Renegotiation of rents for the office network and cancellation of investment plans for this year have pushed insurers' profits up, even though the crisis has seriously hurt policy sales. Will the market shift to profit after three years of net losses?
Most large and medium-sized insurance companies posted higher profits for the first nine months of this year or moved from losses to profit compared with the same time of 2008, despite the decline in insurance sales.
The biggest profit of all the companies to have made their end of September financial results public was posted by ING Asigurari de Viata, the leader of its respective market. Although the gross premiums underwritten by the company fell by 9% in the first three quarters, the gross profit rose by 133% to 75.5 million RON.
Out of the top ten insurers to have revealed their results until now, only Ardaf posted losses, while Allianz-Tiriac, the leader of the insurance market (general plus life insurance) logged 37% decline in gross profit to 26 million RON.
How did so many insurers manage to boost their profits while the market has been going down?
"On the one hand, operating expenses went down compared with last year, and rental or communications contracts were renegotiated. On the other hand, we postponed certain investment projects," says Cornelia Coman, ING Asigurari general manager.
ING Asigurari obtained a 10% or 20% cut in rent for its territorial offices following lease renegotiation, while the mobile telephony contract renegotiation got the insurer a 10-15% tariff cut.
In some cases, the profit growth can be generated by the sale of assets. Omniasig, for instance, which saw its gross profit go up by 19% in the first nine months to 41 million RON, sold its 10% stake in private pension manager Omniasig Pensii this year. It collected about 1.3 million euros from BCR
