Greece Insurance Report Q2 2010

The Greece Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Greece's insurance industry.

This report differs from its predecessors in several respects. In the analysis of competitive conditions, we provide a much more comprehensive ranking of insurance companies in the major segments from the point of view of the organisation that is providing the data (almost always the national insurance regulator or the national insurance trade association). In Greece, for instance, the three largest non-life companies in 2008, in terms of gross written premiums written, were Ethniki AAEGA, Interamerican EEAZ and Agrotiki Insurance, whose market shares were 13.42%, 5.96% and 5.12% respectively. In the life segment, the leaders in 2008 were Ethniki AAEGA, ALICO and Interamerican Life, with market shares of 21.2%, 11.9% and 11.6% respectively. Over time, we hope to derive insights from observing how market shares change. We emphasise, though, that a decline in the share of gross written premiums is not automatically a bad thing and is often the result of a deliberate corporate decision to focus on more profitable business lines.

In this report, we also provide a breakdown of the insurance sector by line, from the point of view of the regulator or the trade association. In Greece, for instance, the largest non-life lines in 2008 were compulsory motor third party liability (CMTPL) insurance, fire and diverse risks and land vehicles voluntary insurance (CASCO). These accounted for 45%, 17% and 15% of total non-life premiums respectively. Over time, we should be able to use this information to bring greater sophistication to the forecasting process.

Writing in January 2010, we have been able to ensure that the report includes actual data for 2008. We have generally been able to use data that was published in 2009 to adjust the forecasts for the year as a whole. We have also extended the forecasts to 2014. We forecast total premiums for 2009 of EUR4,914mn, which includes non-life premiums of EUR2,563mn and life premiums of EUR2,351mn. In 2014, we expect the corresponding figures to be EUR6,428mn, EUR2,992mn and EUR3,437mn respectively. In terms of the key drivers that underpin the forecasts, the author expects non-life penetration to remain static, remaining at 1.00% across the forecast period. Life density should rise from US$296 per capita to US$377. BMI’s Insurance Business Environment Rating for Greece is 61.6 out of 100. This quarter, the author’s include a discussion of developments within regional markets, on the basis of results published by major cross-border companies in relation to Q209 and Q309 and the latest information provided by regulators and/or trade associations.

Greece’s Insurance Sector In Q210 Figures published by the Private Insurance Supervisory Committee (PISC) in late 2009 show that for the first nine months of the year, non-life premiums rose by 8.07% year-on-year (y-o-y) to EUR2,294mn. By contrast, life premiums dropped by 5.50% y-o-y to EUR1,785mn. The implication of these figures is that the Greek insurance sector performed well compared to its peers in Central and Eastern Europe (CEE) in what was a difficult period. Of the countries in the region whose insurance sectors are monitored by BMI, Greece experienced the greatest growth in non-life premiums prior to Q409. The contraction in life premiums needs to be considered in relation to the 3-4% growth in Croatia and the Czech Republic (the best performers by this measure) and contractions of 15-20% in Hungary, Poland and Russia. Much of the growth in non-life insurance during the period was accounted for by an increase in CMTPL premiums, which rose by 13.4% to EUR969mn in the first nine months of 2009. Three other, much smaller, lines also achieved strong growth. Assistance premiums rose by 21.5%, while credit insurance premiums grew by 23.9%. Premiums for miscellaneous financial losses soared by 41.7% to EUR18mn. The conclusion is that particular Greek businesses moved to take advantage of products offered by local insurers in order to reduce financial risk in face of volatile market conditions.

Conversely, there were a number of non-life lines where premiums contracted in the first nine months of 2009, such as accident insurance, ship/hull insurance and insurance for goods carried. Premiums for CASCO and fire insurance, which accounted for about 15% each of total non-life premiums, increased only marginally.

