CEE Insurance Market Trends

Transcription

1 CEE Insurance Market Trends Jure Kimovec, FRM, CAIA, ERP Insurance Ratings Poiana Brasov, 22. May 2017 Copyright 2017 by S&P Global. All rights reserved.

2 7,0% Insurance penetration across the region 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% Source: S&P Global Ratings Data based on 2015 numbers 2

3 GPW origination per countries Poland Czech Republic Hungary Slovakia Slovenia Romania Baltic countries Rest of the CEE Source: S&P Global Ratings; Data as of GPW Gross Premium Written 3

4 MTPL Insurance as % of P/C GPW in % 70% 60% 50% 40% 30% 20% 10% 0% Source: S&P Global Ratings MTPL Motor Third Party Liability, P/C Property / Casualty; GPW Gross Premium Written BiH Bosnia and Herzegovina 4

5 Bodily injury claims are rising in CEE Developing court case law practice is increasing amount of compensations paid. In a number of CEE countries pain and suffering damages represent large proportion of bodily injury claims. Only slowly improving road safety does not sufficiently reduce claims frequency. In million PLN Source: UFG Bodily injury claims in Poland

6 Technology is increasing competitive pressure in CEE insurance sector Usage of technology solutions mostly seen in the motor line of business. Number of companies are offering driving tracking apps based on which motor price discounts are awarded. Online comparsion portals have risen in popularity in several CEE markets over the past five years which is increasing market competition. Several companies in the region have in their strategies further focus on digitalization of their business. Better IT enables companies to optimize their back-office functions as well as better risk selection. Private & Confidential 6

7 MTPL sectors' combined ratios across CEE in % - 90% 90% - 100% 100% - 105% 105% - 120% Above 120 No data MTPL Motor Third Party Liability, Data for Kosovo and Montenegro is from

8 CEE Insurance M&A Number of companies already left the CEE markets. Weak market profitability with high competitiveness, lack of scale and only medium growth prospect will lead to further M&A activity in the region. Some of the latest M&A deals in the CEE Insurance Sector Company Sold Country Seller Buyer Year of acquisition Cardif Osiguranje Croatia BNP Paribas Croatia Osiguranje 2017 Merkur Insurance Podgorica Montenegro Merkur Grawe 2017 Bank Pekao Poland UniCredit PZU 2016 Liberty Ubezpieczen Poland Liberty Mutual AXA 2016 AIG's operations in CEE several countries AIG Fairfax 2016 AXA Life Insurance S.A. Romania AXA VIG 2016 BTA Baltic AAS Latvia Private investor VIG 2016 AXA Serbia Serbia AXA VIG 2016 MKB Life Insurance Hungary MKB Bank CIG Pannonia 2016 UBB-AIG Bulgaria UBB Bank VIG 2016 INSIG Albania State owned EUROSIG 2016 AS Nezivotno Osiguranje Serbia KD Group Sava Re 2016 Source: S&P Global Ratings; Data as of

9 Key trends for P&C insurance across the region Number of regulatory changes affecting MTPL insurance. Solid macroeconomic developments are supporting growth in property insurance. Higher frequency of natural catastrophes in previous years is leading several countries to rethink monetary support for agriculture. Solvency II implementation is leading to some cost saving initiatives and further investments into digitalization. Several country specific drivers. P/C Property / Casualty 9

10 Key trends for Life insurance across the region Upcoming implementation of IDD directive is fostering changes of life insurance offering in several CEE countries. Low interest rate environment leads insurers to reduce guaranteed rate for traditional products that is hampering demand for them. Cyclically higher amount of maturities of old contracts could lead to premium reductions in the next year or two. Favorable regulatory changes for additional supplementary pension insurance or private life insurance schemes introduced in several CEE countries. IDD Insurance Distribution Directive 10

11 CEE P/C markets in comparison with Western European markets Countries Industry Risk P/C Profitability P/C Product Risk P/C barriers to entry P/C market growth prospects Poland Intermediate Neutral Neutral Neutral Neutral Czech Republic Intermediate Positive Neutral Neutral Neutral Slovenia Intermediate Positive Negative Positive Neutral Austria Intermediate Neutral Neutral Positive Neutral Germany Low Neutral Neutral Positive Neutral Italy Intermediate Neutral Neutral Positive Neutral Source: S&P Global Ratings; Data as of:

12 CEE Insurance Research 1. CEE Motor Third-Party Liability Insurance Profitability: The Good, The Bad, And The Ugly; Dec. 12, LIME&sourceObjectId= &sourceRevId=7&fee_ind=N&exp_date= :05:53 2. Insurance In Ex-Yugoslavia 25 Years After Dissolution: Is The Gap Closing?; Nov. 14, Insurance Industry And Country Risk Assessment: Czech Life; May 12, Insurance Industry And Country Risk Assessment: Czech Property/Casualty, May 12, Insurance Industry And Country Risk Assessment: Slovenia Life; Sep. 5, Insurance Industry And Country Risk Assessment: Slovenia Property/Casualty; Sep. 5, Poland's Property/Casualty Insurance Sector Carries A Moderate Industry And Country Risk Assessment; Feb. 11, Poland's Life Insurance Sector Carries A Moderate Industry And Country Risk Assessment; Feb. 11,

13 Thank you for your attention! Jure Kimovec, FRM, CAIA, ERP S&P Global Ratings - Frankfurt Insurance Ratings T: jure.kimovec@spglobal.com 13

14 Macroeconomic environment Stable growth prospects for the region Source: S&P Global Ratings; Data as of Average expected GDP Growth rates between ,5% - 2,0% 2,0% - 2,5% 2,5% - 3,0% 3,0% - 3,5% 14

