In the first 9 months of 2020, GWPs declined by 1% YoY. GWPs in non-life insurances grew 4.7% YoY, while life insurance decreased by 15% YoY.

Croatian Insurance Bureau published the GWP development in September 2020. Since the beginning of the year, GWP’s observed a slight decline of 1% compared to the same period last year. The total amount of GWPs collected reached HRK 8.212bn (includes insurers located in Croatia and insurers operating in Croatia but based in another EU country). The aforementioned decrease came solely on the back of the life segment which observed a strong decline of 15% YoY (or HRK -360.43m) to HRK 2.04bn. Such a decrease could arguably be attributed to the maturing of policies which were underwritten coupled with lower savings through life insurance and early termination of these policies. Meanwhile, non-life segment which traditionally accounts for the biggest portion of total GWPs, is still up by 4.7% YoY (or HRK 274.9m).

Croatia’s largest insurer, Croatia Osiguranje accounted for 26.6% of the market, showing a 0.3 p.p. YoY decrease.

Top & Bottom Performing Insurance Segments (Jan – September 2020 vs Jan – September 2019) (HRK m)

When observing GWPs by structure since the beginning of the year insurance against civil liability in respect of the use of motor vehicles (which accounts for 24.15% of GWPs) recorded a high increase of 11.3% YoY. Next, vehicle insurance (casco policy) which accounts for 12.2% of total GWPs recorded an increase of 3.18%. Health insurance observed also a solid YTD performance of +4.36%. Credit insurance observed a sharp decrease of 30.8% (or HRK 86.49m). This does not come as a surprise given the expected lower loan issuance activity in Croatia as a result of Covid-19 outbreak.

GWPs by Insurance Segment (%)

For today, we decided to bring you an  overview of the indebtedness and capital structure of Romanian companies using H1 2020 results. 

For today, we decided to present you with a comparison of Romanian companies. To be specific, we observed how indebted Romanian companies are by comparing net debt to EBITDA (trailing 12 months) and % of debt financing. We also added how much additional debt these companies could take in order to reach 3xEBITDA. 

Note that financials were excluded from the overview.

Net Debt/ EBITDA (trailing 12m)

Among the 11 observed companies 5 operate at a negative net debt, meaning their cash position (short term financial assets + cash and cash equivalents) exceed their financial debt. To be specific, these are: Conpet, Nuclearelectrica, Romgaz, OMV Petrom and Transelectrica.

MedLife has the highest indebtedness (of the observed companies) of 4.39x EBITDA, followed by Digi with 2.54x EBITDA. Next come Purcari with 1.4x EBITDA and Sphera Franchise Group with 1.12x EBITDA. Despite the fact that Sphera’s H1 2020 EBITDA was severely hit by the pandemic, the company’s net debt relative to its trailing 12m EBITDA is still very low.

We also observed how much additional debt companies could take to reach 3xEBITDA which is in the region considered as a breaking point and red flag in terms of indebtedness.

This analysis provides information on the companies’ potentials for takeovers, but also the potential for an internal growth through additional borrowing. It’s important to point out that companies with net debt above 3xEBITDA are not necessarily too indebted as not all them are equal and their industries differ (and the other way around – certain industries are not prone to hold any leverage).

Potential Additional Debt (HRK m) to Reach 3x EBITDA 

Turning our attention to the capital structure, of the observed companies, 9 of 11 are mostly equity funded. Of those, Conpet leads the list with 100% equity, followed with Romgaz (99.9%). On the flip side, Digi Communications is almost entirely debt funded with a debt representing 94.8% of the capital structure.

Capital Structure of Romanian Companies