INSURANCE MARKET DEVELOPMENT IN THE FIRST HALF OF 2017

Transcription

1 INSURANCE MARKET DEVELOPMENT IN THE FIRST HALF OF 2017

2 Contents INSURANCE MARKET... Error! Bookmark not defined. I. INSURANCE COMPANIES... 4 I.1. Gross premiums written (NLI nonlife insurance and LI life insurance)... 4 I.2. Insurance contracts I.3. Gross claims paid by insurance companies (GCP) I.4. Claim rate and rate of expenditure I.5. Technical reserves I.6.Liquidity of insurance companies I.7. Reinsurance I.8. Profitability of insurance companies I.9. Statistical data under the new solvency scheme I.10. Household insurance I.11. Development of the motor thirdparty liability (MTPL) insurance market underwritten on the Romanian territory in the first half of II. Branches II.1. Gross premiums written by branches(nli and LI) II.2 Gross claims paid by branches (GCP) III. Insurance and/or reinsurance brokers III.1. Insurance mediation services III.2. Revenue generated by insurance intermediation III.3. Debts and claims arisen from intermediation III.4. Balance sheet assets and registered capital of insurance and/ or reinsurance brokers. 43 III.5. Financial results of insurance and/or reinsurance brokers

3 INSURANCE MARKET Insurance companies licensed and regulated by the Financial Supervisory Authority (ASF) registered, during the first semester of 2017, a total gross premiums written (GPW) totalling Lei 5.04 billion, increased by 8% as compared with the same period of the previous year. The amount of gross premiums underwritten for nonlife insurance registered an increase by 2% during the first semester of 2017, as compared with the same period of 2016, and the life insurance segment registered an increase by 36%. Out of the total amount of gross premiums underwritten by the insurance companies licensed and regulated by ASF during the first semester of 2017 (Lei 5.04 billion), the premiums written on the territory of other states registered Lei 52 million, down by 38% as compared with the same period of the previous year (Lei 83.5 million). Insurance companies licensed in other EU member states underwrote during the first semester of 2017, under the right of establishment on the Romanian territory, through a branch, total gross premiums written of Lei million, increasing by 9% as compared to the same period of the previous year. Motor Third Party Liability Insurance, including A3 class (Insurance for land transportation means, other than railway) and class A10 (Motor Vehicles Third Party Liability Insurance) sum up 72.4% of the total gross premiums written related to nonlife insurance and 55.5% of the total gross premiums written by insurance companies during the first semester of Policies taken out relating to class A10 registered a decrease by 2.4% during the first semester of 2017, as compared to the same period of the previous year, while policies taken out for class A3 increased by approximately 7.4%. Premiums underwritten for life insurance registered a significant increase during the first semester of 2017, by 36% as compared to the same period of the previous year, due to insurance classes C3 Life insurance and annuities, related to investment funds (increase by 51%) and C1 Life insurance, annuities and additional life insurance (increase by 28%). This report has been prepared based on additional reports, entered on the accounting and technicaloperative records that the insurance companies sent, except for the chapter on Solvency II scheme, which is prepared based on regular supervisory reports sent by the insurance companies subject to this scheme. The report has been drawnup based on the reports sent by insurance companies as at 5 September

4 thousands of Lei I. INSURANCE COMPANIES On 30 June 2017, 31 insurance companies were active on the insurance market, licensed and regulated by ASF, 17 out of which conducted only nonlife insurance ( NLI ) business, 8 conducted only the business of life insurance ( LI ) and 6 conducted combined business. I.1. Gross premium written (NLI and LI) During the first half of 2017, insurers reached gross premiums written totalling Lei 5,043,654, up by 8% as compared to the first half of 2016: Gross premiums written (GPW) related to nonlife insurance (NLI) totalled Lei 3,972,469 thousand, up by 2% as compared to the first half of the previous year; Gross premiums written related to life insurance (LI) amount to Lei 1,071,185 thousand, up by 36% as compared to the similar period of the previous year. Figure 1. Evolution of the volume of gross premiums written during the period 2013/ , , , , , , , , , , , , , , ,0 AV AG ,0 T T T T T Unlike the European insurance market, which is dominated by the life insurance segment, in Romania it accounted for only about 21% of the gross premiums written; nonlife insurance is dominant, i.e. motor vehicle insurance. Table 1 Distribution dynamics by insurance segments during the period 2013/2017 S S S S S NLI 3,398,263,073 3,194,551,731 3,482,862,241 3,884,393,309 3,972,468,844 LI 841,996, ,442, ,058, ,920,172 1,071,185,386 TOTAL 4,240,259,089 3,844,994,201 4,205,920,422 4,669,313,481 5,043,654,230 NLI Share (%) 80% 83% 83% 83% 79% LI Share (%) 20% 17% 17% 17% 21% 4

5 Table 2 Dynamics of gross written premiums by insurance classes during the period 2013/2017 Category LI Class of insurance GPW (lei) S S S S S A1 69,786,661 33,139,491 45,740,747 31,177,152 30,632,673 A2 27,946,225 18,470,512 26,695,892 36,481,815 71,742,813 A3 874,980, ,439, ,989, ,709, ,985,251 A4 1,434,352 1,087,749 1,921,541 1,924,221 1,596,216 A5 5,833,657 2,388,308 3,728,563 7,206,401 6,783,858 A6 14,917,922 16,418,254 25,198,188 15,142,214 12,993,815 A7 16,754,231 14,853,106 14,153,137 15,109,702 12,731,566 A8 614,269, ,239, ,368, ,063, ,250,145 A9 90,709,485 90,003,111 87,981,060 82,437,315 84,557,244 A10 1,281,945,359 1,393,302,858 1,669,678,920 2,157,066,946 2,105,340,326 A11 6,214,424 7,740,627 8,339,529 10,084,092 13,819,827 A12 10,535,220 6,259,743 6,251,824 3,428,084 3,737,117 A13 198,192, ,916, ,097, ,765, ,342,406 A14 35,571,578 12,317,459 3,788,661 2,289, ,535 A15 111,332,904 68,519,886 81,553,255 61,826,237 79,542,546 A16 8,364,833 11,009,563 14,148,197 11,836,102 12,352,778 A17 11,751 29, ,872 14,462 9,962 A18 29,463,017 34,416,111 38,120,967 37,831,410 43,616,766 TOTAL 3,398,263,073 3,194,551,731 3,482,862,241 3,884,393,309 3,972,468,844 C1 527,186, ,915, ,719, ,713, ,760,436 C2 625, , , , ,618 C3 280,231, ,579, ,868, ,158, ,411,418 C C C C A1 16,039, , ,577 4,241,664 18,549,367 A2 17,913,221 23,673,105 24,160,490 32,354,112 45,127,547 TOTAL 841,996, ,442, ,058, ,920,172 1,071,185,386 TOTAL 4,240,259,089 3,844,994,201 4,205,920,422 4,669,313,481 5,043,654,230 It is noted, with regard to geographical distribution of underwritings, that both nonlife insurance and life insurance contracts have the most important aggregate value in Bucharest and Ilfov, followed at a significant distance by NorthWest and Centre regions. The discrepancy between Bucharest and Ilfov region and the other regions of the country is more pronounced in respect of life insurance. 5

6 Figure 2. GPW distribution for nonlife insurance in the 8 development regions in Romania North West North East West Centre South East SouthWest South Figure 3 GPW distribution for life insurance in the 8 development regions in Romania North West North East West Centre SouthEast South West South 6