15 Appendix: GDP Growth Rates GDP Growth Rates (%) Western Europe f 2018f 2019f 2020f Austria 2,80 0,70 0,10 0,60 1,00 1,50 1,50 1,50 1,50 1,50 Germany 3,70 0,50 0,50 1,60 1,70 1,90 1,60 1,50 1,30 1,30 Italy 0,60-2,80-1,70 0,10 0,80 0,90 0,90 1,00 1,20 1,20 CEE Poland 5,00 1,60 1,40 3,30 3,90 2,80 3,30 3,10 3,00 2,90 Czech Republic 2,00 (0,80) (0,50) 2,70 4,50 2,50 2,60 2,30 2,20 2,00 Slovakia 2,80 1,70 1,50 2,60 3,80 2,90 2,90 3,10 3,10 2,90 Hungary 1,70 (1,60) 2,10 4,00 3,10 2,00 2,90 2,50 2,50 2,40 Slovenia 1,20 0,60 (2,70) (1,10) 3,10 2,30 2,70 2,70 2,40 2,50 Croatia (0,30) (2,20) (1,10) (0,50) 1,60 2,90 3,10 2,50 2,50 2,50 Romania 1,10 0,60 3,50 3,10 3,90 4,80 4,10 3,30 2,50 2,50 Bulgaria 1,30 1,90-0,90 1,30 3,60 3,00 3,00 2,60 2,60 Serbia 0,60 1,40 (1,00) 2,60 (1,80) 0,80 2,70 2,70 2,60 2,60 Macedonia 2,30 (0,50) 2,90 3,60 3,80 2,50 2,00 2,70 2,80 3,00 Bosnia and Herzegovina 0,90 (0,90) 2,40 1,10 3,20 2,60 2,50 2,80 2,60 2,60 Montenegro 3,20 (2,70) 3,50 1,80 3,40 2,40 3,30 3,50 2,90 2,70 Albania 2,50 1,40 1,10 2,00 2,60 3,20 3,50 3,70 3,90 3,90 Lithuania 6,00 3,80 3,50 3,50 1,80 2,20 2,60 2,80 2,80 2,80 Latvia 6,40 4,00 2,60 2,10 2,70 2,00 3,00 3,20 3,00 3,00 Estonia 2,30 7,60 4,30 1,40 2,80 1,40 2,40 2,40 2,70 2,00 Source: S&P Global Ratings; Data as of

16 Appendix: MTPL line Combined Ratio (%) MTPL line combined ratio in CEE countries (%) Poland 117,1 113,7 104,5 105,6 105 Czech Republic 110,1 109,5 105,1 102,8 100,6 Slovenia 84,9 82,1 81,1 65,1 84 Slovakia* 92,1 101, ,2 92 Hungary 107,2 112,2 119,5 108,6 104 Latvia 125,8 111,2 110,7 107,7 110,4 Romania 122,5 126,4 133,1 124,7 144 Bulgaria 131 N/A N/A N/A N/A Croatia 97,3 98,4 82, ,4 Bosnia and Herzegovina (Republika Srpska) 72,9 69,6 80,3 76 N/A Bosnia and Herzegovina (Federation) 86 N/A N/A N/A N/A Macedonia 103,6 102,8 104,2 97,2 N/A Albania 89,2 83,3 138,2 93,7 N/A Kosovo n/a 87, ,9 N/A Montenegro n/a 76, N/A Russia 101,7 93 N/A N/A N/A Germany 98,8 98,8 98,1 102,2 104,3 MTPL--Motor third-party liability. N/A--Not available. *All data at the mid of the respective year. No administrative cost included. No data was available for Estonia, Lithuania, and Serbia. We take reported combined ratios by local regulators or insurance associations. Where we calculated combined ratios, we used net combined ratios. The lower the combined ratio, the more profitable the insurer, and a ratio of more than 100% signifies an underwriting loss. Sources: Komisja Nadzoru Finansowego, Ceská asociace pojistoven, Agencija za Zavarovalni Nadzor, Národná banka Slovenska, Magyar Nemzeti Bank, Latvijas Transportlidzeklu apdrosinataju birojs, Autoritatea de Supraveghere Financiara, Bulgarian National Bank, Macedonia Insurance Supervision Agency, Central Bank of Russia, Gesamtverband der Deutschen Versicherungswirtschaft, S&P Global Ratings. 16

17 Copyright 2017 by S&P Global. All rights reserved. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of S&P Global or its affiliates (collectively, S&P Global). The Content shall not be used for any unlawful or unauthorized purposes. S&P Global and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Global) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Global are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an as is basis. S&P Global DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Global be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P Global s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P Global assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P Global does not act as a fiduciary or an investment advisor except where registered as such. While S&P Global has obtained information from sources it believes to be reliable, S&P Global does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P Global reserves the right to assign, withdraw or suspend such acknowledgement at any time and in its sole discretion. S&P Global disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. S&P Global keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P Global may have information that is not available to other S&P Global business units. S&P Global has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. S&P Global may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P Global reserves the right to disseminate its opinions and analyses. S&P Global's public ratings and analyses are made available on its Web sites, (free of charge), and and (subscription), and may be distributed through other means, including via S&P Global publications and third-party redistributors. Additional information about our ratings fees is available at Australia S&P Global (Australia) Pty. Ltd. holds Australian financial services license number under the Corporations Act S&P Global credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act). S&P Global, S&P Global, CREDITPRO and RATINGSDIRECT are registered trademarks of S&P Global. 17