Having grown rapidly, the domestic insurance market reported losses last year
In 2015, the domestic insurance market expanded rapidly, and the volume of premiums written over the year reached a record high. Claims paid by insurers to insurance policy holders increased as well. Over the last two years, business restructuring and acquisition transactions in the non-life insurance market had a major impact on last year’s financial performance of the insurance market, which, according to unaudited data, constituted a loss of EUR 13.4 million.
‘The profit of life assurance undertakings did not offset the negative financial performance of non-life insurance undertakings, recorded last year, which was driven by the largest loss of the insurance market, incurred from investing activities, in a decade. These activities were not as successful as in the previous years, since insurance undertakings found it difficult to find successful investments in a low interest rate environment. Nonetheless, a significant portion of loss formed due to the fact that one undertaking acquired a part of the insurance business and had to invest a substantial portion of funds into it. Were it not for these investments, the overall performance of the sector last year would have been positive, i.e. constituted EUR 7.7 million in profit,’ said Vytautas Valvonis, Director of the Supervision Service of the Bank of Lithuania.
In 2015, life assurance undertakings earned EUR 10.1 million in profit (in 2014 — EUR 16.9 million). Operating result of non-life insurance undertakings for 2015 was a loss of EUR 23,5 million (in 2014 — a profit of EUR 7.1).
The loss of the insurance market, incurred from investing activities in 2015, amounts to EUR 13.8 million. Despite business restructuring and acquisition transactions, insurance undertakings would have earned a profit of EUR 7.3 million from their investing activity, and the 2015 indicator of the return on investment would have been 1.9 per cent, instead of 1.3 per cent (in 2014, it was 4.5%). While nearly all insurance undertakings earned profits from investing activities in 2014, they failed to achieve this 2015: the investing activities of two life assurance undertakings and two non-life insurance undertakings were loss-bearing.
Insurance premiums written in the domestic insurance market in 2015 recoded the largest number over the entire period of Lithuania’s independence. Over the year, the amount of premiums written reached EUR 645.1 million, a year-on-year increase of 7.4 per cent.
The life assurance market grew by 9.7 per cent. It also reached a record volume: EUR 236 million in premiums was written. The volume of premiums written grew by 2.9 per cent from 2007, when the life assurance market had reached its highest operating performance. The non-life insurance market grew by 6 per cent in volume last year, and this growth was faster than a year ago; the premiums written amounted to EUR 409.1 million.
In 2015, insurers paid EUR 332 million in claims, a year-on-year increase of 4.9 per cent. Life assurance claims paid increased by 1.8 per cent — to EUR 96.7 million. In 2015, non-life insurance claims paid grew more than in 2014, i.e. by 6.3 per cent, and increased to EUR 235.3 million.
The assets of insurance undertakings amounted to EUR 1.144 as of 31 December 2015 (it amounted to EUR 1.024 billion at the end of 2014). The bulk of the assets of insurance undertakings consists of investments — EUR 999.1 million (87.4%).
As of 31 December 2015, 23 registered insurers, established in Lithuania, provided insurance services: 8 of them were engaged in life assurance activities and 15 — in non-life insurance activities.