Baltic states

The Baltic states consist of the countries Estonia, Latvia and Lithuania.

The Baltic insurance market

In the insurance market in the Baltic states, many companies that have their registered office in one of the three countries are also represented by branches in the other two markets. This leads to an above-average number of market participants. The share of total premium volume generated by the top 5 insurance groups in the Baltic states is around 74%, which is about the same magnitude as other markets in the CEE region.

Market growth in the 1^st to 3^rd quarter of 2017 compared to the previous year

Premium volume in the three Baltic states rose by 14.3% year-on-year in the 1^st to 3^rd quarter of 2017. Lithuania recorded the largest increase of 16.5%, and its 47.5% share of premium volume also makes it the largest of the Baltic markets. Latvia and Estonia also recorded major increases of 14.6% and 10.0%, respectively.

The non-life sector recorded dynamic premium growth of 16.1% in the first nine months of 2017. All three countries recorded double-digit premium increases, with the Lithuanian market taking the lead with an increase of 20.5% in the non-life sector. The motor lines of business were the main drivers of growth, increasing 27.9% compared to the same period in the previous year.

Life insurance premiums also recorded good growth of 9.5%. The largest increase in life insurance in the Baltic markets was recorded in Latvia, which rose by 15.1%, followed by Lithuania (+7.6%) and Estonia (+7.1%). Index-linked and unit-linked insurance is particularly important in the life market. In addition to being the most important life segment, it also recorded high growth rates – increasing 8.2% in Lithuania, and even as much as 25.3% in Estonia.

Average per capita expenditures for insurance were EUR 247 in Lithuania in 2016. EUR 161 of this amount was for non-life insurance and EUR 86 for life insurance. Estonia’s insurance density of EUR 296 per capita was higher than in Lithuania. Of this, EUR 231 was spent on non-life insurance and EUR 65 on life insurance. Latvia had the lowest insurance density in the Baltic states, namely EUR 199. EUR 136 was for the non-life sector and EUR 63 for the life sector.

VIG companies in the Baltic states

Market shares of the major insurance groups

VIG is represented in all three Baltic countries. Compensa Life has its headquarters in Estonia and is also represented by branches in Latvia and Lithuania. In Latvia, in addition to BTA Baltic, VIG is also represented by the property and casualty insurer InterRisk (formerly Baltikums), which also has branches in Lithuania and distributes its products via brokers in Estonia. The Group is represented by Compensa Non-Life in Lithuania. It also maintains branches in Latvia and Estonia.

Vienna Insurance Group is one of the leading insurance groups in the Baltic states. The Group holds a market share of 19.6%, putting it in second place in the market. The Group is also in second place in the non-life sector, and in third place for life insurance.

The Latvian supervisory authority approved the merger of the two VIG companies InterRisk and BTA Baltic at the end of 2017. The merger is aimed at combining the selling power of the two companies and strengthening their market presence by using the common brand BTA Baltic throughout the Baltic region. Subject to approval by the local authorities, VIG also plans to acquire 100% of the shares of the non-life insurer Seesam. The acquisition of Seesam will strengthen VIG’s market position in the Baltic states and, above all, improve its position in Estonia.

Business development in the Baltic states in 2017

Premium development

PREMIUMS by line of business

Premiums written in the Baltic states rose to EUR 327.6 million in 2017 (2016: EUR 140.2 million). In addition to the good performance achieved by all Group companies, the significant year-on-year increase in premiums was primarily due to the non-life insurance company BTA Baltic that was acquired previous year. Net earned premiums rose to EUR 242.9 million in 2017 (2016: EUR 108.1 million).

Expenses for claims and insurance benefits

Expenses for claims and insurance benefits less reinsurance were EUR 170.0 million in 2017 (2016: EUR 85.2 million). The increase was primarily due to the non-life insurer BTA Baltic that was acquired in the previous year.

Acquisition and administrative expenses

VIG recorded EUR 67.1 million in acquisition and administrative expenses in the Baltic states in 2017 (2016: EUR 35.2 million). The main reason for this increase is once again the non-life insurer BTA Baltic that was acquired in the previous year.

Result before taxes

The result before taxes of EUR 1.4 million achieved in the Baltic states in 2017 was a significant improvement over the previous year (2016: loss of EUR 11.2 million). The positive change was the result of a significant improvement in the combined ratio.

Combined Ratio

The combined ratio improved compared to the previous year to 99.0%, primarily because of the non-life insurer BTA Baltic acquired in the previous year and the significantly better underwriting result achieved for motor third party liability (2016: 135.4%).