In late 2009, the European Foundation for the Improvement of Living and Working Conditions (Eurofound), an EU agency, noted that the interests of 1mn policy holders and over 700 employees of troubled insurance group Aspis Pronoia had been left in limbo following the September 2009 decision by PISC to revoke the insurer’s operating licence. According to the Greek regulator, Aspis Pronoia failed to meet the necessary solvency margins and had failed to meet obligations to policyholders and employees. Aspis Pronoia’s management unsuccessfully tried to have the decision reversed pending a new capital increase. Government decision making was hampered by the transition prior to the October 2009 election. The company’s employees, with the backing of the Greek General Confederation of Labour (GSEE), organised demonstrations calling for the new Minister of Finance, Giorgos Papakonstantinou, to intervene on their and the policyholders’ behalf.

Unsurprisingly, Aspis Pronoia has lost significant market share in the non-life and life segments. PISC’s figures showed that its share of the non-life market dropped from 4.4% in 2008 to 2.2% in the first nine months of 2009. The company’s share of life written premiums dropped from 8.2% in 2008 to 4.9%. In the non-life segment, most of the large players gained market share. This was true of Ethniki, whose share rose to 15.4%, Interamerican (6.6%), Intersalonica (5.8%), Agrotiki (5.6%) and Ydrogios (4.8%). However, Groupama Phoenix (3.9%) and AXA Insurance (3.4%) lost ground slightly. There was less change in the market shares in the shrinking life segment. Ethniki remains the largest life company by far, with a 22.5% market share. Despite the well publicised problems of its parent, AIG, ALICO’s market share remained more or less constant at 11.8%. The next three largest players in the segment were Interamerican (1.4%), EFG Eurolife (10.7%) and ING (8.9%).

Issues To Watch:

- Re-absorption of Aspis Pronoia’s staff by other insurers: According to Eurofound, other insurers have undertaken to find positions for the employees of Aspis Pronoia. However, the extent to which this happens in practice will provide an indication of the optimism of the insurance companies in general about industry prospects.

- Stabilisation of life premiums: PISC’s data suggest that premiums in the underdeveloped life insurance sector will have been falling for two years by the end of 2009. At this stage, BMI forecasts a gradual recovery from 2010, although we may have to revise the forecast downwards.

- CMTPL premiums: The growth of the non-life segment has been driven by this section of the market, which is the largest and the most developed. Even in the absence of Greece’s economic and financial problems, we would expect momentum to slow down. SHOW LESS READ MORE >

Executive Summary

Table: Overview Of Greece’s Insurance Sector
Key Insights On Greece’s Insurance Sector

SWOT Analysis

Greece Insurance Industry SWOT
Greece Political SWOT
Greece Economic SWOT
Greece Business Environment SWOT

Global Outlook

Central And Eastern Europe Overview
Table: Gross Premiums Written In Selected Central And Eastern European Countries, 2008-2009

Projections And Forecasts

Table: Insurance Premiums, 2006-2014

Projections And Drivers Of Growth

Table: Growth Drivers, 2006-2014

Country Update

Macroeconomic Outlook
Table: Greece Economic Activity, 2006-2014
Political Outlook
Foreign Policy

Insurance Business Environment Rating

Table: Greece – Insurance Business Environment Indicators
Table: Central And Eastern Europe Insurance Business Environment Ratings

Regional Context

Table: Non-Life Premiums In A Regional Context, 2008
Table: Life Premiums In A Regional Context, 2008
Table: Comparison Of Major Lines As % Of Non-Life Premiums, 2006
Major Players In Greece’s Insurance Sector
Table: Principal Insurance Lines By Gross Written Premiums, 2008 (EURmn)
Table: Companies By Gross Written Premiums, 2008
Analysis Of Regional Competitive Conditions

Local Company Profiles

Agrotiki
EFG Eurolife
Ethniki
Phoenix Metrolife

Regional Company Profiles

AIG
Aviva
Generali
ING

BMI Methodology

Insurance Business Environment Ratings
Table: Insurance Business Environment Indicators And Rationale
Table: Weighting Of Indicators

- Agrotiki
- EFG Eurolife
- Ethniki
- Phoenix Metrolife
- AIG
- Aviva
- Generali
- ING