Asirom, the second leading insurance company on the market last year posted 10 million-euro (36 million RON) loss, 70% higher in euros than in 2004, when it posted 5.8 million euros (23.6 million RON) in losses.
These losses occur after a time when Asirom had been posting profit.
"Two thirds of this loss (6.67 million euros) are financial losses, caused by the appreciation of the RON, the re-evaluation of the portfolio of shares Asirom has in other companies and the decline in interests on banking deposits," Boris Schneider, general manager of Asirom told ZIARUL FINANCIAR. He says that more than half of this financial loss, worth some 3.3 million euros, was caused by the decline in the value of the stakes Asirom has in other companies, especially the estimated 18% interest in Astra Romana refinery.
The shares of the refinery plunged some 50% throughout last year, after it was closed down. Therefore the stake Asirom had, which was worth over 4 million euros early in the year depreciated to 2 million euros at the end of 2005 and the company made provisions.
"If Astra opens tomorrow, these provisions will turn into revenues, therefore they cannot be considered losses," Schneider says.
Another significant loss-making factor was the appreciation of the RON against the euro, which affected the auto comprehensive insurance portfolio, with the value of the insurance policies being calculated in euros.
Asirom''s general manager says the 10 million-euro loss was partly caused by the claims settled as a result of the floods last year, worth approximately 3 million euros.
"Another cause for losses are the reserves for premiums we made for the auto liability insurance, 4.5 million euros. The reserve at the end of the year used to be zero in the previous years, and last year was the first time when we had a substantial reserve at the end of the year. This is due to these policies being valid for one year since the day they were bought, not for a calendar year," says Daniela Meghea, Asirom''s deputy chief executive.
Asirom logged 158.3 million euros in turnover in 2005, 135.5 million euros of which was derived from general insurance, and the remaining 22.8 million euros from life insurance. The auto insurance policies (both comprehensive and liability) account for some 65% of the company''s portfolio.
Asirom''s general insurance business witnessed 30% growth in euros, while the growth on the life insurance segment was 3.6%.
"Many insurance policies have matured and this void needs to be filled with new business," Schneider explains.
He adds that Asirom will launch unit-linked products this year, in addition to health care insurance.
The company lost some of its market share both on the general insurance and on the life insurance markets last year. Its share of the general insurance market in 2005 stood at 14% compared to 15.8% at the end of 2004. Its share of the life insurance market amounted to some 8%, down from 11.9% in the previous year. The company lost its second spot on the life insurance market, falling to the fourth place in 2005, behind ING Asigurari de Viata, AIG Life and Asiban.
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