Insurance Post

The Russian insurance market: Major events in Q1 2014


The first quarter of 2014 turned out to be a very calm period for the Russian insurance market. However, although nothing significant happened, there have been positive developments in the sector, says Paul Koshik,

In February, Russian insurance companies shared their financial performance figures for the past year, with Sberbank Insurance being the most rapidly developed start-up company in the history of the market.

Last year, the company managed to make almost £150 000 000 in premiums, and also paid out £626 000 in benefits. In the long-term life sector, Sberbank Insurance collected £142m in premiums and concluded 13 805 contracts.

Meanwhile, insurer Renaissance Zhizn became the leader in terms of life insurance premium volume. The company managed to collect more than £352m - 147% more than it collected in 2012, growing its market share to 21.5%.

As for the insurance sector in general, the total volume of insurance premiums has grown by 33.5% since 2012 and is now a £1.6bn market. The volume of life insurance premiums, meanwhile, grew by 59.7%, and is now valued at £1.3bn. The volume of other insurance premiums decreased by 21.6%.

RESO-Garantia also saw positive results. Its total volume of insurance premiums rose to more than £944m, 10.8% more than in 2012. Its claims payouts were also 18.8% higher than last year, and amounted to almost £557m. RESO-Garantia, whose key area is motor insurance, signed 6.9m contracts in 2013. Its motor business collected £664m in premiums - a 12% increase - and paid out £410m, a 19% increase.

It was not such good news for insurer Ingosstrakh, which saw total premiums drop from £1 187 bn in 2012 to £1 172 bn last year. Last year, Ingosstrakh made £783m of payments, compared with £751m the previous year.

Personnel reshuffles
Top ten Russian insurer Alliance made the decision to terminate the employment of the company's general manager, Hokan Danielsson, on 1 March. Nicolaus Fry became acting general manager in his place. In a further shake-up, senior vice-president of Allianz CEEMA, 

Oleg Pyatakov, replaced Manuel Bauer as chairman.

Sberbank Insurance's strong Q1 performance also led to significant personnel reshuffles. Dmitry Baginsky, previously head of marketing and business development, was promoted to deputy general manager.

Pavel Dengin, who was in charge of investment products, became deputy director of products. Anton Gamov, former operational director of Soglasie LLC, an insurance company, was appointed deputy operations director of Sherbank Insurance.

Insurer Ingosstrakh-Life swooped for a new general manager, Vladimir Chernikov. He will be responsible for the development of the company's business and consolidation of the its operational base. Previously he was head of the corporate business department in OJSIC Ingosstrakh.

Business development
The largest Russian insurance company - Rosgosstrakh LLC - is about to open a representative office in Beijing, to be headed up by Igor Nikulin. Previously Nikulin was head of the Rosgosstrakh affiliate in the Far East. However, Rosgosstrakh won't be the only Russian insurer entering the vast and high developing Chinese insurance market - in fact, OJSIC Ingosstrakh opened its official representative office there in 1998.

At the end of January, Sergey Mestnikov, first deputy head of the Property and Land Relations Ministry in The Sakha (Yakutia) Republic, announced the establishment of a new large insurance company, which would merge insurance companies Sakhamedstrakh and Sterkh.

In 2013, the authorised capital of regional insurance company Sterkh made up £10.5 million. Sterkh provides insurance to social facilities, such as educational, health care, cultural and sports institutions; agricultural and entrepreneurial risks; and property complexes of municipalities. In addition, it also offers property, life and health insurance to. Altogether the company provides 21 types of insurance. Sterkh has the most extensive branch network of insurance companies in The Sakha (Yakutia) Republic. Its affiliates and offices operate in Moscow and Khabarovsk.

As of 2013, the authorised capital of urban insurance medical company Sakhamedstrakh exceeded £1.9 million. Its main fields of work are compulsory and private insurance, protection of rights of the insured, financial support of health care institutions and medical audit and assessment services.

Today, more than 80% of population of Yakutia is insured by this company. According to Mestnikov, a new merger company will not only help consolidate the funds of two big companies, but will also create a worthy competitor to other players in the insurance market.

Other successes
The success of subsidiary company Sberbank Insurance (owned by the largest Russian bank) turned out to be infectious. At the end of March, news emerged that one of the biggest Russian private banking groups - financial corporation Otkrytie - purchased a life insurance company.

The licence of the new company, RSTK-Life, was reissued following the change of the name and address of the insurer. The new name of the insurance company is Otkrytie Life Insurance, though the representative of the financial corporation doesn't confirm or deny the purchase of that particular company.

It said: "At the moment the corporation is in the process of concluding the buying transaction of a life insurer. In accordance with the arrangements of both sides we cannot disclose the conditions and details of the deal until its closure".

RSTK-Life is an insurance company with almost zero premiums that made no payments in 2013. In actual fact, it's a shell company.

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