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Bulgaria Insurance Report Q3 2010
Business Monitor International, May 2010, Pages: 82
Bulgaria Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bulgaria's insurance industry.
Writing in April 2010 we have been able to ensure that the report includes actual data for 2008. We have generally been able to use data published in 2009 to adjust our estimates for the year as a whole. We estimate total premiums for 2009 of BGN1,718mn, which comprises non-life premiums of BGN1,491mn and life premiums of BGN228mn. In 2014 the corresponding figures should be BGN3,008mn, BGN2,324mn and BGN684mn. In terms of the key drivers that underpin our forecasts, we expect non-life penetration to rise from 2.27% in 2009 to 2.70% in 2014, and for life density to rise from US$22 per capita to US$54. BMI’s Insurance Business Environment Rating for Bulgaria is 51.2 out of 100. We include a discussion in this report of developments within regional markets, on the basis of results published by major cross-border companies in relation to Q209 or Q309 and the latest information provided by the regulators and/or trade associations. In the non-life segment, there was a slight increase in gross written premiums over this period, from BGN953.5mn to BGN956.9mn. Trends in life insurance varied markedly from country to country in Central and Eastern Europe, but official figures showed double-digit falls in premiums in Bulgaria.
Bulgaria’s Insurance Sector
The latest figures from the Bulgarian Financial Supervision Commission (FSC), which relate to the first 10 months of 2009, show a rather difficult period. Non-life premiums contracted by 1% to BGN1,163mn, which was a respectable result given economic conditions for much of the year and the financial problems of neighbouring Greece. The figures show that across much of Central and Eastern Europe non-life premiums changed by 3% in local currency terms in 2009, so this outcome for Bulgaria was unexceptional.
As is the case in Greece, premiums for compulsory motor third-party liability (CMTPL) cover increased, from BGN246mn to BGN302mn, while CASCO insurance premiums fell from BGN565mn to BGN505mn. Fire insurance premiums rose from BGN143mn in the first 10 months of 2009 to BGN170mn from the corresponding period in 2008. Bulgarian operators DZI, Lev Insurance and Armeec increased their market shares within the segment to 14.1%, 11.0% and 10.4% respectively. The other leading players in the non-life segment typically lost market share slightly. The local subsidiaries of Vienna Insurance Group (Bulstrad) and Allianz are the largest foreign groups, with market shares of 15% and 10% respectively.
However, life premiums have slumped, to the extent that we have revised down our forecasts for the segment in 2009 and subsequent years. The FSC’s data suggest a 20% fall in premiums to BGN177mn for the first 10 months of 2009. There were similarly large contractions in life premiums in Hungary, Poland and Russia. In the non-life segment there were even bigger shifts in market shares. UNIQA’s life operation’s market share fell from 15.0% in the first 10 months of 2008 to 9.6% in the same period of 2009. Several of other foreign controlled groups also experienced shrinkage in market share, although Bulstrad’s share of the segment rose to 10.0%. The three largest life groups are Allianz Bulgaria (21.83% market share), DZI (15.7%) and ALICO (10.2%).
Issues To Watch:
Stabilisation Of Life Premiums
This will be an indicator that local savers perceive an improvement in the medium-term outlook for Bulgaria’s economy and financial markets.
Motor Insurance Premiums
Given that the growth in CMTPL premiums is probably unsustainable, we expect a more difficult market for non-life insurance overall in the coming months.
The Competitive Landscape
The small Bulgarian insurance market is crowded. Although some companies are committed because they see Bulgaria as an important part of a regional business strategy and/or because they hold dominant shares in at least one of the two major segments, we would not be surprised if there is rationalisation. The contraction in the life segment, from what was a low level of development, is disappointing.
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