ArmInfo. The net profit of the insurance sector of Armenia dropped by 33% in 2023, after a 4.5-fold increase in 2022. "This resulted from higher reimbursement growth of 30% with a modest 17% increase in premiums.
A year ago, on the contrary, premiums grew rapidly, while reimbursements almost stagnated," ArmInfo analysts say. According to the data of the Financial Rating of Insurance Companies of Armenia as of December 31, 2023, prepared by ArmInfo IC, in Q4 2023 alone, the insurance industry recorded a loss of 663.7 million drams ($1.6 million), against a profit of 637 million drams in Q3 and a positive 292.8 million drams in the Q4 2022.
Of the six insurance companies, only one insurance company, Armenia Insurance, completed the quarter with a profit, while significantly reducing it. Four companies went from profit to loss, and one remained in loss, greatly reducing it. The loss of the new participant represented by the EFES insurance company increased 10-fold, which in its case is quite explainable by its relatively recent appearance on the insurance market (from the end of July 2023). As a result, at the end of 2023, the net profit of the insurance sector amounted to 2.6 billion drams ($6.4 million), premiums exceeded 71 billion drams (about $176 million), and compensation reached 38.1 billion drams ($94.2 million). Analysts note that such a downward trend in profit is associated with high growth rates of claims for such classes as property insurance, cargo transportation, compulsory motor liability insurance, voluntary motor insurance, agricultural risk insurance and medical insurance. The leader with net profit in 2023 was "Armenia Insurance", 765.3 million drams, displacing Nairi Insurance to second polace - 653 million, and pushing INGO Armenia to third place- 613.9 million, and LIGA Insurance was in fourth place- 378.7 million , the fifth and sixth places continue to be occupied by REGO Insurance and Sil Insurance - 319 million and 149 million, respectively, and the last seventh place is occupied by a new market participant, EFES Insurance Company, with a loss of 300.7 million drams. Only three of these insurance companies were able to increase their profits during the year (by 3.5-75%), while the profits of the other three decreased (by 35-51%).
Meanwhile, "LIGA Insurance" is the leader in terms of the volume of insurance premiums and indemnities, which, while continuing to increase fees moderately, improved the dynamics of payments from recession to high growth, which did not best affect the annual profit trend, which after a significant increase in 2022 began to decline in 2023. Following, the second and third places are occupied by INGO Armenia and Nairi Insurance, which, having greatly accelerated the growth of reimbursements, significantly worsened the dynamics of premiums, in particular INGO Armenia with a reversal from double-digit growth to decline, and Nairi Insurance with a noticeably slowdown in growth rates, which of course greatly reduced the profits of both companies.
There are organizations in the insurance market of Armenia that are affected by anti-Russian sanctions. In 2022, the Russian parent companies of Armenian insurance companies were included in the sanctions list. As a result, a reorganization process began in the market. Already in December 2022, the companies RESO and Rosgosstrakh Armenia went to rebranding, and earlier to a change in the composition of shareholders, being re-registered as REGO Insurance and LIGA Insurance. The Armenian subsidiary of the Russian Ingosstrakh company is also going through a slightly different path of reorganization with the spin-off of its client base. It is not yet known whether Ingosstrakh intends to leave the Armenian market.
It should be noted that in the insurance market of Armenia there are organizations affected by anti-Russian sanctions. In 2022, the Russian parent structures of Armenian insurance companies were included in the sanctions list. As a result, a reorganization process began in the market. Already in December 2022, the former companies RESO and Rosgosstrakh Armenia underwent a structural reorganization of capital and rebranding, re-registering as REGO Insurance and LIGA Insurance. The Armenian subsidiary of the Russian company Ingosstrakh, from which the Efes insurance company grows, is also taking a slightly different path of reorganization with the spin-off of its client base. It is not yet known whether the Ingosstrakh company itself intends to leave the Armenian market.
There are already 7 companies operating in the insurance market of Armenia, which operate in 18 of the available 20 classes of insurance, with the exception of liability insurance for the use of railway transport and insurance of judicial and extrajudicial expenses. Only 3 companies operate in the agricultural risk insurance class - LIGA Insurance, INGO Armenia and Sil Insurance. Only Armenia Insurance is licensed for railway transport insurance. The largest number of classes are licensed by "INGO Armenia" and Armenia Insurance - 16 and "LIGA Insurance" - 15. (The calculated exchange rate of the dram against the dollar as of December 31, 2023 was 404.79 AMD/$1).