ERGO in the Baltic States is profitable despite recession
November 11, 2010
The profit earned by ERGO Insurance Group in the first nine months of
this year in the Baltic States amounted to more than 4.8 million euros
or over 75 million kroons according to the International Financial
Reporting Standards (IFRS).
The Chairman of the Management Board Dr. Kęstutis Bagdonavičius believes
that the ERGO Baltic insurance companies coped brilliantly at the time
when the markets were in decline. “Our profit is an indication of expert
risk assessment and the ability to mobilize our organisation to achieve
its goal even in times of recession. However companies’ profits have
declined conditioned by decreases of prices," said Dr Kęstutis
Bagdonavičius.The ERGO Insurance Group collected more than 93.9 million euros in insurance premiums in the first nine months of this year. The company’s turnover has decreased 9.7% in comparison to the same period in 2009. Mr Dr. Bagdonavičius says that positive trends can already be seen in the turnover of the Baltic insurance companies in the third quarter. “The decrease in turnover ERGO suffered in recent months is slowing down, which is a sign of recovery of the insurance markets, especially in Estonia and Lithuania,” said Dr. Bagdonavičius. “It is obvious that the insurance market reacts to economic growth with a rather long delay, which means we have to wait at least another six months before the market recovers completely."
ERGO in the Baltic States collected the biggest share of its insurance premiums from non-life insurance with over 71.5 million euros, and the underwritten insurance premiums of life and health insurance amounted to 22.4 million euros.
The non-life insurance premiums collected in Estonia amounted to 32.4 million euros and life insurance premiums to 3.3 million euros. In Lithuania, non-life insurance premiums amounted to 28.6 million euros and life insurance premiums exceeded 10 million euros. The non-life insurance premiums collected in Latvia amounted to 10.4 million euros and life insurance premiums to 8.9 million euros.
The biggest share of insurance premiums in Baltic States were collected in motor third party liability insurance (20 million euros), followed by motor hull insurance (19 million euros) and property insurance premiums (16 million euros).
The turnover of travel insurance has increased the most in Estonia in nine months with 62%. Liability insurance and accident insurance premiums have also increased by a fourth. Consumers in Lithuania have started to focus on home insurance – the amount of premiums collected for this type of insurance increased more than 69% in comparison to the same period last year. All life insurance services are also growing in Lithuania. Health insurance segment has been the best productive in Latvian market ranking ERGO among the leaders in this segment.
The ERGO Baltic insurance companies continued to restructure their life insurance operations in the third quarter. “We have made some big changes in the areas of life insurance in the third quarter by starting co-operation with DnB Nord Bank in Latvia and Lithuania and taking over the portfolio of the Norwegian life insurance company Vital," said Dr. Kêstutis Bagdonavičius. “We will also complete the merger of the three ERGO Baltic life insurance companies into a European company by the end of the year according to the plan. The goal of all these activities is to offer clients better services than before and to make the management of the organisation more efficient."
The total amount of indemnities paid out by ERGO companies in the first nine months of this year amounted to 61 million euros, the majority of which are motor hull and motor third party liability insurance indemnities. Indemnities decreased 24.4% in comparison to the same period in the previous year. The biggest indemnity paid out in the third quarter was more than 250,000 euros to compensate the restoration of a house struck by fire in Estonia.
The market share of ERGO on Baltic non-life and life insurance markets in the end of the first nine months of this year totalled 11.9%, making it the third biggest insurance company in the Baltic States.
In addition to the Baltic region ERGO is also active through Baltic operation units in Belarus, where it earned a profit of over 130,000 euros in the first three quarters of this year.
ERGO in the Baltic States
ERGO is one of the leading insurance groups in the Baltic States operating on the non-life, life and health insurance markets in Estonia, Latvia and Lithuania, on the second pillar pension fund market in Estonia and Lithuania and on the non-life insurance market in Belarus. Almost 400,000 clients in the Baltic States trust the services, expert knowledge and financial stability of ERGO. ERGO’s Baltic companies belong to one of the biggest insurance groups in Europe, the ERGO Insurance Group, which serves 40 million clients in more than 30 European and Asian countries. The owner of the ERGO Insurance Group is one of the world’s largest reinsurance groups Munich Re.
