Renegotiation of rents for the office network and cancellationof investment plans for this year have pushed insurers' profits up,even though the crisis has seriously hurt policy sales. Will themarket shift to profit after three years of net losses?
Most large and medium-sized insurance companies posted higherprofits for the first nine months of this year or moved from lossesto profit compared with the same time of 2008, despite the declinein insurance sales.
The biggest profit of all the companies to have made their endof September financial results public was posted by ING Asiguraride Viata, the leader of its respective market. Although the grosspremiums underwritten by the company fell by 9% in the first threequarters, the gross profit rose by 133% to 75.5 million RON.
Out of the top ten insurers to have revealed their results untilnow, only Ardaf posted losses, while Allianz-Tiriac, the leader ofthe insurance market (general plus life insurance) logged 37%decline in gross profit to 26 million RON.
How did so many insurers manage to boost their profits while themarket has been going down?
"On the one hand, operating expenses went down compared withlast year, and rental or communications contracts wererenegotiated. On the other hand, we postponed certain investmentprojects," says Cornelia Coman, ING Asigurari general manager.
ING Asigurari obtained a 10% or 20% cut in rent for itsterritorial offices following lease renegotiation, while the mobiletelephony contract renegotiation got the insurer a 10-15% tariffcut.
In some cases, the profit growth can be generated by the sale ofassets. Omniasig, for instance, which saw its gross profit go up by19% in the first nine months to 41 million RON, sold its 10% stakein private pension manager Omniasig Pensii this year. It collectedabout 1.3 million euros from BCR group for this stake, according tocertain estimates. The value of the deal was not revealed.
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