7 The insurance market in Romania is very concentrated. During the first half of 2017, 88% of the total gross written premiums were covered by 10 of the 31 insurance companies active as at 30/06/2017 in the insurance/reinsurance business. Table 3. Companies with the highest volumes of gross written premiums and their share in the total market (nonlife and life insurance) Crt. no. Company Total market share 1 CITY INSURANCE S.A % 2 ALLIANZ TIRIAC ASIGURARI S.A % 3 EUROINS ROMANIA ASIGURARE REASIGURARE S.A % 4 OMNIASIG VIG 10.15% 5 ASIROM VIENNA INSURANCE GROUP S.A. 9.34% Total (15) 57.70% 6 GROUPAMA ASIGURARI S.A. 9.14% 7 NN ASIGURARI DE VIATA SA 7.12% 8 GENERALI ROMANIA ASIGURARE REASIGURARE S.A. 6.48% 9 UNIQA ASIGURARI S.A. 4.04% 10 BCR ASIGURARI DE VIATA VIENNA INSURANCE GROUP S.A. 3.87% Total (110) 88.35% Other companies 11.65% TOTAL 100% Gross premiums written reported for non life insurance During the first half of 2017, the total volume of gross premiums written for nonlife insurance was Lei 3,972,468,844, recording a growth by 2% as compared to the first half of the previous year. The top 10 insurance companies to have underwritten premiums relating to nonlife insurance amounted to a cumulated value of Lei 3,835,511,546, i.e. 97% of the total line of business. Table 4. Ranking of insurance companies according to the gross premiums written for nonlife insurance during the first half of 2017 Crt. no. Company Total market share 1 CITY INSURANCE S.A % 2 EUROINS ROMANIA ASIGURARE REASIGURARE S.A % 3 ALLIANZ TIRIAC ASIGURARI S.A % 4 OMNIASIG VIG 12.89% 5 GROUPAMA ASIGURARI S.A % Total (15) 70.71% 6 ASIROM VIENNA INSURANCE GROUP S.A % 7 GENERALI ROMANIA ASIGURARE REASIGURARE S.A. 7.36% 8 UNIQA ASIGURARI S.A. 5.13% 9 POOLUL DE ASIGURARE P.A.I.D. 1.75% 10 GOTHAER ASIGURARI REASIGURARI S.A. 1.39% Total (110) 96.55% Other companies 3.45% TOTAL % Of the total gross premiums written for nonlife insurance, the largest shares are held by classes A10 Motor third party liability for use of land vehicles, A3 Land vehicles, exclusively railway rolling stock, A8 Insurance against fire and other natural disasters (for other assets than those which can be insured via classes A3A7). 7

8 During the first half of 2017, the share of these three classes was 88% of the total gross premiums written for nonlife insurance: Class A10 Motor third party liability for use of land vehicles with a volume of gross premiums written of Lei 2,105,340,326, i.e. 53% of the total underwritings for nonlife insurance recorded a decrease by 2% during the first half of 2017, as compared to the same period of 2016; Class A3 land vehicles, exclusively railway rolling stock, with a volume of gross premiums written of Lei 892,985,251, i.e. 22% of the total underwritings for nonlife insurance recorded an increase by 7% during the first half of 2017, as compared to the same period of 2016; Class A8 Insurance against fire and other natural disasters (for other assets than those which can be insured via classes A3A7), with a volume of gross premiums written of Lei 492,250,145, i.e. 12% of the total underwritings for nonlife insurance, recorded an increase by 6% during the first half of 2017, as compared to the same period of Table 5. Structure according to nonlife insurance classes Class GPW NLI (lei) S S S S S Percentage share in 2017 A10 1,281,945,359 1,393,302,858 1,669,678,920 2,157,066,946 2,105,340, % A3 874,980, ,439, ,989, ,709, ,985, % A8 614,269, ,239, ,368, ,063, ,250, % Other classes 627,068, ,569, ,826, ,554, ,893, % TOTAL 3,398,263,073 3,194,551,731 3,482,862,241 3,884,393,309 3,972,468, % Figure 4. Evolution of the volume of gross premiums written by nonlife insurance (million Lei) 2500,0 2157,0 2105,0 2000,0 1500,0 1282,0 1393,0 1670,0 1000,0 500,0 875,0 851,0 825,0 832,0 893,0 614,0627,0 462,0489,0 485,0503,0 464,0431,0 492,0482,0 T T T T T PBS (MIL. LEI) A10 A3 A8 Alte Other clase classes 8

9 Figure 5. Structure dynamics by nonlife insurance classes 120% 100% 80% 60% 40% 18% 15% 14% 11% 12% 12% 14% 14% 18% 12% 21% 27% 24% 22% 26% 20% 38% 44% 48% 56% 54% 0% T T T T T A10 A3 A8 Alte Other claseclasses Gross premiums written for life insurance The gross premiums written by insurance companies with respect to life insurance recorded an increase by 36% during the first half of 2017, as compared to the same period of last year. A high concentration level was maintained in 2017 too, so 10 companies held a share of 95% of the volume of total premiums written in this segment, with total underwritings amounting to Lei 1,021,860,314. Table 6.Ranking of insurance companies according to gross premiums written for life insurance in 2017 Crt. no. Company Market share 1 NN ASIGURARI DE VIATA SA 33.53% 2 BCR ASIGURARI DE VIATA VIENNA INSURANCE GROUP S.A % TOTAL (12) 51.74% 3 EUROLIFE ERB ASIGURARI DE VIATA S.A. 8.50% 4 ERGO ASIGURARI DE VIATA S.A. 7.03% 5 ALLIANZ TIRIAC ASIGURARI S.A. 6.88% 6 BRD ASIGURARI DE VIATA S.A. 6.45% 7 ASIROM VIENNA INSURANCE GROUP S.A. 6.10% 8 GENERALI ROMANIA ASIGURARE REASIGURARE S.A. 3.21% 9 SIGNAL IDUNA ASIGURARE REASIGURARE S.A. 2.90% 10 UNIQA ASIGURARI DE VIATA SA 2.58% TOTAL (110) 95.40% Other companies 4.60% TOTAL % Of the total gross premiums written for life insurance, the highest shares are held by class C1 Life insurance, annuities and additional life insurances and respectively class C3 Life insurance and annuities, relating to investment funds reaching together an aggregate 94% of the total gross premiums written for life insurance. 9

10 The following conclusions can be reached from the dynamics analysis: Class C1 Life insurance, annuities and additional life insurance accounts for 64% of the total underwritings for life insurance; it recorded an increase by 28% during the first half of 2017, as compared to the same period of last year; Class C3 Life insurance and annuities related to investment funds accounts for 30% of the total underwritings for life insurance; it recorded an increase by 51% during the first half of 2017, as compared to the same period of last year; Table 7. Structure by life insurance classes Class GPW LI (lei) S S S S S Share in 2017 Pace of change (%) C1 527,186, ,915, ,719, ,713, ,760,436 64% 28% C3 280,231, ,579, ,868, ,158, ,411,418 30% 51% Other classes 34,578,284 24,947,097 25,470,072 37,047,362 64,013,532 6% 73% TOTAL 841,996, ,442, ,058, ,920,172 1,071,185, % 36% Figure 6. Evolution of the volume of gross premiums written by life insurance classes (million Lei) 800,0 700,0 600,0 500,0 400,0 300,0 200,0 100,0 683,0 527,0 534,0 468,0 429,0 280,0 324,0 197,0 230,0 214,0 35,0 24,0 25,0 37,0 64,0 T T T T T GPW PBS (MIL. LEI) C1 C3 Alte Other claseclasses Figure 7. Structure dynamics by life insurance classes 120% 100% 80% 4% 4% 3% 5% 6% 33% 30% 32% 27% 30% 60% 40% 20% 0% 63% 66% 65% 68% 64% T T T T T C1 C3 Alte Other clase classes 10

11 I.2. Insurance contracts Based on the entire insurance market, the insurance contracts in force at the end of the first half of 2017 counted 14,586,982 units, growing by 11% as compared with the similar period of the previous year. The number of insurance contracts in force at the end of the first half of 2017 for nonlife insurance accounts for 87% of the total number of contracts. The number of contracts in force at the end of the first half of 2017 registered an increase in NLI, as well as in LI by 10%, 18% respectively, as compared to the same period of the previous year. Table 8 Evolution of the total insurance contracts number in force at the end of the first half during the period 2013/2017 S S S S S NLI 12,740,963 11,897,931 12,042,203 11,471,075 12,663,958 LI 3,409,719 2,519,056 2,342,040 1,627,809 1,923,024 TOTAL 16,150,682 14,416,987 14,384,243 13,098,884 14,586,982 With regard to the number of insurance contracts valid at the end of the first half over the past 5 years, separately for nonlife insurance business and for the one conducted on life insurance, the report was as follows: Table 9 Evolution of the insurance contracts number for nonlife insurance, in force at the end of the 1 st semester during the period 2013/2017: Insurance class NLI S S S S S A1 977,093 1,143,159 1,347, , ,699 A2 505, , , , ,599 A3 773, , , , ,838 A A A6 1,310 1,435 1,472 1,157 1,450 A7 4,233 4,844 4,091 4,228 4,671 A8 4,700,923 3,931,556 3,715,454 3,560,653 3,605,985 A9 214, , , , ,241 A10 4,467,568 4,681,529 4,866,543 5,040,030 5,695,440 A A , A13 664, , , , ,714 A14 35,719 33,212 32,033 18, A15 17,829 22,817 30,007 29,948 39,030 A16 10,348 13,402 11,608 11,888 15,383 A17 20, ,315 61,509 A18 366, , , , ,895 TOTAL NLI 12,740,963 11,897,931 12,042,203 11,471,075 12,663,958 Change compared to the previous period Pace change (%) compared to the previous period 843, , ,128 1,192,883 7% 1% 5% 10% 11

