In today’s blog we bring you an overview of the regional insurance market in 2018, whereby we will put a special attention to the gross written premium and FY performance of the largest insurers in the region.

Croatia

Trailing 12M GWPs in Croatia (EUR m)

Source: Croatian Insurance Bureau, InterCapital Reserach

In 2018, Croatia’s total GWP’s grew 9% YoY, reaching a record amount of EUR 1.4bn and thus finally beating the pre-crisis high of EUR 1.3bn.

When looking at the GWP structure, the non-life segment accounted for 68% of the total GWPs (EUR 923m) and posted a growth rate of 10%. Meanwhile the life segment rose 7% YoY, amounting to EUR 430.4m. Vehicle insurance, the largest category in the non-life segment, grew 6.3% YoY as Croatia recorded an 18% YoY increase in new cars registered. Furthermore, Casco insurance grew by 18.7% YoY, amounting to EUR 141.8m.

Croatia Osiguranje (together with Croatia Osiguranje Kredita) continues to account for roughly one third of the market, however the company’s market share fell by 1 p.p. YoY and now amounts to 27.9%. Despite the small loss in market share the company still managed to record an 5% YoY increase in total GWP.

YoY Changes by Months Individually

Source: Croatian Insurance Bureau, InterCapital Reserach

Slovenia

Trailing 12M GWP in Slovenia (EUR m)

Source: Slovenian Insurance Supervision Agency, InterCapital Research

The Slovenian market also posted a record performance in 2018 with the total value of GWP’s amounting to EUR 2.4bn (+8% YoY). Previously Slovenian GWPs grew until 2012, peaking in September 2011 (at EUR 2.1bn), after which they started decreasing at a 2.7% CAGR to reach the lowest point of EUR 1.93b at the end of January 2015. This period was marked by a crisis in Slovenia, mostly related to banks. A strong recovery followed shortly after, as monthly results continued to improve during 2015. These improvements were sustained during the first half of 2016, however the incredible growth which started in Q2 2016 has continued up to today, with December marking the 29th consecutive month in which Slovenia recorded a monthly growth in GWPs.

Segment wise, the non-life segment in Slovenia amounted to EUR 1.7bn (+7.1% YoY), while the life segment reached EUR 714.4m (+9.4% YoY).

Turning our attention to Slovenia’s market share, Triglav remains a convincing market leader with 27.5% of the market share (roughly 33% if we add Triglav Zdravstvena zavarovalnica), followed by Sava with 16.8% of the market share. Note that the Slovenian insurance market continues to be characterised by a high degree of concentration as the five leading insurance providers account for 75.9% of all GWPs.

YoY Changes by Months Individually

Source: Slovenian Insurance Supervision Agency, InterCapital Research

If we look at the relative indicators, Slovenia is by far more developed regional insurance market with EUR 1,144.54 gross written premiums per capita in 2018 and penetration (share of GWPs in the country’s GDP) of 5.2%. However, on the relative performance this market has been rather flattish in the observed period. Meanwhile, the Croatian market recorded EUR 325.79 GWPs per capita in 2018, with a penetration of 2.7%. Since penetration rate is one of the best metrics for measuring the development of insurance sector in a country it leads to a conclusion that there is still a vast potential for further insurance penetration in both countries.

The Companies

In 2018 Triglav recorded GWPs worth EUR 1.068.4m (+7% YoY), making it the largest insurer in the region. Growth was posted on all individual markets (Slovenia up 7%, other markets up 8%) and segments (Non-life up 8%, Life & Pension up 2%, Health up 11%). Gross claims paid totalled EUR 680m and were up 6% on the year, owing to a good part to more severe CAT events (up by EUR 15m vs 2017). The total amount of claims paid amounted to EUR 680m, which represents a 6% YoY increase and can be attributed to more severe CAT events (up by EUR 15m vs 2017). However, since the company managed to decrease their cost ratio and claims incurred (+1%) grew slower than net premium earned (+7%) the company’s bottom line went up 16% to EUR 80.8m. Also note that Triglav continued their M&A activities in 2018 by acquiring Raiffeisen Mirovinsko Osiguravajuce Drustvo in Croatia, the Slovene asset management company Alta Skladi, and have purchased the remaining 28% stake in Skupna Pokojninska Druzba.

Meanwhile, Sava recorded a 5.6% YoY increase in GWPs which amounted to 546m with all but two segments up. The exceptions were the reinsurance segment which wrote 7.2% less premiums than in 2017 due to a strict underwriting discipline and selective underwriting and the Slovenian life segment which went down 2.9% YoY due to large number of policy maturities. Still, the company’s bottom line surged 38% YoY to EUR 43m due to a relatively benign year in terms of claims.

The same as Triglav, Sava Re also undertook noticeable M&A activity in 2018 by acquiring 3 new companies (TBS Team (Slovenia), Energoprojekt Garant (Serbia) and Sava Penzisko Društvo (Macedonia)). The smooth integration of these companies was also an important factor in Sava Re’s improved profitability. Note that as of end-Feb2019 Sava Re started to consolidate the two Croatia-based Ergo companies, upon receiving all necessary legal approvals.

Croatia Osiguranje recorded a 5.8% YoY increase in total GWP, amounting to HRK 3.3bn. Of that, non-life insurance accounted for 79%, amounting to HRK 2.6bn. This represents an increase of 5.4% YoY. Meanwhile, Life insurance increased by 7.4%, amounting to HRK 686.5m. When observing the company’s expenses, Claims amounted to 1.6bn which is an increase of 6.6%, amounting for roughly half of the total expenses. Note that non-life insurance observed an increase in claims of 2.5%, while life insurance observed an increase in claims of 19.4%. Moreover, Acquisition cost accounted for 36.7% of the total expenses amounting to HRK 1.2bn (+5%). As a result, Croatia Osiguranje recorded a net income of HRK 327.2m, which represents a 29.3% increase.