August 26, 2011
Nearly fifty percent growth in premium income and market share- the Groups’ profitable operation in focus
CIG Pannonia Life Insurance Plc. published its flash report about its results and assessment of the first two quarters of 2011 along with its further plans. The Board of Directors evaluates the results achieved during the first two fiscal quarters as successful and intends to take further action in the interest of efficiency and the improvement of ability to generate income.
Market with regards to its financial performance the company concluded a successful time period in the first half of 2011, it achieved HUF 12,642 billion gross written premium which means a growth of 48% in comparison to the gross written premium of HUF 8,530 billion to the similar period of 2010.
The premium income of regular premium policies grew by 69% to HUF 8,3 billion, while top-up premiums grew by 19% to HUF 4,3 billion compared to previous years’ similar period. The increase of premium income was the result of the large increase of new sales of unit-linked life insurances and the renewal fees coming from the existing life insurance portfolio.
In the first half of 2011 the annualized premium of newly sold policies was HUF4,923 billion which is a 28% increase compared to last years’ similar period. The insurance portfolio of the company continued to broaden, 11 119 pieces of policies have been sold during the first year of 2011, with which the closing life insurance portfolio increased to 36 971 pieces.
The company’s market share according to gross written premium was 5,6% at the end of the first half of 2011 compared to the 3,8% of last years’ similar period. With this result the company achieved the 8thlargest premium income out of the 18 market players after last years’ 9th place. According to the adjusted premium income which takes top-up premiums by 10% into consideration the company’s market share is 6%, after the 3,8% markets share of last year, with which it became the 6th largest player of the national life insurance market after the 9th place of last year’s similar period.
The diversification of distribution channels improved further. The ratio of BROKERNET Group within the Hungarian sales decreased to 63% compared to the 80% of last year’s similar period. The ratio of the tied-networks’ performance increased to 9% to 10% while the ratio of other diversification channels increased from 11% to 20% when compared to last years’ similar period.
The size of operational costs was HUF 9,154 billion, out of which HUF 5,928 billion was acquisition cost and HUF 3,137 was administration cost. The retained profit/ loss shows HUF 2,427 billion loss. The capital position of the company is stable, the size of share capital was HUF 7,301 billion on 30th
June 2011, the company’s total equity and liabilities is HUF 37,656 billion and it fully fulfilled its responsibilities.
Considering the results of the first half of the year, the company keeps its goals defined for the financial year of 2011, the Board of Directors expects the accomplishment of HUF 35 billion premium income plan.
Preparation of the non-life activity
The company’s subsidiary, CIG Pannonia First General Life Insurance Plc dealing with non-life insurance took over national and international carriers’ liability and liability insurance portfolio of the TIR Insurance Association during the second quarter. The received portfolio significantly increased its the portfolio to HUF 153 million. The premium income was HUF 73 million in the first half of 2011.
The preparation of the non-life insurer subsidiary’s entrance to the market during the fourth quarter of 2011 is progressing according to plans.
Profitable operation in focus
Since the company’s foundation the Board of Directors aimed at becoming the leading player on new sales market, dynamically increasing the premium income, broadening the circle of activities, appertaining on the markets of neighboring countries, which require the initial investment of great financial and human resources. The Board of Directors expects the profitable operation of the life insurance company in the 5th to 7th year after the launch of activity according to business plans (according to the business model of newly founded life insurance companies as a greenfield investments).
Keeping in mind the secure and prudent operation and the increase of shareholder value, the Board of Directors made a decision about taking a range of measures, under which the quality of service and security of operation improves while the operational costs decrease considerably.
Basic and value creating activities in focus: the development of activities in Hungary, Romania and Slovakia will be continued, while other activities under preparation announced before are progressing according to plans. The Hungarian non-life activity is planned to commence during the fourth quarter of 2011, while the pension and investment service provider companies supporting the pension fund activities will launch after the necessary licenses are obtained. Those business processes and distribution channels which are not directly connected to the core activity will be terminated or reorganized.
More effective cost management: productivity can be further increased and operational costs decreased with the reorganization of operational areas and through more rational management. The effects of the first stage of action series taken will have limited impact in 2011 already, but will fully emerge in 2012. With the first step of the range of measures, operational costs decreased by an annual HUF 400 million, which have a significant positive impact on the company’s financials.
Development of background support functions: the development and automation of business support functions will gain more emphasis, the further improvement of central administration will greatly contribute to sales goals.
CIG Pannonia Life Insurance Plc.
Further information:
CIG Pannonia Life Insurance Plc.
Benedek Sándor
director, investor relations and communications
E: investor.relations@cig.eu , kommunikacio@cig.eu
T: +36 1 437 6652
Market share of CIG Pannonia Life Insurance Plc. according to premium income in the first half of 2011
Market share of CIG Pannonia Life Insurance Plc. according to the adjusted premium income in the first half of 2011
