Newspaper Insurer Press Issue No 10

Dear readers, in the overview 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.

We offer our best wishes to our contributors, friends and well-wishers, who celebrate their birthday or name-day.

Many happy returns!

On pages 4 & 16 carry the Insurance Market Review 2009, Voluntary Health Insurance and Insurance Brokerage included.

In 2009 the total number of licensed insurers with business seat in Republic of Bulgaria kept unchanged - 37, 20 of which non-life insurance companies, 15 – life insurance companies, and 2 – Mutual Insurance cooperatives.

The first professional reinsurer on the Bulgarian market - GP REINSURANCE EAD, granted with license in 2008, pursued non-life reinsurance activity over the period considered.

In 2009 FSC issued a license for carrying out the activity of Voluntary Health Insurance Company to UNIQA Health Insurance EAD, thereby the number of the licensed health insurance companies in Bulgaria reached 21.

As at the end of 2009 the total number of the registered insurance brokers reached 316.

The total number of the insurance agents, entered in the FSC’s electronic register as at the end of 2009 was 53,622, including 836 agents carrying out insurance mediation activity in favor of the branches of insurers from Member States. The insurance agents-legal entities were 5 920, sole traders – 3,681, natural persons – 44,021.

At the end of FY 2009 the Gross Premium Income, realized by insurers with business seat in Republic of Bulgaria amounted to BGN 1,681,491 thousand versus BGN 1,804,642 thousand at the end of FY 2008, which stands for decline of 6,8% on annual basis. In 2009 the insurance penetration, which is a reflection of the gross premium as a percentage of the GDP, was 2.5%, while in 2008 it has been 2,7%. The insurance density, which is measured by per capita expenditure on insurance, also known also known as premiums per capita, was calculated at BGN 222.31 for 2009 versus BGN 237.25 for 2008.

Reportedly, the Gross premium income realized by non-life insurers in FY 2009 amounted to BGN 1,459,064 thousand, which records a negative growth of 4.9% on annual basis. The insurance penetration was rate was calculated at 2.2%, while 2.3% for 2008, and the insurance density – at BGN 192.90 per capita versus BGN 201.72 in 2008.

Gross premium income realized by life insurers for the period January-December 2009, amounted to BGN 222,427 thousand, which records a decline of 17.7% on annual basis. The insurance penetration was rate was calculated at 0.3%, while 0.4% for 2008, and the insurance density – at BGN 29.41 per capita versus BGN 35.53 in 2008.

On pages 6 & 7 you will find the Analysis of the Voluntary Health and Pension Insurance business.

According to the FSC, Gross Premium income realized by companies in voluntary health insurance at the end of 2009 is BGN 38,258 thousand which makes for annual growth of 26,3%.

The paid claims accounted for BGN 21 736 thousand and and the annual growth was  3,0%.

As at the end of 2009 the total amount of the health insurance provisions (the ultimate cost of settling outstanding claims and claims incurred but not reported on certain risks) amounted to BGN 12,356 thousand, showing a decline of 5.4% versus the reserves, set aside one year before.

On the Voluntary Health Insurance market leader in terms of premium income for FY 2009 is the Health Insurance Company (ZOK) Bulgaria Health AD with its BGN 5,920,691 of Gross Written Premium (GWP) and market share of 15.5 per cent.

Second place was taken by Generali Zakrila Health Insurance AD with premium income of BGN 5,809,060 and market share of 15.2 per cent.

The third in the ranking is the Health Insirance Fund ZOF Medico-21 AD recorded premium income of BGN 4,455,202 and market share of 11.per cent.

The net asset value of supplementary pension funds amounted to BGN 3,304,748 thousand.

On pages 8 & 19 we carry the information about the Insurance Academy “Oscar Awards. The academic community is well aware about the role of the “Oscar Awards” for the exposure of the financial professional. It took time for the idea to become reality. This marked the beginning of a noble and useful initiative for the development of the insurance business in Bulgaria, namely the organization of the yearly nominations and “Insurer of the Year” Award submissions.  The Insurer of the Year Award is annually presented to the insurance companies that does not only show remarkable excellence in the performance of service but also to those who manage to introduce innovative products and services that benefit the entire assurance industry

For 2009, the Award was divided into four categories. The four prizes were bestowed in the spring night of 18^the May this year – three of them were for successful business performance in 2009 , and one for entire contribution of a natural person’s activity in the branch.

