ERGO was profitable in all tree Baltic countries

May 13, 2014

According to an IFRS-based assessment, ERGO in the Baltic States in the 1st Q of 2014 wrote more than EUR 39.2 million premiums. Positive result amounted to EUR 1.98 million profit. In the 1st Q ERGO customers in the Baltic countries were paid EUR 19 million claims. 
Commenting the 1st Q results of ERGO in the Baltic States Dr. Bagdonavičius, Chairman of ERGO insurance companies in the Baltic States, emphasizes that in all Baltic countries ERGO was profitable. “Prudent underwriting policy, decreased loss ratio, good investment policy as well as solutions, which were implemented timely and consistently according to the market situation – these are the reasons for managing profit at all ERGO insurance companies in the Baltic States and this complies with the profitable growth strategy of ERGO”. According to Dr. Bagdonavičius, with this strong start to the year, where ERGO in the Baltic States grew faster than the market in health and life insurance segments increasing its market share in health from 17.3% to 19%, and especially in Latvia, where ERGO grew almost twice faster than insurance market, we have taken a pleasing step towards our goals with the main focus to our clients and their expectations and we are on track with achieving our targets.

In P&C insurance segment premiums of ERGO in the Baltic States totalled ca. EUR 26 million. Main drivers in P&C segment were MOD, MTPL and Property insurance. Excellent results were also obtained in life and health insurance segments totalling EUR 13.2 million written premiums with a growth of 19.7%. Such result was influenced by growing Life business volumes via bancassurane channel and specialized life sales forces.  Main drivers in life were Risk insurance, Endowment insurance and Private pension insurance (annuities). Growth in health reflects improving economic situation in the Baltic States as in most cases organisations use the health insurance as a motivation tool, especially in Latvia and Lithuania.

In the 1st Q of 2014 ERGO enhanced its financial strength and stability even more: the investment portfolio of ERGO in the Baltic States grew to EUR 292 million (EUR 281 million in the equal period 2013) as well as the equity grew up till EUR 97 million (EUR 93 million in 1 Q 2013). Solvency ratio increased from 206% to 213%.

In the 1st Q of 2014 ERGO customers in the Baltic countries were paid EUR 19 million claim benefits. Within this period one of the biggest claims in Estonia due to fire in private property claim came up to EUR 0.37 million. In Lithuania the biggest claim due to fire in commercial property amounted to EUR 0.2 million.

The subsidiaries of ERGO in the Baltic States – ERGO in Belarus, ERGO Invest and ERGO Funds – generated a profit during 1Q 2014 amounting to EUR 192 thousand. ERGO in Belarus wrote more than EUR 1 million premiums.

Commenting the trends and prognoses of insurance market in the Baltic States Dr. Bagdonavičius forecasts a growth of Baltic insurance market with some exceptions. „Forecasts of ERGO in the Baltic States show that economy of the Baltic States is recovering as well the volume of P&C, life and health insurance businesses will continue to grow this year. But from the long term perspective it is hard to forecast the growth due to political environment. We are close neighbours of Russia and the falling of growth in this country can influence our countries as well, both directly and indirectly. The direct affect will be for business sector with commercial and industrial business partners in the east. As well if foreign investments in Russia shrink, attracting new investment to the Baltic countries could slow down. All of this can lead to a lesser economic and insurance market growth”, Dr. Bagdonavičius said.

According to Dr. Bagdonavičius, one of most important projects for our organizations will be the euro introduction (in Lithuania), as well SEPA (Single Euro Payments Area) and FATCA (Foreign Account Tax Compliance Act). “ERGO in the Baltic States can be proud of the 2-time successful transfer to the euro currency within our organization in Estonia and Latvia. ERGO may feel now strongly confident for the upcoming introduction of the euro in Lithuania, because it can adopt the best practice and experience from its colleagues in Estonia and in Latvia at any time”, Dr. Bagdonavičius said.

According to CEO at ERGO in the Baltic States, the entry to the Eurozone in Estonia and Latvia as well as Lithuania’s future entry will have a positive effect on the economy in the Baltic States. “Seen from the perspective of foreign companies, this is a step in the right direction for all three Baltic countries. Current experience strongly indicates that the euro will make the Baltic States even more attractive to foreign investors, will allow the Baltic States to strengthen economic growth, improve welfare and development”. 


ERGO in the Baltic States

ERGO has been among leading insurance groups in the Baltic States and the only one to offer a complete range of coverage including non-life insurance along with life, pension and health insurance. Premiums of ERGO Baltic totalled EUR 155 million in 2013. Last year customers in the Baltic countries were paid more than EUR 85 million for insurance claims. ERGO is also present in Belarus offering services in the non-life sector. Over 550,000 customers in the Baltic States trust the services, know-how and financial stability of ERGO Group.

ERGO companies operating in the Baltic countries are part of the ERGO Group – one of the major insurance groups in Germany and Europe. Worldwide, the Group is represented in over 30 countries and concentrates on Europe and Asia.

ERGO is part of Munich Re, one of the leading reinsurers and risk carriers worldwide.