Rise in profit, GWP and market share for ERGO in the Baltic States in 2014

May 04, 2015

ERGO insurance companies in the Baltic States attained a profit of 5,15 million euros (IFRS) in the 2014 financial year (0,01 million euros in 2013). During the 2014, ERGO Baltic signed premiums in the amount of 163 million euros (155 million euros in 2013). During 2014 ERGO in the Baltic States has outperformed market in all business segments: P&C, Life and Health and increased its market share from 12.3% to 12.6% on regional level. While Baltic insurance market grew by 7.9%, ERGO grew by 10.3%.

“These facts show that ERGO has recorded good results yet again. Our success in 2014 is a testament to our method of gearing our products and services to the needs of our customers”, said Dr. Kęstutis Bagdonavičius, Chairman of the Management Board of ERGO Insurance Group in the Baltic States.

The main driver of improved P&C result is better UW result due to lower net loss ratio. Result in Life company was influenced by better Health UW result in Latvia, as well by strengthening of Life reserves (annuity business) in Estonia and statutory reserves in Lithuania. In Life during last two years ERGO achieved stable investment result in absolute terms. However, in 2014 the extraordinary effects caused by impairment of IT projects the actual result of 2014 loss of 1.99 million euros.

The increase in GWP was caused by an excellent development in all three countries and in all segments: P&C, Life and Health. The GWP in life insurance segment was influenced by excellent development of both lines of business - Life and Health. In health insurance ERGO in all three countries outperformed the market and maintained market leader position on regional level.

In 2014 ERGO customers in the Baltic countries were paid more than 82 million euros claims. The biggest claim within this period amounted to 2.2 million euros in Lithuania due to African swine fewer.
Both ERGO companies are well capitalized and fulfil the ERGO Group long term minimum requirement of 140%. The Solvency I ratio in ERGO P&C company increased from 206% to 219%. The Solvency I ratio in ERGO Life company slightly decreased from 183% to 179% due to fast growing business and strengthening of statutory reserves. “The fact that the solvency ratio of ERGO has been significantly above the minimum rate proves once again that our companies are very stable and devote great attention to prudent risk assessment”, said Dr. Bagdonavičius.

Regarding the trends and prognoses of insurance market in the Baltic States Dr. Bagdonavičius carefully forecasts the growth of Baltic insurance market. “Forecasts of ERGO in the Baltic States show that the volume of P&C, life and health insurance businesses will continue to grow this year, nevertheless, from the long term perspective it is hard to forecast the huge growth due to political environment. We are close neighbours of Russia and Ukraine and the falling of growth in these countries can influence our countries as well, both directly and indirectly. As well the business environment remains difficult owing to the low interest rates and that will push risk carriers to focus more on insurance risk. We see limited and price driven market with long soft market cycles, too”.

According to Dr. Bagdonavičius, Solvency II will bring significant impact to the insurance industry as competition will become even tougher. “All market players will be obliged to follow this approach, therefore, everybody will have to take into consideration costs for provision of capital necessary for business”, Dr. Bagdonavičius said. “What insurance industry should use more proactively in order to increase efficiency are innovative and digital solutions. Many business models can be replaced or improved by digitalisation, and we insurers have long since ceased to be just spectators on the side lines. We, ERGO, are fully on track with digitalisation”, Dr. Bagdonavičius said.

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.