Slovenia: Small Market, Big Opportunities for Insurers

23. Juni 2006, 00:00

In comparison with most well established EU countries, the insurance market in Slovenia is very open, very...

In comparison with most well established EU countries, the insurance market in Slovenia is very open, very concentrated yet full of opportunity – especially where life insurance is concerned. The commercial property insurance market is more mature, harder to enter and less interesting because it is oligopolistic.

Currently, foreign-owned insurance companies hold less than 10 per cent of the market. The largest insurance company in Slovenia is Zavarovalnica Triglav, which controlled 42.77 per cent of the market at the end of 2005. Triglav’s majority shareholder is the state through the state-owned Slovenska odskodninska druzba (Sod) and Kapitalska druzba (Kad) that hold 47.48 per cent and 35.22 per cent respectively.

The other insurance companies are privately owned; Generali, Merkur, Grawe, Arag and Wiener Staedtische by foreign capital. None of these companies is listed on the Ljubljana Stock Exchange, except for Zavarovalnica Triglav bonds. The state is preparing to sell its share in Triglav, which is valued at EUR 23.2 million.

The second largest insurer is Vzajemna, which was the first voluntary health insurance company in Slovenia and is still the largest. It was established on 1st November 1999 as a result of the legal requirement to separate the voluntary and compulsory health insurance bodies. Today, Vzajemna is fully owned by its 900,000 policyholders and has an annual premium income stream of approximately EUR 233 million.

Insurance premiums in Slovenia totaled EUR 1.44 billion in 2005, which is a rise of 8.4 per cent over 2004. Life insurance premiums rose 14.7 per cent; and now represent 24.7 per cent of the insurance market; up from 23.3 per cent the previous year. In terms of market share, the top four insurance companies – Triglav, Vzajemna, Adriatic Slovenica and Maribor – lost 2.2 per cent in 2005 and now control around 86 per cent of the market; Grawe, Merkur, Generali and Arag account for a further 6.9 per cent.

The newly established Wiener Staedtische attracted EUR 5 million worth of custom in 2005, but exact figures are hard to determine as the Austrians are not sharing any detail with the Slovenian Insurance Association.

Maribor, Adriatic Slovenica and Triglav are looking to add a further EUR 8 million in premiums (or 7.9 per cent) this year. Adriatic Slovenica is the most ambitious in this regard, having hopes of increasing revenues by 18 per cent, which will lift net income by more than 40 per cent.

Compared to most well established EU countries, the insurance market in Slovenia is very open and full of opportunities – especially where life insurance is concerned, according to Merkur. But the market is also very concentrated and, according to Generali, still controlled either directly or indirectly by the state. However, they are quick to add: “The markets for life and pension insurance have enormous upside potential!”

Grawe: the Slovenian insurance market is well developed. We expect to see some novel liability insurance products.

Zavarovalnica Maribor: we are expecting new insurance products and new approaches to insurance in the future. Increasingly, insurance policies will be realized through ”bank assurance” and vice-versa – with a system called ”assurfinance” insurance companies will also be able to offer some banking products.

Zavarovalnica Triglav is currently present in Slovenia, Croatia, Bosnia and Herzegovina, the Czech Republic and Montenegro. Triglav’s current strategy is to produce around 10 per cent of its total revenue outside of Slovenia (2 per cent in EU countries) and they are looking to buy into the Serbian insurance market.

They are also appraising their options in Macedonia, Kosovo and Albania, where they sense that cooperation with other Slovenian companies working in those markets is one viable possibility. Other markets, such as Romania, Bulgaria, the Ukraine and the Slovak Republic, are also being scrutinised.

One of the strategic goals of the Triglav Group is internationalisation with services like health and pension insurance, asset management and banking.

Every insurance segment can be profitable – profit depends on an insurance company’s policy, the size of its portfolio, regional specifics, its services, the cost of claims, etc. Merkur deals primarily in life insurance products, which accounted for more than 83 per cent of its portfolio in 2005.

The Slovenian branch of Merkur will also enter the compulsory health insurance market – drawing on the experience of their head office.

Grawe believes that the best way to grow their business in Slovenia is to orient their products towards the individual; those who needs life, non-life and motor insurance. They also believe that the market for commercial insurance is more mature, harder to enter and less interesting because of market oligopoly.
While non-life insurance products have been Zavarovalnica Maribor’s most popular and profitable, they have noticed that interest in life insurance is steadily increasing.

Generali views non-life insurance products as their most profitable; especially motor insurance, where Generali offers lower premiums to drivers with more than 10 years experience and female drivers both of whom are less likely to cause damage than their younger and less experienced counterparts.

Merkur is 100-per-cent owned by Merkur Versicherung AG, Graz, which also has branches in Croatia and Bosnia and Herzegovina. They are also looking to establish a branch in Serbia.

Grawe is 100-per-cent owned by Grazer Wechselseitige Versicherung AG, Graz. Grawe is one of the biggest insurance-finance groups in central and southeastern Europe and is always looking for strategic partnerships in those areas.

The two largest stakeholders in Zavarovalnica Maribor are Nova KBM (49.96 per cent) and the Sava Reinsurance Company (45.63 per cent). Smaller parcels are held by companies such as Probanka and Perutnina Ptuj among many others.

Generali Zavarovalnica is 100-per-cent owned by Generali Holding Vienna and is part of Generali Group, the third largest banking and insurance group in Europe.

The ownership structure of Adriatic Slovenica is as follows: KD Holding 83.0 per cent, Sava RE 9.4 per cent, KD ID 6.7 per cent, others 0.9 per cent.

Zavarovalnica Triglav is 82.7-per-cent owned by Sod and Kad. Other parties such as Slovenijales, Hit, Sava RE, Poteza nalozbe, Autocommerce, Sava, BTC, Energija RM, etc. also have an interest.

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