12 Table 10 Evolution of the insurance contracts number for life insurance in force at the end of the 1 st semester during the period 2013/2017 Insurance class NLI S S S S S C1 2,890,996 2,260,915 2,060,005 1,407,362 1,704,745 C2 1,961 1,670 1,496 1,357 1,170 C3 238, , , , ,689 A1 269,949 2,899 2,240 1,869 19,900 A2 8,577 32,086 63,812 5,224 8,520 TOTAL NLI 3,409,719 2,519,056 2,342,040 1,627,809 1,923,024 Change compared to the previous period Pace change (%) compared to the previous period 890, , , ,215 26% 7% 30% 18% I.3. Gross claims paid by insurance companies (GCP) During the first half of 2017, insurance companies reported gross claims paid (excluding maturities and partial and total redemptions), cumulatively for the two insurance categories amounting to Lei 2,032,895,173, as follows: Lei 1,958,238,376 related to nonlife insurance contracts (96%) registering an increase by 9% as compared to the similar period of 2016 (Lei 1,802,510,098); Lei 74,656,797 sums paid for gross claims, pertaining to life insurance, registering similar value as compared to the similar period of 2016 (Lei 74,940,917 ). Maturities and partial or total redemptions are added to gross claims pertaining to life insurance, leading to a total of Lei 476,967,341, increasing by 91% as compared to the same period of the previous year. The damages pertaining to the insurance portfolio of the four companies whose operating license was withdrawn: Astra (in 2015), Carpatica, Forte and LIG (in 2016), were taken over by the Policyholder Guarantee Fund, which is to make payments under the limit of the ceiling of Lei 450,000 lei per insurance creditor. The Policyholders Guarantee Fund has, during the first half of 2017, awarded damages amounting to Lei 90.1 million, further to Astra and Carpatica insurance companies going bankrupt; about 87% was paid for MTPL claims, and the damage reserve employed on 30 June 2017 amounts to Lei million, 75% out of which is the damage reserve employed for MTPL insurance. 12

13 Figure 8 Evolution of the volume of gross claims paid, including maturities and redemptions for nonlife and life insurance (Lei million) , , , , , , , , , , , , , , , ,0 T T T T T Gross Indemnizații claims paid brute for plătite life insurance, pentru asigurările maturities de and viaţă, redemptions inclusiv maturități included și răscumpărări Gross claims paid for nonlife insurance Indemnizaţii brute plătite pentru asigurările generale Table 11 Dynamics of gross claims paid, maturities and redemptions included, for nonlife and life insurance during the period 2013/2017 Period GCP NLI + LI (lei) Pace of change compared to the previous period (%) GCP NLI (lei) Pace of change compared to the previous period (%) GCP LI, maturities, total or partial redemptions (lei) Pace of change compared to the previous period (%) S ,496,259,943 2,136,297, ,962,646 S ,427,053, % 2,108,204, % 318,848, % S ,339,157, % 2,018,623, % 320,534, % S ,127,151, % 1,802,510, % 324,641, % S ,509,862, % 1,958,238, % 551,624, % Gross claims paid for nonlife insurance Taken together, gross claims paid by 10 insurance companies accounted for 98% of the total gross claims paid for the nonlife insurance segment. Table 12. Insurance companies having reported the highest volume of gross claims paid for nonlife insurance Crt. no. Company Market share (%) 1 CITY INSURANCE S.A % 2 EUROINS ROMANIA ASIGURARE REASIGURARE S.A % 3 OMNIASIG VIG (former BCR ASIGURARI VIG) 14.43% 4 ASIROM VIENNA INSURANCE GROUP S.A % TOTAL (14) 58.33% 5 ALLIANZ TIRIAC ASIGURARI S.A % 6 GROUPAMA ASIGURARI S.A % 7 UNIQA ASIGURARI S.A. 7.99% 8 GENERALI ROMANIA ASIGURARE REASIGURARE S.A. 6.10% 9 GOTHAER ASIGURARI REASIGURARI S.A. 1.25% 10 EXIM ROMANIA S.A. 0.91% TOTAL (110) 98.20% Other companies 1.80% TOTAL 100% 13

14 Significant ratios of gross claims paid by the insurance companies were registered by the following insurance classes (92% of the total): Class A10. Motor thirdparty liability for use of land vehicles with a volume of gross claims paid of Lei 1,128,277,108 accounting for 58% of the total gross claims paid for nonlife insurance and registered an increase by 8% as compared to the same period of the previous year; Class A3. Land vehicles, exclusively railway rolling stock with total volume of gross claims paid of Lei 589,655,701 accounts for 30% of the total gross claims paid for nonlife insurance and registered an increase by 3% as compared to the same period of the previous year; Class A8. Fire and natural disasters (for other assets than those which can be insured via classes A3A7) with a volume of gross claims paid of Lei 83,104,943 stands for 4% of the total gross claims paid for nonlife insurance and registered an increase by 2% as compared to the same period of the previous year. Gross claims paid for the other classes account for 8% of the total payments related to nonlife insurance, which meant, in absolute value, Lei 157,200,624. Figure 9. Structure dynamics by classes of gross claims paid for the nonlife insurance category 120% 100% 80% 60% 6% 4% 11% 8% 6% 8% 5% 5% 4% 4% 44% 32% 32% 30% 35% 40% 20% 46% 49% 55% 58% 58% 0% T T T T T A10 A3 A8 alte Other claseclasses 14

15 Figure 10. Evolution of the volume of NLI gross claims paid (Lei million) 1200,0 1000,0 986,0 934,0 1034,0 1118,0 1045,0 1128,0 800,0 600,0 744,0 638,0 573,0 590,0 400,0 200,0 233,0 92,0 124,0 97,0 160,0 157,0 103,0 81,0104,0 83,0 T T T T T IBP (MIL. LEI) A10 A3 A8 alte Other clase classes Gross claims, maturities and redemptions pertaining to life insurance The amount of gross claims, maturities and redemptions paid relating to life insurance recorded, during the first half of 2017, Lei 551,624,138 registering an increase by 70% as compared to the same period last year. Taken together, the gross sums paid (claims, maturities and redemptions) by 10 insurance companies accounted for 98% of the total gross amounts paid for the life insurance segment. Table 13. Insurance companies to have reported the highest volume of gross claims paid, maturities and redemptions in life insurance Crt. no Company Total share 1 NN ASIGURARI DE VIATA SA 34.10% 2 BCR ASIGURARI DE VIATA VIENNA INSURANCE GROUP S.A % TOTAL (12) 62.53% 3 EUROLIFE ERB ASIGURARI DE VIATA S.A % 4 ASIROM VIENNA INSURANCE GROUP S.A. 8.42% 5 ALLIANZ TIRIAC ASIGURARI S.A. 6.28% 6 GENERALI ROMANIA ASIGURARE REASIGURARE S.A. 3.12% 7 SIGNAL IDUNA ASIGURARE REASIGURARE S.A. 2.31% 8 GRAWE ROMANIA ASIGURARE S.A. 1.95% 9 AXA LIFE INSURANCE S.A. 1.43% 10 BRD ASIGURARI DE VIATA S.A. 1.28% TOTAL (110) 97.79% Other companies 2.21% TOTAL 100% 15

