Baltic states

The Baltic states consist of the countries Estonia, Latvia and Lithuania.

The Baltic insurance market

In the insurance market in the Baltic states, many companies that have their registered office in one of the three countries are also represented by branches in the other two markets. This leads to an above-average number of market participants. The top 5 insurance groups in the Baltic states generated 78.8% of the total premium volume.

Premium volume in the three Baltic states rose by 14.2% year-on-year in the 1^st to 3^rd quarters of 2018. Latvia recorded the largest increase of 16.9%. Estonia and Lithuania also recorded major increases of 13.7% and 12.9%, respectively. Lithuania, with a 47.0% share of the premium volume, is the largest individual Baltic market.

The non-life sector continued to record dynamic premium growth of 16.4% in the first nine months of 2018. All three countries recorded double-digit premium increases, with the Latvian market standing out with an increase of 19.7% in the non-life sector. The growth was mainly driven by motor third party liability insurance. Premium volume increased around 42% compared to the same period in the previous year.

Life insurance premiums also recorded good growth of 7.9%. The largest increase in life insurance in the Baltic markets was recorded in Latvia, which rose by 9.8%, followed by Lithuania (+8.8%) and Estonia (+2.9%).

Average per capita expenditures for insurance were EUR 274 in Lithuania in 2017. EUR 204 of this amount was for non-life insurance and EUR 70 for life insurance. Estonia’s insurance density of EUR 326 per capita was higher than in Lithuania. Of this, EUR 261 was spent on non-life insurance and EUR 65 on life insurance. Latvia had the lowest insurance density in the Baltic states, namely EUR 239. EUR 180 was for the non-life sector and EUR 59 for the life sector.

VIG companies in the Baltic states

Market shares of the major insurance groups

VIG is represented in all three Baltic countries. Compensa Life has its headquarters in Estonia and is also represented by branches in Latvia and Lithuania. VIG is represented in Latvia by BTA Baltic, which has branches in Estonia and Lithuania. The Group is represented in Lithuania by Compensa Non-Life, which also maintains branches in Latvia and Estonia.

Following signing of the purchase agreement in December 2017, acquisition of 100% of the shares of the non-life insurance company Seesam was concluded in September 2018 with approval by the local authorities. The acquisition of Seesam, which is represented in all three Baltic states, raised VIG’s market share in the Baltic states to 23.8% in the 1^st to 3^rd quarters of 2018. This makes VIG by far the largest insurance group in the Baltic states. The Group is also in first place in the non-life sector, and in third place for life insurance.

Financial performance indicators in the Baltic states segment

Premium development

Premiums by line of business

Premiums written in the Baltic states segment rose to EUR 375.8 in 2018 (2017: EUR 327.6 million). This significant year-on-year increase in premiums of 14.7% was due to generally good performance achieved in all lines of business, in particular the motor lines of business and other property and casualty insurance. Net earned premiums rose to EUR 277.1 million in 2018 (2017: EUR 242.9 million).

Expenses for claims and insurance benefits

Expenses for claims and insurance benefits less reinsurance were EUR 198.4 million in 2018 (2017: EUR 170.0 million). The increase of 16.8% essentially equals the increase in business volume.

Acquisition and administrative expenses

VIG recorded EUR 69.0 million in acquisition and administrative expenses in the Baltic states segment in 2018 (2017: EUR 67.1 million). The change is due to an increase in personnel and operating expenses caused by expansion of the distribution network.

Result before taxes

The result before taxes of EUR 2.1 million recorded in the Baltic states segment in 2018 was an improvement over the previous year (2017: EUR 1.4 million).

Combined Ratio

The combined ratio improved compared to the previous year to 98.7%, mainly due to good performance in the motor lines of business (2017: 99.0%).