Turkey/Georgia

Turkey

The Turkish insurance market recorded another sharp increase of 32.1% in local currency terms in the first three quarters of 2016. The non-life sector dominates the Turkish insurance market with a share of 88.5% of total premium volume and an increase of 33.7% compared to the same period in the previous year. The increase was primarily due to dynamic growth in the motor lines of business (+58.0%). The non motor lines of business also rose 13.2% in local currency terms. Life insurance grew 20.9% in the 1^st to 3^rd quarters of 2016.

More than 60 insurance companies were operating in Turkey in the first three quarters of 2016. Vienna Insurance Group is represented by the non-life insurer Ray Sigorta in the Turkish insurance market. The Group’s 1.5% share of total premium volume places it in 17^th place in the market.

Georgia

The Georgian insurance market recorded an 8.2% year-on-year increase in premium volume in local currency terms in the 1^st to 3^rd quarters of 2016. Despite the dissolution of the national health insurance programme and a resulting decline in this class of insurance, the share of health insurance in the total premium volume totals around 46%. All lines of business recorded positive growth in local currency terms compared with the same period in the previous year. The non-life area grew by 8.0%, the life area by 11.7% and health insurance by 13.0%.

14 insurance companies operate in Georgia. VIG is represented by two companies: IRAO and GPIH. These Group companies held second place in the market with a combined market share of 30.4% in the 1^st to 3^rd quarters of 2016.

Business development in the Turkey/Georgia segment in 2016

Premium development

VIG wrote EUR 208.70 million in premiums written in the Turkey/Georgia segment in 2016 (2015: EUR 182.34 million), representing a significant increase of 14.5% compared to the previous year. This change was due to a sharp rise in average premiums for motor third party liability insurance in Turkey and other property and casualty insurance. Net earned premiums were EUR 102.13 million in 2016 (2015: EUR 92.74 million), an increase of 10.1% compared to the previous year.

Expenses for claims and insurance benefits

Expenses for claims and insurance benefits less reinsurance were EUR 76.95 million in 2016 (2015: EUR 71.83 million). Compared to the previous year, this represented a 7.1% increase in expenses for claims and insurance benefits (less reinsurance), with claims rising significantly less than premiums due to the growth in motor third party liability insurance in Turkey.

Acquisition and administrative expenses

Acquisition and administrative expenses in the Turkey/Georgia segment decreased from EUR 25.16 million in 2015 to EUR 22.60 million in 2016. This corresponds to a year-on-year decrease of 10.2%, which was primarily due to higher reinsurance commissions in the motor third party liability and other property and casualty lines of business in Turkey.

Result before taxes

Profit before taxes rose to EUR 9.00 million in 2016 (2015: EUR 3.21 million). This significant increase was due to growth in motor third party liability insurance, primarily in Turkey.

Combined ratio

The combined ratio improved significantly to 95.7% in 2016, primarily due to higher reinsurance commissions in the motor third party liability and other property and casualty lines of business in Turkey (2015: 102.5%).