Romania Insurance Report Q4 2010

Writing at the beginning of August 2010, we have been able to ensure that the report includes actual data for 2009. According to Romania's insurance regulator, total premiums in 2009 amounted to RON8.84bn. This includes non-life premiums of RON7.21bn and life premiums of RON1.63bmn. In 2014, the corresponding figures should be RON14.84bn, RON12.36bn and RON2.49bn. In terms of the key drivers that underpin our forecasts, we are looking for non-life penetration to rise from 1.60% in 2009 to 1.70% of GDP in 2014. We are looking for life penetration to rise from US$28 to US$40 per capita. BMI's proprietary Insurance Business Environment Rating (IBER) for Romania is 54.5.

Romania's Insurance Sector In 2010

Final data for Romania's insurance sector in 2009 became available in mid-2010. As indicated by the figures that had been published by the National Association of Insurance and Reinsurance Companies from Romania (or UNSAR, to give it its local language acronym), life insurance premiums contracted sharply in the wake of the global financial crisis. Meanwhile, the non-life segment has gone from rapid growth to stagnation. Romania's experience is, therefore, consistent with that of most other countries in Central and Eastern Europe.

Although the premiums for 2009 were slightly larger than we had envisaged, we have felt it necessary to revise down our projections for non-life penetration and life density. As a consequence, the forecast growth is considerably less than had been envisaged in BMI's Q310 report. As is the case in many countries in the region, Romania's IBER has fallen as a result. The implication is that the global financial crisis has had two overall effects on the insurance sector. One is to interrupt trends (in most respects, of growth) that had been in place since 2005 or earlier. The other, more lasting, impact is to constrain the overall attractiveness of the marketplace in the international and strategic contexts.

Issues to Watch

Contagion In Bond Markets

Investment earnings may remain volatile over the next year or so if the Romanian bond market suffers contagion from the problems in nearby countries (such as Hungary and Greece).

Concentration

Relative to the other insurance markets in the region, Romania is unusual because of the dominance of ING (in the life segment) and the Vienna Insurance Group companies (in the non-life segment). Generali/PPF and Allianz, leading insurance companies across the region as a whole, are relatively small players in Romania. Vienna Insurance Group's results indicate that it may have gained market share at the expense of its smaller rivals in 2009.

Corporate Activity

Although anti-trust issues restrict the ability of Vienna Insurance Group and ING to expand by way of acquisition, the same is not true of other competitors. UNIQA, present in Romania through its Astra subsidiary, has bought Unita from Vienna Insurance Group. UNIQA now accounts for about 16% of the non-life segment.