Foreign activity

PZU consistenly developes its activities in the Baltic states and Ukraine, strenghtening the Groups’ leading position among top insurers.

Lithuanian market

According to the Bank of Lithuania, the value of gross written premium on the non-life insurance market amounted to EUR 463 million in 2016 and was 13.2% higher than in the previous year.

The market dynamics was generated mostly by motor insurance (composing 58.0% of the market) with gross written premium growth by 16.0%. Motor TPL insurance grew by 14.7%, while motor own damage insurance grew by 18.0%. The higher written premium in motor insurance comprises mainly a growth in the average premium. The number of new insurance policies only grew by 4.0% in comparison with 2015. Also higher sales of property insurance (comprising 20.9% of the market) made a relevant impact on market development – the written premium grew by 14.7% in comparison with 2015.

Twelve companies were operating in the non-life insurance sector at the end of May 2016 (including 9 branches of insurance companies registered in other EU member states).

The largest insurance company in Lithuania in terms of total gross written premiums from non-life insurance remains Lietuvos Draudimas. At the end of 2016, the market share of this company was 29.5%. Taking into account recent acquisitions, the total share of the four largest companies in the non-life market was 81.2%.

The 2016 gross written premium collected by Lithuanian life insurance companies amounted to EUR 247 million, which means a growth by 4.6% in comparison with the previous year. Only in December there was EUR 31 million in the written premium, which had been influenced by legislative changes limiting tax exemption to EUR 2 thousand starting in 2017. In the future these changes may substantially influence the written premium from the single-premium insurance.

The structure of life insurance was dominated by unit-linked insurance representing 71.9% of the premiums. Traditional life insurance accounted for 20.7% of the written premium.

At the end of 2016, 8 companies were active in the life insurance sector. The Lithuanian life insurance market is highly concentrated. At the end of the year, the share of total gross written premiums of the three largest life insurance companies amounted to 62.6%.

Latvian market

Latvian non-life insurance market recorded gross written premium in the amount of EUR 206 million at the end of Q3 2016. It was EUR 11 million more than in the corresponding period of the previous year, i.e. growth by 5.4%.

Motor insurance had the biggest share in the market measured at gross written premium level. Motor own damage insurance accounted for 25.2% of the market, and for motor TPL it was 21.1%. Health and property insurances also have a significant position in the product structure (20.4% and 19.1% share in the market, respectively). Health insurances present high dynamics – in comparison with the first three quarters of 2015, the written premium rose by 13.9%.

In 2016, 15 insurance companies were operating on domestic non-life insurance market, and 4 biggest ones held the approximate share of 65.4%.

Estonian market

In 2016, non-life insurance companies conducting operations in Estonia recorded a growth in gross written premium of 8.4% in comparison with 6.7% in 2015. The gross written premium amounted in total to EUR 302 million, of which EUR 76 million, i.e. 25.2%, were collected by the branches of foreign insurance companies operating in Estonia.

The structure of non-life insurance in 2016 was dominated by motor insurance, which accounted for 59.8%, whereby the share of motor own damage insurance was 33.7%. Property insurance amounts to 26.3% of the gross written premium on the market.

13 companies were operating in the non-life insurance sector at the end of 2016 (including 4 branches of foreign insurance companies), of which 4 largest companies held the market share of 69.8%.

Activities of PZU companies in the Baltic states

 

Since November 2014, PZU Group has been operating on the Lithuanian non-life insurance market through Lietuvos Draudimas, which is the leader in these segments with the market share of 29,5%.

From November 2014, PZU Group has been operating on the Lithuanian non-life insurance market through Lietuvos Draudimas, which from May 2015 is the owner of a branch of PZU Estonia. The acquisition of Lietuvos Draudimas was conditioned by the sale of PZU Lithuania – the disinvestment took place on 30 September 2015.