16 Rata daunei Rata cheltuieli Rata combinata Rata daunei Rata cheltuieli Rata combinata Rata daunei Rata cheltuieli Rata combinata In 2017, the highest ratios in terms of gross claims paid, totalling Lei 551,624,138, were held by the following classes of insurance: Class C3. Life insurance and annuities pertaining to investment funds account for 64% of the total payments made and amount to Lei 351,980,266; Class C1. Life insurance, annuities and additional life insurance account for 33% of the total payments made and amount to Lei 182,795,528 ; Payments with regard to the other classes totalled Lei 16,848,344 and accounted for 3% of the total payments pertaining to life insurance. I.4. Claim rate and rate of expenditure Figure 11. Claim rate and combined claim rate s development for the principal nonlife insurance classes during the period: Semester I 2015 Semester I % 120% 100% 080% 060% 040% 020% 000% T T Claim rate Rate of expenditure Combined rate Claim rate Rate of expenditure Combined rate Claim rate Rate of expenditure A3 A8 A10 Combined rate T A3 A8 A10 The table below shows the halfyearly rates calculated by cumulative data. Table 14. Halfyearly development of claim rate and combined claim rate for the principal nonlife insurance classes. Period Claim rate Class A3 Class A8 Class A10 Rate of acquisition costs and administrative expenses Combined claim rate Claim rate Rate of acquisition costs and administrative expenses Combined claim rate Claim rate Rate of acquisition costs and administrative expenses Combined claim rate S % 35.12% % 14.15% 37.82% 51.97% 89.08% 38.00% % S % 33.94% % 21.97% 37.17% 59.13% 67.53% 36.74% % S % 31.98% % 24.58% 37.09% 61.67% 70.44% 28.53% 98.97% Table 15.Quarterly development of the acquisition costs and administrative expenses amount as well as of commissions charges during the period (first quarter of each year) Period Indicator class A3 Class A8 Class A10 Acquisition costs and administrative expenses 296,663, ,506, ,844,675 S out of which commissions charges 105,672,833 96,086, ,093,366 acquisition costs and administrative charges 285,227, ,158, ,979,821 S out of which commissions charges 87,949,214 59,094, ,294,453 acquisition costs and administrative charges 283,846, ,121, ,589,832 S out of which commissions charges 101,072,451 60,485, ,200,745 16

17 Figure 12. Quarterly development of the acquisition costs and administrative expenses amount as well as of commissions charges during the period , , , , , , ,0 A3 A8 A10 Acquisition cheltuieli cost de achizitie si expenses administrare and administrative out din of which care cheltuieli Acquisition cost de commissions cheltuieli cu achizitie si charges expenses comisioanele administrare and administrative out din of which care cheltuieli de commissions cheltuieli cu achizitie si charges expenses comisioanele administrare Acquisition cost and administrative T T T out din of care which commissions cheltuieli cu charges comisioanele Table 16. Development of the commissions expenditure ratio for gross premiums written during the period Period class A3 class A8 class A10 S % 20% 17% S % 13% 14% S % 12% 10% Figure 13. Development of the commissions expenditure ratio for gross premiums written (%) 25% 20% 20% 15% 10% 13% 17% 14% 13% 11% 11% 12% 10% A3 A8 A10 5% 0% T T T The commissions expenditure ratio is noticed to have decreased with regard to gross premiums written, as a result of the insurance companies efforts to minimise the combined claim rate, and thus to improve the financial stability and profitability indicators. The marketwide average on all nonlife insurance classes fell from 13% during the first half of 2016 to 11% in the first half of

18 I.5. Technical reserves As at 30/06/2017, insurance companies had established gross technical reserves totalling Lei 15,215,243,509, up as compared to the end of the first quarter of 2017 (Lei 14,764,520,714), broken down by the two insurance categories as follows: Gross technical reserves established for nonlife insurance recorded the amount of Lei 8,457,896,955, accounting for 56% of the total technical reserves. Companies established reserves amounting to Lei 6,757,346,554 for life insurance; this level is the equivalent of a 44% ratio out of the total technical reserves. Technical reserves established for nonlife insurance On 30/06/2017, insurance companies had established gross technical reserves for the nonlife insurance business totalling Lei 8,457,896,955. On 30/06/2017, the structure of the gross technical reserves for the nonlife insurance category was as follows: Premium reserves in a gross amount of Lei 3,472,450,203, account for 41% of the gross technical reserves total amount relating to nonlife insurance; Registered claim reserves in amount of Lei 3,189,537,557, accounted for 38% of the total amount of gross technical reserves relating to nonlife insurance; Unregistered gross claim reserves, in amount of Lei 1,497,264,730, accounted for 18% of the total amount of gross technical reserves related to nonlife insurance. Other technical reserves, in amount of Lei 298,644,465, accounted for 3% of the total amount of gross technical reserves relating to nonlife insurance. Table 17. Structure of gross technical reserves for nonlife insurance on 30/06/2017, as compared to 31/03/ /06/2017 Total share A10 A3 A8 Share of significant classes lei (%) lei Lei lei (%) Premium reserve 3,472,450, % 1,616,560, ,311, ,095, % Registered claims reserve 3,189,537, % 1,962,741, ,126, ,544, % Unregistered claims reserve 1,497,264, % 1,217,885, ,253,576 59,644, % Other technical reserves 298,644, % 636,101 93,555, ,967, % Total reserves 8,457,896, % 4,797,824,257 1,517,247, ,252, % 31/03/2017 Total share A10 A3 A8 Share of significant classes lei (%) lei Lei lei (%) Premium reserve 3,456,594, % 1,610,553, ,883, ,512, % Registered claims reserve 3,068,858, % 1,900,828, ,115, ,434, % Unregistered claims reserve 1,414,660, % 1,147,664,892 95,752,940 53,953, % Other technical reserves 305,113, % 12,358,885 94,190, ,732,756 81,37% Total reserves 8,245,226, % 4,671,406,235 1,494,942, ,633, % 18

19 Technical reserves established for life insurance On 30/06/2017, insurance companies had established gross technical reserves for life insurance amounting to Lei 6,757,346,554. Of them, technical reserves pertaining to class C3 Life insurance and annuities related to investment funds and those relating to class C1 Life insurance, annuities and additional life insurance cover together for about 99% of the total. The increase in the amount of technical reserves for life insurance is the result of both underwriting new risks, and the calculated fluctuating value of reserves, further to the change in parameters included in the technical basis (e.g. norisk yield used to calculate the current amount of future cashins and payment flows, annual bonus rate included in the insured amount etc.). Unlike nonlife insurance where insurance policies are generally taken out for 1 year or less (reserves established to be issued either upon claim s payment, or when the contract ends), lifeinsurance contracts have a broader timespan, which makes the technical reserves be kept over longer periods and gradually accrue. Table 18 Structure of gross technical reserves for the life insurance category as at 30/06/ /06/2017 (Lei) Total share (%) Premium reserves 463,849, % Mathematical reserve 5,927,404, % Benefits and rebates reserve 120,791, % Other technical reserves 245,300, % Total technical reserves related to life insurance 6,757,346, % Table 19 Structure of gross technical reserves for the life insurance category as at 31/03/ /03/2017 Total share (%) Premium reserves 441,163,780 6,77% Mathematical reserve 5,817,903,847 89,24% Benefits and rebates reserve 119,571,195 1,83% Other technical reserves 140,655,277 2,16% Total technical reserves related to life insurance 6,519, % I.6. Liquidity of insurance companies The cashdeposit ratio is determined as the ratio between liquid assets provided by rules and shortterm obligations of insurers toward policyholders and, as per prudential requirements, it should be supraunitary. As at 30 June 2017, the cashdeposit ratio for each of the insurance categories as well as items contributing to its makingup reported the following figures: Table 20. Cashdeposit ratio by each insurance category as at 30 June 2017 Government bonds (mln. Lei) Municipal bonds (miln lei) Securities traded (miln lei) Deposits (mln. lei) Checking account and treasury activity (mln. lei) Shortterm bonds (mln. LeI) Cashdeposit ratio NLI 4, , LI 3, ,

