Czech Republic

Czech insurance market

The Czech insurance market is highly concentrated. The top 5 insurance groups generated around 84% of the market premiums in the 1^st to 3^rd quarters of 2018.

Premium volume in the Czech Republic was CZK 97.4 billion in the first three quarters of 2018, representing a year-on-year increase of 4.5%. This is one of the fastest growth rates recorded in recent years.

The increase was driven by a large increase of 6.3% in the non-life sector, particularly due to growth in the motor lines of business. Growth in the number of insured vehicles led to a 6.6% increase in premiums for motor third party liability insurance and an even larger increase of 10.0% for motor own damage insurance. The non-motor lines of business rose by 4.5%.

The trend reversal for life insurance is particularly noteworthy. Life insurance recorded an overall increase of 1.1% in the Czech market, based on the local currency (using the calculation method of the Czech Insurance Association). Premiums in the single premium business continued to decline (-11.7%) in the first three quarters of 2018, while the significantly larger regular premium business achieved an increase of 1.4%.

According to Axco Global Statistics, a per capita average of EUR 524 was spent on insurance premiums in the Czech Republic in 2017. EUR 319 of this amount was for non-life insurance and EUR 205 for life insurance.

VIG companies in the Czech Republic

Vienna Insurance Group operated three insurance companies in the Czech Republic in 2018: Kooperativa, ČPP and PČS. The planned merger of PČS and Kooperativa was officially concluded at the beginning of January 2019. The aim is to strengthen the bancassurance business by combining the expertise of the two companies.

VIG had a market share of 31.6% in the Czech Republic in the 1^st to 3^rd quarters of 2018. Vienna Insurance Group holds first place both in terms of total premiums and in the life insurance business. The Group is in second place in the non-life business.

The Group reinsurance company VIG Re, which has its headquarters in Prague, is assigned to the Central Functions segment.

Financial performance indicators in the Czech Republic segment

Premium development

Premiums by line of business

The Czech Group companies wrote EUR 1,684.2 million in premiums in 2018 (2017: EUR 1,603.2 million), representing an increase of 5.0% compared to the previous year. This major increase was mainly due to good performance in other property and casualty insurance and regular premium life insurance. Net earned premiums were EUR 1,265.7 million in 2018, representing an increase of 4.9% compared to the previous year.

Expenses for claims and insurance benefits

Expenses for claims and insurance benefits less reinsurance were EUR 804.8 million in 2018, representing an increase of 1.6%. Due to a decrease in large losses, expenses for claims and insurance benefits did not grow as fast as premiums.

Acquisition and administrative expenses

Acquisition and administrative expenses for the Czech Group companies increased 5.3% to EUR 380.6 million in 2018. Acquisition and administrative expenses were still EUR 361.4 million in 2017. Higher commission expenses due to premium growth were the main reason for the increase.

Result before taxes

The result before taxes generated by the Czech Group companies rose to EUR 166.7 million in 2018, primarily due to an improvement of 11.6% in the combined ratio compared to the previous year (2017: EUR 149.3 million).

Combined Ratio

The combined ratio decreased compared to the same period in the previous year to 92.7% in 2018 (2017: 97.5%). It must be noted that the combined ratio was negatively affected by large losses in the previous year.