Turkey/Georgia

Turkey

The Turkish insurance market once again recorded double-digit growth of 18.2% during the 1^st to 3^rd quarters of 2018. The non-life sector gained 19.9% in the 1^st to 3^rd quarters of 2018 in local currency terms, further increasing its contribution to total premium volume to around 86%, while life insurance premiums rose 8.5%. Motor third party liability insurance represented around one third of the non-life business. It recorded an increase of 25.1%, and motor own damage insurance recorded a gain of 11.9% in premium volume. The non-motor lines of business rose by 19.3%.

More than 60 companies offer insurance in Turkey. Vienna Insurance Group is in 17^th place in the ranking of the largest insurance groups in the country. The non-life insurance company belonging to the Group, Ray Sigorta, holds a market share of 1.6% in the overall market.

Georgia

In Georgia, the top 3 insurance groups generated around two thirds of the premiums in the Georgian insurance market in the 1^st to 3^rd quarters of 2018. The overall market recorded a year-on-year increase of 20.7% in local currency terms. The increase in all lines of business underscores the potential for catch-up offered by this market. Health insurance, which is still the dominant line of business, representing around 41% of total premium volume, recorded an increase of 6.8%. As announced, mandatory motor third party liability insurance was introduced for foreign vehicles at the beginning of 2018, causing the premium volume in this line of business to almost quadruple. The next step being planned is to also introduce mandatory motor third party liability insurance for domestic vehicles. Double-digit growth rates were recorded for motor own damage insurance (+15.7%) and the non-motor lines of business (+16.6%). After decreasing in the previous year, life insurance recorded a striking increase of 62.4% in the 1^st to 3^rd quarters of 2018.

VIG is represented by two companies in Georgia: GPIH and IRAO. It occupies second place in the market, with a total market share of 26.8%.

Financial performance indicators in the Turkey/Georgia segment

Premium development

Premiums by line of business

Vienna Insurance Group recorded total premiums written of EUR 198.3 million in the Turkey/Georgia segment in 2018 (2017: EUR 207.8 million), representing a decrease of 4.6% compared to the previous year. This change was due to negative currency effects. When adjusted for these effects, the Turkey/Georgia segment recorded an increase of 19.8%. Net earned premiums were EUR 97.1 million in 2018 (2017: EUR 101.6 million), a decrease of 4.4% compared to the previous year.

Expenses for claims and insurance benefits

Expenses for claims and insurance benefits less reinsurers’ share fell from EUR 79.8 in 2017 to EUR 73.6 million in 2018. This corresponds to a year-on-year decrease of 7.8% that was primarily due to currency effects.

Acquisition and administrative expenses

Acquisition and administrative expenses were EUR 22.7 million in 2018 (2017: EUR 19.7 million). Compared to the previous year, this represented an increase of 15.1% and was mainly due to a reduction in reinsurance commissions.

Result before taxes

The result before taxes declined to EUR 3.8 million in 2018, primarily due to full impairment of the goodwill of EUR 5.1 million in Turkey, negative currency effects and a deterioration of the combined ratio (2017: EUR 9.4 million).

Combined Ratio

The combined ratio rose to 98.5% in 2018 due to higher claims expenses (replacement part prices) in the motor lines of business (2017: 96.1%).