20 Table 21 Cashdeposit ratio by each of the insurance categories as at 31 March 2017 Government bonds (mln. Lei) Municipal bonds (miln lei) Securities traded (miln lei) Deposits (mln. lei) Checking account and treasury activity (mln. lei) Shortterm bonds (mln. LeI) Cashdeposit ratio NLI 4, , LI 2, I.7. Reinsurance Nonlife insurance category About 39% of the gross premiums written in the first half of 2017 with regard to the nonlife insurance segment were transferred to reinsurance; this is the highest rate over the past 5 years and, at the same time, it significantly increased as compared to the same period of 2016, when it was only 32%. Table 22. Development of GPW and net reinsurance premiums during the period 2013/2017 for NLI Period GPW (lei) Net reinsurance Rate of transfer to Rate of retention premiums (Lei) reinsurance (%) S ,398,263,073 2,462,237, % 27.54% S ,194,551,731 2,204,727, % 30.98% S ,482,862,241 2,449,573, % 29.67% S ,884,393,309 2,650,490, % 31.77% S ,972,468,844 2,438,845, % 38.61% About 38% of the total gross claims paid were transferred to reinsurance during the first semester of Table 23 Development of GCP and net reinsurance GCP during the period 2013/2017 for NLI Period GCP (lei) Net reinsurance GCP (Lei) Rate of retention Rate of transfer to reinsurance (%) S ,136,297,297 1,672,716, % 21.70% S ,108,204,951 1,392,205, % 33.96% S ,018,623,367 1,463,584, % 27.50% S ,802,510,098 1,274,419, % 29.30% S ,958,238,376 1,221,667, % 37.61% About 38% of the gross technical reserves existing at the end of the first half of 2017 pertained to transfers to reinsurance. Table 24 Development of gross technical reserves and net technical reserves in reinsurance during the period 2013/2017 for NLI Period Gross technical reserves Net technical reserves in Rate of transfer to Rate of retention (lei) reinsurance (%) reinsurance (%) S ,252,364,069 5,048,761, % 30.38% S ,317,730,673 5,376,035, % 26.53% S ,023,667,251 5,643,986, % 29.66% S ,419,385,476 5,697,948, % 32.32% S ,457,896,955 5,217,488, % 38.31% Insurers often resort to, for a better part of nonlife insurance products (e.g. catastrophe, civil liability insurance) as part of their own risk management strategies, various forms of contracts of transfer to reinsurance, thus minimising the maximum claim borne where covered events with major financial impact occur. 20

21 Life insurance category Traditionally, there are significant differences with regard to the reinsurance policy between the life insurance and nonlife insurance businesses. Insurance companies generally take over a greater part of the underwritten risk with respect to life insurance. Since insurance premiums are generally prepaid and claims for insured events are set out by contract for each event, so more predictable, life insurance companies do not resort as often as the nonlife insurance companies to the transfer to reinsurance. Table 25 Development of GPW and net reinsurance premiums during the period 2013/2017 for LI Period Gross premiums Net reinsurance Rate of transfer to rate of retention written(lei) premiums (lei) reinsurance (%) S ,996, ,622, % 2.89% S ,442, ,113, % 3.89% S ,058, ,865, % 4.31% S ,920, ,584, % 3.99% S ,071,185,386 1,026,519, % 4.17% Table 26. GCP and net reinsurance GCP development during the period 2013/2017 for LI Period Gross premiums written Net reinsurance Rate of transfer to Rate of retention (lei) premiums ( (lei) reinsurance (%) S ,535,040 55,015, % 9.12% S ,186,999 54,325, % 12.64% S ,171,976 63,500, % 14.39% S ,940,917 66,778, % 10.89% S ,656,797 66,830, % 10.48% Table 27. Development of gross technical reserves and net reinsurance technical reserves during the period of 2013/2017 for LI Period Gross technical reserves Net technical reserves in Rate of transfer to Rate of retention (lei) reinsurance (%) reinsurance (%) S ,501,140,136 5,406,864, % 1.71% S ,180,486,244 5,108,598, % 1.39% S ,555,499,930 5,517,905, % 0.68% S ,008,782,815 5,976,140, % 0.54% S ,757,346,554 6,722,685, % 0.51% I.8. Profitability of insurance companies The net result during the first half of 2017 for the whole insurance market was positive, reaching a net total profit of Lei 260,374,231. The net profit amount, cumulated for the whole market, was Lei 292,127,680, up by 23% compared to the first half of The net loss, cumulated for the whole market, was Lei 31,753,449, down by 87% as compared to the first half of

22 Table 28. Net halfyearly financial result for the whole market during the period 2013/2017 Period Net financial result (lei) Change to the nominal value (Lei) compared to the previous period Pace of change (%) compared to the previous period S ,968,725 0% S ,249,382 4,280,657 9% S ,340,640 16,091,258 30% S ,079, ,420, % S ,374, ,294, % Figure 14. Half yearly net financial result on the whole market during the period 2013/ , , ,0 Net financial result (Lei) ,0 S S S S S The report was as follows in terms of technical results achieved by insurance companies during the first semester of the past 5 years, separately for the nonlife insurance business and the one conducted in the life insurance segment: Table 29 Technical result on the whole nonlife insurance market during the period 2013/2017: Period Technical result for NLI (lei) Change to the nominal value (lei) compared to the previous period Pace of change (%) compared to the previous period Profit Loss Profit Loss Profit Loss S ,814, ,233,756 0% 0% S ,262, ,831,739 35,551,683 12,597,983 26% 6% S ,714, ,283,690 44,547,987 9,548,049 44% 4% S ,976, ,104,950 91,261, ,178, % 53% S ,345,350 25,893,502 25,368,846 79,211,448 17% 75% Figure 15 Half yearly net technical result on the whole nonlife insurance market during the period 2013/ , ,0 Net technical result for NLI ,0 S S S S S ,0 22

23 Table 30 Technical result on the whole life insurance market during the period 2013/2017 Period Technical result for LI (lei) Change to the nominal value (lei) compared to the previous period Pace of change (%) compared to the previous period Profit Loss Profit Loss Profit Loss S ,446,688 37,794,462 0% 0% S ,384,861 28,431,883 11,061,827 9,362,579 15% 25% S ,930,262 32,043,601 15,545,401 3,611,718 25% 13% S ,559,075 21,707,789 21,371,187 10,335,812 27% 32% S ,635,979 5,837,277 7,076,904 15,870,512 13% 73% Figure 16. Half yearly net technical result on the whole life insurance market during the period 2013/ , , , ,0 Net technical result for LI S S S S S I.9. Statistical data under the new solvency regime Entry into force of Solvency II Directive as of 1 January 2016 required insurance companies to align with new rules and standards. The Directive increases consumer protection in that it introduces new prudential financial requirements (Pillar I) to ensure payments to insurance policyholders and/ or beneficiaries are made. As it is a riskbased prudential regime, Solvency II uses specific models for assessing assets, liabilities and capital requirement for insurance activities. Their application leads to significant differences compared to amounts calculated as per statutory regulations, especially in terms of technical reserves and prudential financial requirements (capital requirement). According to Solvency II, capital requirements are higher for insurance companies, actually relying on risks they undertake (both from an investment perspective and in terms of underwritings). The value of assets as well as that of the insurance companies bonds grew at the end of the 2 nd quarter of 2017 (measured according to Solvency II principles) compared to the values registered at the end of the 2 nd quarter of the previous year. Both total assets, and total debts registered by insurance companies grew by 14% in the 2 nd quarter of 2017 compared to the value recorded at the end of the 2 nd quarter of

24 Billion lei Million lei Billion lei Figure 17. Development of assets and total debts of the insurance companies 25,0 20,0 15,0 10,0 17, , , , ,0 T T Total assets Total active Total debts Total datorii Surplus assets as compared to debts was Lei 4.69 billion on 30/06/2017, up compared to Lei 4.03 billion, which was recorded at the end of the 2 nd quarter of Figure 18. Development of the solvency capital requirement (SCR) and minimum capital requirement (MCR) 3000,0 2500,0 2000,0 1500,0 1000,0 500,0 2631,0 2771,0 1134,0 1197,0 T T SCR MCR A comparative analysis between the report recorded at the end of the 2 nd quarter of 2016 and the one existing at the end of the 2 nd quarter of 2017 shows an increase in the solvency capital requirement (SCR) by Lei 140 million. At the end of the 2 nd quarter of 2017, eligible own funds to cover the solvency capital requirement amounted to Lei 4.97 billion, up by 18% compared to the 2 nd quarter of Figure 19. Development of eligible own funds to cover the solvency capital requirements 5,2000 5,000 4,8000 4,6000 4,4000 4,2000 4,000 3,8000 4, ,97000 T T

