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ERGO in the Baltic States: sustainable and market outperformed development with doubled profit

August 25, 2015

ERGO in the Baltic States during the 1st half year of 2015 has shown excellent results in both – GWP and profit – as well as outperforming the market in all lines of business. During this period ERGO in the Baltic States written premiums in the amount of 89,3 million euros and in comparison to the same period last year, achieved growth of 15%. Positive bottom line result amounted to 5,22 million euros profit which is more than double than same period last year. During the 1st HY 2015 ERGO in the Baltic States has outperformed market in all business segments: P&C, Life and Health and increased its market share to 13,2% on regional level. While Baltic insurance market grew by 6,2%, ERGO grew by 15%. During half year of 2015 ERGO customers in the Baltic countries were paid almost 44 million euros in claims, this amount is by ca. 17% higher than during the same period last year.

Commenting the 1st HY results of ERGO in the Baltic States Dr. Bagdonavičius, Chairman of ERGO insurance companies in the Baltic States, emphasizes that such an excellent result has been achieved due to successful implementation of growth initiatives, stable net loss ratio and due to decreased net cost ratio. "Despite an uncertain environment, increasing competition, the profitable growth of our core business remains remarkable. In order to make sure we retain our competitiveness and profitability in the future, we will increase our efforts to make the most of the opportunities offered by increase of efficiency, incl. digitalization and to open up new business potential by designing innovative solutions for our customers”.

The increase in GWP was caused by excellent business activities in all three countries and in all segments: P&C, Life and Health. In P&C we see growth in all lines of business, expect cargo/transport, carriers liability due to geopolitical situation (Russian/Ukrainian crises). The main driver is motor business (MOD, MTPL). The GWP growth in Life Insurance Company was generated by significant volumes of annuities in Estonia, via bancassurance co-operations in Latvia and performance of specialized sales network in Lithuania. Even with tough competition ERGO has a leading position in the Health market in the Baltic States.  
ERGO in all the Baltic States has outperformed the market. During the 1st HY 2015 Estonian insurance market grew by 4,6%, while ERGO significantly outperformed it and grew by 15,3%. ERGO in Latvia grew by 16,6%, while Latvian insurance market grew by 7,6%. ERGO also grew faster than the market in Lithuania: ERGO in Lithuania with its growth of 11,9% outperformed the market. Market growth was 6,4%. The number of valid contracts has increased by 17 %.

In the 1st HY of 2015 ERGO customers in the Baltic countries were paid 44 million euros in claims, which is 17% in comparison to the same period last year. The biggest claim has been fixed in Lithuania due to fire in amount of 1,5 million euros.

Both ERGO risk carriers are well capitalized and are above the ERGO Group long term minimum requirement of 140% solvency ratio. In ERGO P&C company the Solvency I ratio increased from 207% to 224%. ERGO Life company is well capitalised with 141% Solvency I ratio. Significant growth of investment portfolio amounting by 328 million euros (319 million euros in 1-2 Q 2014) is related to growing Life business volumes.

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 volumes of P&C, Life and Health insurance businesses will continue to grow this year. Still we have to keep in mind the geopolitical environment. We are approaching new legal environment the EU’s Solvency II Directive, which will enter into force on 1 January 2016, updating the approach taken to determine the capital that EU (re) insurance undertakings should hold against their risk profiles and thus requires a lot of efforts from insurance companies.
The biggest challenge for the whole insurance industry will be changing behaviour of customers, the fast developing digital environment. The need to continuously offer innovative solutions to customers is no longer a prerogative of IT business alone. Working with our ERGO Group colleagues in various European counties, we are well aware of the fact that the insurance business must be dynamic and keep up with the accelerating pace of life and the latest technology trends, to focus on individualized services and be ahead of customer needs”, says Dr. Bagdonavičius.

ERGO in the Baltic States 

ERGO has been among leading insurance groups in the Baltic States and offers a complete range of coverage including non-life insurance along with life and health insurance. Premiums of ERGO Baltic totalled EUR 163 million in 2014. Last year customers in the Baltic countries were paid more than EUR 82 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. In 2014 ERGO recorded a premium income of 18 billion euros.

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