance Press», with missing, at least one question about the influence of the financial crisis. This theme was focal point for the 10^th Southeast Europe Economic Forum, which was held in the Palace of Culture. In the column „Theme with continuation”  on pages 8 and 16 in this issue we are bringing to your attention the speech of Stefan Sofianski, Chair of the Board  and Executive Director of Lev Ins Insurance and Reinsurance Company AD, at the specialized, Insurance panel of the forum. The world financial crisis would unavoidably impact on the Bulgarian market, but in some degree it would be found to be with low intensity. First and foremost it is conditioned by the fact that the Bulgarian economy and in particular the financial markets in the country have not reached this higher stage of development, which is specific for the countries from Europe and Asia.  финансовите пазари у нас не са достигнали този висок етап на развитие, който е характерен за страните от Европа и Азия.  The operative Insurance Code does strictly apply the European directives and the best world practices, while creating good prerequisites for regulation. The companies are observing the current regulation for formation and investment of the insurance reserves; most of them are well capitalized and have little number of explosions in the financial and credit insurances. 

Even thought the crisis will have an impact on the insurance sector. The risks are mostly in three directions – the reflect of the real economy on the financial system, on the investments made by the insurance companies and the run of financial hazards.

According to Mr. Sofianski the problem in the branch is called decrease of the tariffs and insufficient appreciation of the financial risk. He is also examining in details the financial insurances.

On page 10 we reflect the CELEBRATION OF THE SUCCESSES LEV INS INSURANCE AND REINSURANCE COMPANY IN THE STYLE OF THE EUROPEAN TRADITION. Here we publish the conversation with the manager of Sofia corporative center Lazar Georgiev. He is talking about the operating methods, the team of experts, the target of the insurance products, as well as about the philosophy and the future plans.

On pages 11, 14 and 16  we publish the speech of Tzvetanka Krumova, Executive Director, Armeets Insurance and reinsurance company, before the  Seventh National conference with international participation „Social security and insurance in Bulgaria under the conditions of eurointegration process: challenges before the yet continuing adaptation”. Mrs krumova outlines some of the debating points in the Insurance Code, mainly in the part, regarding the insurance contract and offers solutions of some of the problems in the light of the European Insurance Law.

On page 12 in the column „Forum” you can read the continuation of the material «Direct communication between the structures of the insurance business and its partners», published in issue 21. There is the information about the seminar, held on 10 and 11 October this year in Hisar Resort, and organized by the company Auto3P Bulgaria.

On page 13 is the article of ing. Vesselin Ivanov „Program for determination of the ruminant state of the automobile tires” .

On page 15, the material of Slavimir Genchev  provides information about the motor insurance pricing. The article is published under the heading „The market dictates the prices, but which market?” On 17 November 2008 at the metropolitan „Central Park Hotel”, was held one-day seminar   „Motor Insurance Pricing – science, art or just a business”. The lecturer on this seminar was Georgy Matov, Certified Actuary, member of Bulgarian Actuarial Society (BAS), who has specialized Actuarial Sciences in Heriot-Watt University, Edinburgh. At present time Mr. Matov is Price Policy Manager in the international department of Rоyal Bank of Scotland Insurance. The seminar was aimed to Motor Insurance professionals – executive directors, managers, actuaries.

On page 17, in the column „Bookshelf” we offer to your attention the book „Capital systems:  Their role for the solution of the pension problem ”, which contains the lectures  and the presentations (in Bulgarian language), delivered before the international conference, held on 31 May – 1June 2007 in Varna.

In the same column you also put an accent on the book of Eng. Веселин Vesselin Ivanov „Designations on the tires and rims of the motor vehicles”.

We get to know some curious news, published in the column “In the world” (page 19), where Iva Ivanova is discovering for us “The side effects of the financial spasm” for Japan, USA and China. And some more interesting news “Over the world” on page 21: Boom in the property insurances in Turkey after the earthquake, Zurich Financial cut down their profit by 1/3, ING reported EUR 478 million losses.

On page 20 in our regular column “Look back, look forth” you can read the interview of Petar Andassarov with Zlatolina Mukova, Executive Director, Euroins Insurance Group EAD, Chair of the Board of Euroins AD Insurance Company. Mrs Mukova emphasized: At “Euroins Insurance Group” EAD we have always set great store on the intuitive approach in the insurance business, we keep looking for means to facilitate the insurance procedures, and to create products that are new for our market.

On page 22 we reflect the Christmas promotion  of the insurance products „Protected family” and  „Protected property” , launched by Armeets Insurance and Reinsurance Company.

We are finishing our overview by the conversation of Maria Miteva with the famous traveler and TV journalist Simeon Idakiev, published in the column “Insurance and Personalities”.

selection: Vania Petrova

translation: Albena Dimitrova