25 The aggregate amount of eligible own funds to cover the SCR is formed by totalling the company s own funds classified on the 3 tiers defined by the Solvency 2 regime, depending upon quality criteria. Figure 20. The structure of eligible own funds to cover the SCR on 30/06/2016 1st tier without restrictions 94% Other; 6% 2nd tier; 5% 3rd tier; 1% The eligible own funds to cover the SCR were worth billion Lei 4.21 on 30 June 2017, on the whole system, consisting mainly of Tier 1 items without restrictions (94%) and Tier 2 items (5%). The eligible own funds to cover the SCR reached the amount of Lei billion 4.96 at the end of the 2 nd quarter of 2017, and with regard to the components, Tier 1 items without restrictions held the largest share (92%). Figure 21 Structure of eligible own funds toc over the SCR (as at 30/06/2017) tier 1 with restrictions; 2% Tier 1 without restrictions; 92% Other8% Tier2; 5% Tier 3; 1% 25

26 MCR rate The significant ratio of Tier 1 items in total eligible funds indicates that, at market level, the capital held by insurance companies in Romania is of very good quality (mainly equity). All companies meet the solvency capital requirement (SCR) at the end of the 2 nd quarter of 2017, and there is just one company which failed to meet the minimum capital requirements (MCR); on 30 June 2017, it was in the process of transferring its insurance portfolio. Figure 22 Distribution of the insurance companies depending on the SCR/MCR rate on 30 June ,000 9,000 8,000 7,000 6,000 5,000 4,000 SCR and MCR weighted averages on market level 3,000 2,000 1,000 2,000 4,000 6,000 8,000 10,000 12,000 14,000 SCR rate SCR and MCR rates to the market level SCR and MCR rates to the market level, calculated as weighted average of SCR/MCR individual rates of the insurance companies, were supra unitary both at the end of the first half of 2017, and at the end of the first half of Also, both the SCR rate to the market level and the MCR rate to the market level registered growth at the end of the first semester of 2017, as compared to the end of the first semester of SCR rate to the market level registered an increase by 12%, and MCR rate to the market level registered an increase by 11%, as shown by the following table: Table 31 SCR and MCR rates to the market level S S SCR rate to the market level MCR rate to the market level

27 I.10. Household insurance During the first half of 2017, voluntary home insurance policies taken out declined by 13% compared to the same period of the previous year. Table 32 Dynamics of the number of contracts and volume of gross premiums written for voluntary household insurance during the period 2013/2017 (half yearly Period Number of contracts in force (items) Number of contracts concluded over the reporting period (items) Gross premiums written (lei) Gross claims paid (Lei) S ,837,033 2,165, ,307,079 31,320,492 S ,140, , ,181,041 26,648,793 S ,793, , ,855,084 31,462,110 S ,563, , ,597,563 22,069,133 S ,502, , ,299,242 28,632,886 Figure 23. Evolution of the number of contracts and volume of gross premiums written for voluntary home insurance during the period 2013/2017 (half yearly) , , , , , , , ,0 T T T T T PBS IBP Nr ctr No. la of final ctr. at GPW GCP Nr ctr noi the end No. of new ctr , , , , , , , , ,0 Compulsory household insurance is presented by the results of the PAID activity Insurance Pool against Disasters. Compared to the first half of 2016, the number of contracts in force at the end of the first half of 2017 decreased by 3%, and gross premiums written decreased by 2%. Table 33 Development of compulsory household insurance Period Number of contracts in force at the end of the reporting period (items) Number of new contracts, concluded during the reporting period (items) Gross premiums written (Lei) Gross claims paid (Lei) S ,410 55,237 3,704,344 57,961 S ,350, ,085 56,872, ,851 S ,506, ,300 57,135,159 2,422,732 S ,733, ,962 70,812, ,028 S ,672, ,271 69,407,852 1,490,510 27

28 Figure 24.Development of compulsory household insurance , , , , , , , ,0 T T T T T PBS GPW IBPGCP Nr No. ctr of la ctr. final at the Nr No. ctr of noi new ctr. end , , , , , , , , , ,0 The household insurance market as a whole (compulsory and voluntary) marked a decrease during the first half of 2017 with regard to gross premiums written of about 10% compared to the same period of the previous year. Table 34. Development of household insurance (compulsory and voluntary) Period Number of contracts in force at the end of the reporting period (items) Number of new contracts, concluded during the reporting period (items) Gross premiums written (Lei) Gross claims paid (Lei) S ,166,443 2,220, ,011,423 31,378,453 S ,490,931 1,633, ,053,113 27,131,644 S ,299,440 1,680, ,990,243 33,884,842 S ,296,396 1,445, ,409,712 22,820,161 S ,175,038 1,419, ,707,094 30,123,396 Figure 25. Household insurance development (compulsory and voluntary) , , , , , , , ,0 T T T T T PBS GPW IBP GCP Nr No. ctr of la ctr. final at Nr No. ctr of noi new ctr. the end , , , , , , , , ,0 28

29 I.11. Development of the motor thirdparty liability (MTPL) insurance market underwritten on the Romanian territory in the first half of 2017 The following insurance undertakings, licensed by A.S.F. for MTPL activities, were active on the insurance market in the first half of 2017: AllianzŢiriac Asigurări S.A., Asigurarea Românească Asirom Vienna Insurance Group S.A., Societatea de Asigurare Reasigurare City Insurance S.A., Euroins România Asigurare Reasigurare S.A., Generali Romania Asigurare Reasigurare S.A., Grawe Romania Asigurare S.A., Groupama Asigurări S.A., Omniasig Vienna Insurance Group S.A. și Uniqa S.A.. Market share A significant concentration was noticed in the first half of 2017, i.e. the first two insurers totalled 58% (compared to 38% in 2016) of the total gross premiums written pertaining to MTPL insurance in Romania. Table 35 Market share pertaining to MTPL insurance during the first semester of 2017 Crt. no. Insurance undertaking Market share 1 CITY INSURANCE 30.27% 2 EUROINS 27.94% TOTAL (12) 58.21% 3 ASIROM VIG 12.77% 4 ALLIANZ TIRIAC 8.08% 5 OMNIASIG VIG 6.81% 6 GENERALI 5.49% 7 GROUPAMA 5.33% 8 UNIQA 3.22% 9 GRAWE 0.09% TOTAL 100% Traditionally, the Romanian MTPL market was dominated by 34 insurers, while the other players held far less market shares, if not insignificant. The insurance undertakings to hold the highest share on the MTPL insurance market in 2016 and during the first half of 2017 were Euroins, City Insurance and Asirom; they held together over half the market (54% on 31/12/2016 and 71% on 30/06/2017) 29

30 Table 36 The evolution of market shares registered by MTPL insurance 2012 S is as follows: Insurance undertaking Year 2013 Year 2014 Year 2015 Year 2016 Semester I of EUROINS 19.50% 16.60% 22.00% 20.57% 27.94% 2 CARPATICA 17.30% 18.00% 16.40% 10.52% 0.00% 3 ASIROM VIG 8.60% 9.40% 12.70% 17.34% 12.77% 4 CITY INSURANCE 7.50% 10.70% 10.40% 16.14% 30.27% 5 OMNIASIG VIG 7.90% 9.90% 10,20% 8.92% 6.81% 6 ASTRA 15.10% 15.40% 8.70% 0.00% 0.00% 7 ALLIANZ TIRIAC 8.70% 8.30% 8.20% 9.49% 8.08% 8 GROUPAMA 5.20% 4.30% 5.60% 7.00% 5.33% 9 UNIQA 8.20% 5.50% 3.80% 4.91% 3.22% GENERALI 1.70% 1.70% 1.90% 5.09% 5.49% ABC 0.30% 0.30% 0.00% 0.00% 0.00% GRAWE 0.00% 0.00% 0.00% 0.00% 0.09% Total 100% 100% 100% 100% 100% Omniasig figures were cumulated to those registered by BCR Asigurari Generale for the years before the merger with regard to Omniasig VIG Generali figures were cumulated with Ardaf for the years prior to the merger with regard to Generali Data as at 30 June 2015 was used for Astra undertaking for the year 2015 Data as at 30 June 2015 was used for Carpatica undertaking for the year 2016 Evolution of premiums The total amount of insurance premiums underwritten with regard to MTPL insurance during the first half of 2017 reached Lei 2,041,889,248 lei, the remainder to class A10 total being represented by the carrier liability insurance for goods carried and the MTPL insurance policies underwritten on other EU member states territory under the right of freedom to provide services. A decrease by 2% was reported by gross premiums written, as compared to the same period of the previous year. The number of MTPL contracts concluded during the first semester of 2017, expressed into annual units (to take account of the various term of policies) was 2,718,380 units, amount similar to the one reported in the same period of the previous year. Figure 26 Evolution of gross premiums written as regards MTPL during the period 2013/ , , , , ,0 T T T T T GPW PBS thousands mii lei of Lei , , , , ,0 No. Nr. of contracte contracts taken incheiate out , , , , ,0 No. of contracts as annual units Nr contracte unitati anuale , , , , , , , , , , , , , , ,0 GPW PBS mii lei Nr. contracte incheiate Nr contracte unitati anuale thousands Lei No. of contracts concluded No. of contracts as annual units 30