For the second consecutive year, Higher School of Insurance and Finance (VUZF) and Association of Bulgarian Insurers and Dr. Veleslav Gavriiski Foundation bestowed the prestigious prize for Most Successful Insurance Company, being in a fair way to become traditional in both non-life and life insurance. There was also a special prize for Most dynamically developing company in 2009. Furthermore, Dr. Veleslav Gavriiski Foundation bestowed a prize “For outstanding contribution to the development of Bulgarian Insurance” to a prominent figure of the guild for his/her entire contribution for the development of the Bulgarian insurance.

The Awards announcement and bestowment ceremony took place at Kempinski-Zografski Hotel in Sofia.

The performance criteria for non-life insurance companies are market share,

• technical result,
• paid claims,
• net premium income,
• solvency rate
• technical reserves to premium income ratio,
• expense ratio.

The criteria in the life-insurers group are:

• market share,
• technical result
• earnings capacity,
• insurance business’ profitability ratio,
• solvency ratio,
• technical reserves to premium income ratio
• expense ratio.

All data that are used to measure these criteria are officially presented by the Financial Supervision Commission.

Orlin Penev explained that the awardee of “Insurer of the year – general insurance 2009” - the Insurance Company (ZAD) Bulstrad Vienna Insurance Group, has been selected among six successful companies nominated in the non-life insurance 2009 category.

For a second consecutive year the Sectoral Leadership Award "Insurer of the Year - Life" was bestowed to Allianz Life Bulgaria AD.

On pages 17 and 19 we are talking about the special ceremony for the celebration of the Fifteenth Anniversary of Pension Insurance Company SAGLASIE. It was held on 14 May at Sheraton Sofia Balkan Hotel in Sofia and gathered experts and professionals in this branch, former and present employees of the company, journalists and friends, representatives from the Supervising body, of the employers’ organizations and the syndicates.

1.               &nb sp;              Milen Markov, Chair of the Board and General Executive Manager, Pension Insurance Company Saglasie, delivered an opening speech. “The passing years have been charged with a lot of hard work and efforts – he shared. Every new day requires more efforts and brings more pressure. I hope than after fifteen more years 15 we would be at the position to congratulate ourselves with the really big success and also able to pay the well-deserved, the just pensions to all contributors who have passed their vote of confidence to us… During the last years we have been striving to improve our performance and results – now we manage over BGN 380 million.; over 483 000 individual savings accounts for social insurance

.”

On page 20 we give more details about the General meeting of the Association of Bulgarian Insurers, held on 12 May 2010. The Association of Bulgarian Insurers plans to amend its statute this September. Dr. Veleslav Gavriiski Foundation has also called its General Meeting, which was held on 19 May in Sofia /page 24/

The General Meeting was presided by Neno Pavlov Prof. Dr. Ec. Sc. – Chair of the Board of Dr. Veleslav Gavriiski Foundation. His deputy, Mr. Maxim Maximov, read the Annual Report, and Diana Ivanova Ass.Prof. Dr, General Secretary presented the Future Activity Plan.

On pages 22 and 24 you will find the interview with David Sanders, Managing Director, Europe Division of EUREKO. Mr. Sanders expressed his satisfaction of the development of INTERAMERICAN Bulgaria. He answered the question about how do they cope with the crisis with no help from the state this way: „EUREKO is not listed on the Stock exchange. We are Mutual Insurance Company with powerful and well positioned stockholders. One of our stockholders is Rabobank – one of the most powerful banks in the world. Notwithstanding of the crisis, the credit rating of Rabobank has been kept to ААА. We are "traditionally cautious insurer – usually we do not take too big risks. This fact provided good results under the conditions of crisis. Although we lost a lot of money on the capital markets, we are able to keep a stable capital position which is mostly due to the fact that we managed to get out from the risk investments in the nick of time, and we got EUR 1 billion financial injection from our stockholders. As a result, we did not have any need of state aid.

Furthermore, we decided to get out from Poland…We plan to target our further investment resources on three countries – Turkey, Greece and Russia. We do not plan to make any additional investments in Bulgaria, Romania and Slovakia; however we will focus on the natural of our companies in these countries. Interamerican Bulgaria fits well into this strategy.”