Lietuvos Draudimas is the leader of Lithuanian non-life insurance with the market share of 29.5%. In 2016, it recorded a growth of the gross written premium by 7.4% compared with the previous year and reached the level of EUR 137 million. The greatest growth was recorded in property (9.9% year-on-year) and motor (7.2% year-on-year) insurance.

The life insurance activity in Lithuania is carried out by UAB PZU Lietuva Gyvybës Draudimas – „PZU Lithuania Life”. The acquired written premium amounted to EUR 12 million, a 14.3% growth from the previous year. The greatest sales growth was recorded in life and endowment insurance, which rose by 17.1% from 2015 The share of PZU Lithuania Life in the life insurance market was 4.8% (up from 4.4% in 2015).

In Latvia, PZU Group conducts business through AAS Balta – one of the leaders on the market – which entered the Group in June 2014 and, subsequently, acquired the PZU Lithuania branch operating on the Latvian market since 2012 (in May 2015). At the end of Q3 2016, the share of both entities in the non-life insurance market was 27.2%, and the total gross written premium was EUR 56 million.

From May 2015, the entity conducting business in Estonia is a branch of Lietuvos Draudimas and was established through the merger of two entities – the branch of PZU Lithuania, registered in 2012, and the Estonian branch, acquired in 2014, which had been operating under the Codan brand. In

2016, the share in the Estonian non-life insurance market was 14.5% (13.8% in 2015). The acquired gross written premium was EUR 44 million.

Ukrainian market

The Ukrainian insurance market recorded a growth of the gross written premium by 14.4% after the first three quarters of 2016, reaching the level of UAH 25 billion. The premium collected due to non-life insurance amounted to UAH 23 billion, a growth by 13.1.% in comparison with Q3 2015. This growth resulted mainly from the raise of insurance sums, which was caused by depreciation of the local currency, rising inflation, and the statutory increase in compulsory insurance rates. Motor insurance (29.7% share in the market) recorded increase in written premium of 19.0%, including the growth in the Green Card insurance by 21.3%. Life insurance companies collected gross written premium of UAH 2 billion in the corresponding period, which was 32.2% more than in Q3 2015.

The Ukrainian insurance market is fragmented, as it was composed of 323 insurance companies as at the end of September 2016 (of which 43 were providing life insurance). Regardless the still-enormous number of insurance companies, the TOP 100 largest non-life insurance companies generated 97.0% of the entire market’s gross written premium, and the TOP 20 largest life insurance companies generated 99.4% of the written premium.

PZU Group conducts its insurance business on the Ukrainian market through two companies: PrJSC IC PZU Ukraine (in terms of non-life insurance) – „PZU Ukraine” and PrJSC IC PZU Ukraine Life (life insurance) – „PZU Ukraine Life”. In addition, LLC SOS Services Ukraine performs assistance functions.

In 2016, the gross written premium in non-life insurance market for PZU Ukraine amounted to UAH 1 billion, i.e. it was 40.2% higher than in the previous year.

In 2016, the gross written premium in non-life insurance market for PZU Ukraine amounted to UAH 1 billion, i.e. it was 40.2% higher than in the previous year. This increase arose from both the growth in the premium obtained through external entities (banks and travel agencies) and through its own distribution channels. Motor insurance, Green Card insurance, tourism insurance, and corporate non-life insurance played a particularly important role in the growth in written premiums. The gross written premium collected by PZU Ukraine Life in 2016 amounted to UAH 240 million and was 34.7% higher than in 2015. This growth was achieved primarily in the bancassurance and brokerage channel, mainly thanks to the sales of life and endowment insurance.

During the first three quarters of 2016, PZU Ukraine had obtained 3.7% (growth of 1.0 p.p. in relation to three quarters of 2015) of the gross written premium on the Ukrainian non- life insurance sector, achieving the fifth place on the market. In turn, on the life insurance market, PZU Ukraine Life held the fifth place after the first three quarters of 2016, with a market share of 8.5% (0.1 p.p. drop in comparison with the previous year).

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