31 As compared to similar periods of previous years, the highest share during the first half of 2017 is held by 6 month validity policies. Table 37. Share of contracts concluded by periods as total contracts depending on the contracted period 2013/2017 S S S S S Valid over a 12 month period 37.01% 38.32% 38.63% 41.05% 34.13% Valid over an 11 month period 0.00% 0.00% 0.00% 0.00% 0.03% Valid over a 10 month period 0.00% 0.00% 0.00% 0.00% 0.02% Valid over 9 month period 0.00% 0.00% 0.00% 0.00% 0.06% Valid over an 8 month period 0.00% 0.00% 0.00% 0.00% 0.10% Valid over a 7 month period 0.00% 0.00% 0.00% 0.00% 0.12% Valid over a 6 month period 56.99% 55.28% 54.69% 51.81% 43.49% Valid over a 5 month period 0.00% 0.00% 0.00% 0.00% 0.09% Valid over a 4 month period 0.00% 0.00% 0.00% 0.00% 0.17% Valid over a 3 month period 0.00% 0.00% 0.00% 0.00% 3.56% Valid over a 2 month period 0.00% 0.00% 0.00% 0.00% 2.00% Valid for one month 6.00% 6.40% 6.68% 7.14% 16.23% Total 100% 100% 100% 100% 100% There were no significant changes in the clients portfolio structure during the first half of 2017; therefore, a constant share around 7879% was maintained on the whole market share as regards the contracts concluded with natural persons. Table 38. Share of the number of contracts concluded during the period as total contracts depending on the contracting person (natural or legal person) 2013/2017 S S S S S Natural persons 77.79% 78.35% 78.57% 78.44% 79.23% Legal persons 22.21% 21.65% 21.43% 21.56% 20.77% Total 100% 100% 100% 100% 100% Development of MTPL average premium Table 39. Development of the MTPL average premium annualized during the period 2013/2017 S S S S S Total market Natural persons Legal persons The detailed calculation shown below for the first half of 2017 illustrates how the average premium is calculated. Table 40. MTPL average premium during the first semester of 2017 Total Natural persons Legal persons Number of contracts taken out during the period researched: 4,750,342 3,763, ,642 Valid for 12 months 1,621,167 1,129, ,036 Valid for 11 months 1,632 1, Valid for 10 months Valid for 9 months 2,945 2, Valid for 8 months 4,922 3, Valid for 7 months 5,780 4,695 1,085 Valid for 6 months 2,065,952 1,783, ,742 Valid for 5 months 4,319 3, Valid for 4 months 8,049 6,289 1,760 Valid for 3 months 168, ,272 25,617 Valid for 2 months 94,966 81,242 13,724 31

32 Total Natural persons Legal persons Valid for 1 month 770, , ,629 MTPL premiums underwritten (Lei) out of which: 2,041,889,248 1,147,510, ,378,522 Valid for 12 months 1,216,305, ,313, ,991,990 Valid for 11 months 1,046, , ,872 Valid for 10 months 633, , ,579 Valid for 9 months 1,679, , ,021 Valid for 8 months 1,956,566 1,121, ,023 Valid for 7 months 2,119,240 1,179, ,352 Valid for 6 months 684,677, ,014, ,663,623 Valid for 5 months 1,252, , ,143 Valid for 4 months 2,397,091 1,317,594 1,079,497 Valid for 3 months 36,287,053 26,448,669 9,838,384 Valid for 1 months 14,120,651 10,167,349 3,953,302 Valid for 1 months 79,413,698 41,561,962 37,851,736 MTPL average premium for 12 month contracts (calculated as ratio between the amount of premiums written for contracts valid for 12 months and number ,343 of MTPL contracts valid for 12 months) Lei MTPL annualized average premium for 6 month contracts (calculated as ratio between the amount of premiums written for contracts valid for 6 months and ,250 number of MTPL contracts valid for 5 months, multiplied by 2 ) Lei MTPL annualized average premium for 1 month contracts (calculated as ratio between the amount of premiums written for contracts with 1 month validity 1, ,726 and the number of MTPL contracts valid for 1 month, multiplied by 12) Lei Annual exposure units (number of 12 month validity contracts + number of contracts for 6 months divided by 2 + number of contracts for 1 month divided 2,792,000 2,132, ,403 by 12) Annualized MTPL average premium (GPW divided by annual units of exposure ) Lei ,356 Evolution of claims The MTPL average claim paid for bodily injury dropped by 9% during the first half of 2017, as compared to the same period of the previous year, and the one for property damage dropped by 4%. The average premium reported a decrease by about 5% during the first half of 2017, as compared to the same period of the previous year, and the average claim file decreased by about 2%. Figure 27. Evolution of claims paid during the period 2013/2017 for bodily injuries (into thousands Lei) and the number of related claim files paid , , , , , ,0 T T T T T Bodily Vătămări injuries corporale , , , , ,0 Number Număr of dosare claim files 3435,0 4298,0 4099,0 4155,0 5324,0 Bodily injuries Vătămări corporale Număr Number dosare of claim files 6000,0 5000,0 4000,0 3000,0 2000,0 1000,0 32

33 Figure 28. Evolution of claims paid during the period 2013/2017 for property damage (thousands Lei) and the number of related claim files paid , , , , , , , , , , , ,0 T T T T T Property Daune damage materiale , , , , ,0 Number Număr of dosare claim files , , , , , , , , , , , , ,0 Daune Property materiale damage Număr Number dosare of claim files Figure 29 Development of the average premium and average claim during the period 2013/ ,0 7000,0 6000,0 5000,0 4000,0 3000,0 2000,0 1000,0 T T T T T Prima Average medie 516,0 535,0 609,0 768,0 731,0 premium Dauna Average medie claim 5930,0 7078,0 6856,0 7354,0 7208,0 Table 41. Development of MTPL claims paid bodily injuries S S S S S Claims paid to natural persons 91,629, ,148, ,579, ,160, ,614,095 Claims paid to legal persons 71,515, ,231,409 92,113,450 81,895,189 96,432,854 Total claims paid 163,144, ,380, ,692, ,056, ,046,949 Table 42. Evolution of MTPL claims paid damage to property S S S S S Claims paid to natural persons 453,402, ,737, ,342, ,580, ,713,403 Claims paid to legal persons 341,255, ,849, ,017, ,695, ,601,732 Total claims paid 794,658, ,586, ,360, ,275, ,315,135 33

34 Figure 30. Evolution of the average claim paid for MTPL bodily injuries 80000, , , , , , , ,0 Average claim natural persons T T T T T Dauna medie PF 41293, , , , ,0 Dauna medie PJ 58812, , , , ,0 Average claim legal persons Dauna Average medie claim total total 47495, , , , ,0 Figure 31. Evolution of the average claim paid for MTPL damage to property 8000,0 7000,0 6000,0 5000,0 4000,0 3000,0 2000,0 1000,0 T T T T T Average Dauna medie claim n PF pers 4789,0 5010,0 5069,0 5305,0 5296,0 Average Dauna claim medie legal persons PJ Average claim total 5382,0 5700,0 6278,0 7060,0 6492,0 Dauna medie total 5027,0 5284,0 5545,0 5973,0 5746,0 To get a broad picture of the actual expenditure incurred with claims, the variation of the technical reserves established by companies for reported but not settled claims (RBNS) should be borne in mind, as well as incurred but not reported claims, therefore not yet paid (IBNR). Figure 32 Evolution of technical reserve quarterly during the period 2013/ , , , , , , ,0 T T T T T RBNS (mii lei) , , , , ,0 IBNR (mii lei) , , , , ,0 Total (mii lei) , , , , ,0 Mii lei= thousands Lei 34

