Thursday, May 21 2020 14:38
Karine Melikyan

ArmInfo FinRating: With the introduction of state of emergency,  premiums of Armenian insurance companies decrease 

ArmInfo FinRating: With the introduction of state of emergency,  premiums of Armenian insurance companies decrease 

ArmInfo.In the Q1 of 2020, premiums of Armenian insurance companies decrease due to the outbreak of the coronavirus pandemic. According to the Financial Rating of Armenian Insurance Companies prepared by ArmInfo IC, premiums fell by 4.2% y-o-y against 17.6% last year. The decrease in the volume of collected premiums was accompanied by a significant slowdown in the  growth of insurance payments - up to 5.8% compared to last year's  13.3%.  

At the same time, in the quarterly, that is, only in the Q1 of the  current year, compared with the fourth of the previous premium, they  accelerated growth from 25.2% to 27.1%, with the dynamics of  compensations leaving the 30.6% decline last year by 3 9% growth. By  April 1, 2020, the total amount of insurance premiums amounted to  15.6 billion drams, and insurance claims - 6.4 billion drams (the  figures are given from the reports of the IC according to IFRS  standards). As a result of this, the insurance system summed up the  Q1 of 2020 with a net profit of 924.7 million drams, with a y-o-y  growth of 6.5-fold with a quarterly growth of 3.5-fold.

According to the reports of IC portfolios according to the standards  of the Central Bank of the Republic of Armenia, insurance premiums in  the Q1 of 2020 exceeded 15.8 billion drams (with a turn in y-o-y  dynamics from 17.4% growth to 4.2% decline), and reimbursements - 6.4  billion drams (with a meager acceleration of y-o-yl growth from 4.3%  to 7.1%). The decline in fees during the reporting period was  recorded in two companies (INGO Armenia and Sil Insurance), and the  only decrease in refunds was in Nairi Insurance. Moreover, a year  earlier, in the same period, INGO Armenia premiums showed the leading  growth (42.4%), and Nairi Insurance compensations already stagnated  (0.1%).

Rosgosstrakh Armenia IC is the leader in the volume of collected  premiums - 4.9 billion drams, INGO Armenia IC took the second  position - 4 billion drams. The third position is held by Nairi  Insurance IC - 2.4 billion drams, followed by the former Sil  Insurance ICs - 2.1 billion drams, Armenia Insurance IC - 1.18  billion drams and RESO IC - 1.17 billion drams.

According to the analysts of ArmRating Agency: "The introduction of  the State of Emergency in Armenia from March 16 to June 13, as part  of the measures to prevent the coronavirus pandemic with the  accompanying temporary ban on many types of economic activity,  strongly influenced the performance of the financial system as a  whole and particularly in  insurance companies. Thus, suspension of  public transport (including metro) and inter-regional bus services  for the first two months of emergency, limitation of international  air, rail and bus pervasive messages have led to a deterioration in  the dynamics of fees and payments for the respective insurance  classes.

The uncertainty in the development of the situation with the  coronavirus pandemic does not allow us to accurately forecated  the  period of improvement of financial indicators. Under the current  conditions, medical insurance turned out to be relevant, but based on  the not unlimited possibilities of the insurance company and  reinsurance, which slowed down significantly, we can assume a further  deterioration in positions of this class. But the complete lifting of  the ban on economic activities from May 18 and the resumption of  public transport, do not exclude the possibility that this year, with  the economic recovery, insurance companies will have a second wind.  However, another pessimistic scenario of the health care crisis is  possible, according to which such prospects can become reality only  next year. "

The actual situation of numbers indicates the subsidence of CMTPL  insurance and fully comprehensive insurance, liability for the use of  air transport, cargo transportation, general liability, accident and  property, and at the same time, the growth of travel insurance and  air insurance charges slowed down. Improvement in dynamics was  recorded in insurance: financial loss (with growth), credit risk  (with faster growth), liability from the use of vehicles (with faster  growth), against which the accelerated growth of medical insurance   looks too modest.  

According to the results of the Q1 of 2020, the dominant share in the  structure of insurance fees is occupied by health insurance - 45.98%  (against 40.71% a year earlier) or 7.3 billion drams (with y-o-y  growth accelerating from 6.5% to 8.2%). In the second position CMTPL  insurance - 36.2% (against 35.2% a year earlier) or 5.7 billion drams  (with a reversal of they-o-y trend from 7.7% growth to 1.2% decline).  Property insurance (from fires, natural disasters, other damages) was  fixed in third place - 4.42% (versus 9.19% a year earlier) or 699  million drams (with an annual trend reversal from an increase of  2.7-fold to 54% recession). The fourth position is held by CMTPL  insurance - 3.59% (against 3.67% a year earlier) or 567.6 million  drams (with a turn of the y-o-y trend from 11% growth to 6.2%  decline). And the fifth position, as before, is occupied by insurance  against accidents - 3.55% (against 3.88% a year earlier) or 561.9  million drams (with an y-o-y trend reversal from 26.8% growth by  12.2% recession). In addition, for 8 insurance classes, Armenian  insurers collected 984.7 million drams. There are no concluded  agreements for the 3rd insurance classes (water transport insurance,  liability insurance for the use of water transport and insurance of  guarantees provided).

To recall, there are 6 companies in the insurance market of Armenia  operating 17 each from the existing 20 insurance classes, with the  exception of railway transport insurance, liability from the use of  railway transport, insurance of legal and extrajudicial expenses.  Moreover, since 2019, in the financial reports on the portfolio of  all 6 insurance companies, at the request of the Central Bank of the  Republic of Armenia, a line was added - insurance of seismic risks  (from earthquakes), the data on which are also included in the  corresponding insurance classes. In the largest number of classes,  "INGO Armenia" IC was licensed - 16 (the only one operating in the  class of water transport insurance) and IC "Rosgosstrakh Armenia" -  15. (The calculated exchange rate of the dram against the dollar as  of March 31, 20 was 504.47 dr./$ 1).

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