35 II. Branches On 30 June 2017, 11 branches were active on the insurance market, 8 out of which conducted the nonlife insurance ( NLI ) business, and 3 conducted the business of life insurance ( LI ). II.1. Gross premiums written by branches (NLI and LI) During the first half of 2017, branches totalled gross premiums written amounting to Lei million, increasing by 9% as compared to the same period of the previous year: Gross premiums written (GPW) pertaining to nonlife insurance (NLI) amount to Lei 178 million, up by 16% as compared to the same period of the previous year; Gross premiums written pertaining to life insurance (LI) amount to Lei million, up by 4% compared to last year. Table 43 Dynamics of distribution by insurance segments during the period 2016/2017 S S NLI 153,590, ,004,051 LI 179,556, ,906,204 TOTAL 333,147, ,910,255 NL share I (%) 46% 49% LI share (%) 54% 51% Figure 33 Evolution of the gross premiums amount written during the period 2016/ , , , , , , , ,0, , , , ,180 T T AG AV AG= nonlife insurance; AV= life insurance II.2. Gross claims paid by branches (GCP) During the first half of 2017, branches reported gross claims paid, cumulatively for the two insurance categories, amounting to Lei million, as follows: Lei 49.5 million pertaining to nonlife insurance contracts (44% of the total gross indemnity payments made), registering an increase by 32% compared to the same period the previous year (Lei 37.6 million); Lei 62.4 million account for sums paid for gross claims (maturities and redemptions included), pertaining to life insurance, registering a decrease by 3% compared to the same period of the previous year (Lei 64.3 million). 35

36 Table 44 Evolution of the amount of gross claims paid, maturities and redemptions included, with regard to nonlife insurance (Lei million) S S NLI 37,579,990 49,527,913 LI 64,349,704 62,398,543 TOTAL 101,929, ,926,456 NLI share (%) 37% 44% LI share (%) 63% 56% Figure 34 Evolution of the amount of gross claims paid, maturities and redemptions included, with regard to life insurance during the period 2016/ , , , , , , , , , ,320,0 T T AG AV AG= nonlife insurance; AV= life insurance 36

37 III. Insurance and/ or reinsurance brokers According to centralised data on 30/06/2017, there were 317 insurance and/or reinsurance brokers out of the 321 to have sent the regular reports, as per statutory provisions in force, conducting insurance intermediation and/ or damage settlement. III.1. Insurance mediation services It follows, upon the centralisation of reports sent, that on 30/06/2017 the amount of mediated premiums for nonlife and life insurance totalled Lei 3,178,840,312 lei, a nominal growth by 1.05 percentage points as compared to the same period of 2016 (Lei (3,015,430,624) in nonlife insurance and a growth by 1.21% in life insurance. Insurance and/ or reinsurance brokers mediated, during the first half of 2017, a volume of insurance premiums totalling Lei 3,178,840,312 with respect to the total volume of gross premiums written by insurers for the two insurance categories (nonlife and life) account for 63.01%, downward by 1.55 percentage points compared to the similar period of 2016 (64.58%). Table 45 Evolution of the intermediation degree Gross premiums written (lei) Mediated premiums (lei) Intermediation degree (%) Period Total out of which: NLI LI Total out of which: NLI LI Total NLI LI 30/06/2013 4,240,259,089 3,398,263, ,996,016 1,982,610,992 1,926,568,808 56,042, % 56.69% 6.66% 30/06/2014 3,844,994,201 3,194,551, ,442,470 2,195,704,631 2,141,129,895 54,574, % 67.02% 8.39% 30/06/2015 4,205,920,422 3,482,862, ,058,181 2,511,936,906 2,448,627,752 63,309, % 70.31% 8.76% 30/06/2016 4,669,313,481 3,884,393, ,920,172 3,015,430,624 2,937,622,339 77,808, % 75.63% 9.91% 30/06/2017 5,043,654,230 3,972,468,844 1,071,185,386 3,178,840,312 3,085,017,150 92,823, % 77.66% 8.67% Although there was a rise of the volume of gross premiums written pertaining to life insurance during the first half of 2017 as compared to the similar period of 2016, the intermediation degree decreased, given the fact that insurance undertakings gave a strong boost to the purchase process by own strengths, viewed as more effective, including as regards the related costs. An analysis of the structure of mediated premiums by insurance and/or insurance brokers by classes of nonlife insurance reveals that during the first half of 2017, significant shares in the total of mediated premiums for nonlife insurance (Lei 3,085,017,150) are held by the following classes: class A10. Civil liability insurance for motor vehicles (MTPL + CMR) account for 58.20% (Lei 1,795,439,469); class A3. Land transportation means insurance (Casco) account for 21.18% (Lei 653,310,759); class A8. Fire and other natural disasters insurance account for 8.48% (Lei 261,609,782); class A9. Other damages or losses related to other assets than those stated under classes 3 7 account for 3.65% (Lei 112,703,113); other classes held a share of 8.49% (Lei 261,954,027) out of the total nonlife insurance mediated premiums. 37

38 Figure 35. Structure of mediated premiums by nonlife insurance classes during the first half of % 3.65% 8.49% 21.18% 58.20% Clasa Class A10 Clasa Class A3 Clasa Class A8 Clasa Class A9 Alte Other clase classes Figure 36. Structure of mediated premiums by life insurance classes during the first semester of % 3.29% 8.26% 20.22% 60.57% Clasa Class A10 Clasa Class A3 Clasa Class A8 Clasa Class A9 Alte Other clase classes An analysis of the structure of mediated premiums by insurance and/or insurance brokers by classes of life insurance reveals that during the first half of 2017, significant shares in the total mediated premiums for life insurance are held by the following classes: class C1 Life insurance, annuities and additional life insurance amounting to Lei 80,388,154 i.e % of the total mediated premiums for life insurance category; class C3 Life insurance and annuities related to investment funds (unitlinked): Lei 7,869,326, i.e. 8.39% of the total mediated premiums for the life insurance category; the other insurance classes amounted to Lei 5,565,681, i.e. 5.93% of the mediated premiums for this category. 38

39 Figure 37. Structure of mediated premiums by life insurance classes during the 1 st semester of % 5.93% 85.68% Clasa Class C1 Clasa Class C3 Alte Other clase classes Figure 38 Structure of mediated premiums by life insurance classes during the 1 st semester of % 5.95% Clasa Class C1 Clasa Class C3 Alte Other clase classes 85.59% Table 46 Report on the top 10 insurance and/ or reinsurance brokers depending on the amount of mediated premiums during the first half of 2017 Crt. no. Insurance broker Market share 1 SAFETY BROKER DE ASIGURARE S.R.L. 7.30% 2 MARSH BROKER DE ASIGURAREREASIGURARE S.R.L. 7.25% 3 TRANSILVANIA BROKER DE ASIGURARE S.A. 5.56% 4 DESTINE BROKER DE ASIGURAREREASIGURARE S.R.L. 5.08% 5 INTER BROKER DE ASIGURARE S.R.L. 4.75% 6 DAW MANNLIEMENT BROKER DE ASIGURARE S.R.L. 4.19% 7 CAMPION BROKER DE ASIGURARE S.R.L. 3.76% 8 UNICREDIT INSURANCE BROKER S.R.L. 3.10% 9 PORSCHE BROKER DE ASIGURARE S.R.L. 2.41% 10 MILLENIUM INSURANCE BROKER (M.I.B.) S.A. 2.00% Total mediated premiums by the top 10 brokers 45.40% Compared with the previous period (30/06/2016), the top 10 insurance and/ or reinsurance brokers are noted to be constant during the first half of 2017, depending on the amount of mediated premiums for nonlife and life insurance. 39