Profits of Armenia`s insurance sector go on decreasing 

ArmInfo. The net profit of the insurance sector of Armenia, after a 4.5-fold jump in 2022, began to decline in 2023, lingering in this trend in 2024 with some slowdown in growth rates from 33% to 26%. This was the result of a  deterioration in the dynamics of premiums to a 2% decline and a  slowdown in the growth of compensation to 15%. While a year ago, both  indicators increased by 17% and 30%, respectively (against high  growth in premiums and stagnation in compensation in 2022). 

This is evidenced by the data of the Financial Rating of Insurance  Companies of Armenia as of 31.12.2024, prepared by ArmInfo IC based  on published financial reports and additional data requested from the  insurance companies. Moreover, in the fourth quarter of 2024 alone,  net profit increased 4.5 times - to 569.4 million drams ($1.4  million), reaching such a positive level from minus 230.1 million  drams in the third quarter. As a result, the net profit of the  insurance sector amounted to 1.98 billion drams ($4.99 million) at  the end of 2024, premiums exceeded 72 billion drams (about $183  million), and compensation reached almost 44 billion drams (about  $111 million).

In terms of net profit for 2024, Armenia Insurance secured the lead -  589.9 million drams, LIGA Insurance moved up to second place - 369.7  million drams, and REGO Insurance took third place - 341.2 million  drams.

Nairi Insurance moved to fourth place - 281.1 million drams, and  pushed INGO Armenia to fifth place - 243.8 million drams. Efes and  Sil Insurance were in sixth and seventh positions - 82.1 million and  74.5 million drams, respectively. Of the listed insurance companies,  only three were able to increase their profits over the year (by  7-128%), while the other four saw their profits drop (by 23-63%).  Moreover, the largest increase in profits at SK Efes (2.3 times) is  explained by the exit from the loss, which was then recorded only by  it as a result of the first year of activity. 

Meanwhile, in terms of the volume of insurance premiums and  compensations, SK LIGA Insurance holds the lead - 15.4 billion and  10.6 billion drams, respectively. Of the seven SKs (including Efes),  three companies reduced premiums (by 10-57%, with the maximum at  INGO), and the remaining four showed growth (by 4-286%, with the  maximum at Efes). At the same time, only SK INGO reduced  compensations on an annual basis, and the other six kept this  indicator growing (by 5-1890%, with the maximum also at Efes). The  very high growth rate of both premiums and compensation recorded by  SK Efes can be fully explained by the increasing activity in the  first year of operation.

(AT. As ArmInfo analysts note, the transfer of financial statements  of insurance companies to a new format each time hides more and more  important indicators from the possibility of analyzing the state of  the market. It is worth noting that, unlike the previous reporting  format, the new version does not have a unified approach to  publishing financial statements, thereby allowing insurance companies  to selectively disclose certain balance sheet indicators. This is why  ArmInfo IC requests from insurance companies the important data  missing in the new format, since it has become difficult for them to  analyze the situation on the market).

With the appearance of Efes Insurance Company at the end of July  2023, 7 companies are already operating in the Armenian insurance  market. Among the currently operating insurance companies, the parent  structures of some of them were included in Western sanctions lists  in 2022, as a result of which a reorganization process began on the  market.

In particular, the former companies RESO and Rosgosstrakh Armenia  went for rebranding and change of share capital structure,  re-registering as REGO Insurance and LIGA Insurance. The Armenian  subsidiary of the Russian company Ingosstrakh - SK "INGO" (previously  called INGO Armenia), from which the insurance company "Efes" grew,  went through a slightly different path of reorganization with the  spin-off of the client base.

ArmInfo analysts noted that these two, still partially affiliated  companies, divided between themselves, mainly, the segment of banking  products insurance (INGO) and the segment of medical insurance  (Efes).  Thus, according to the results of 2024, Efes overtook INGO  in health insurance premiums - 4.5 billion against 3.1 billion drams,  respectively, taking the 2nd position in the market in this class,  while a year ago, INGO still held the leadership in the market. And  this is not the only class in which Efes not only managed to overtake  INGO, but also "squeeze" the championship from it (property  insurance, CASCO, accident insurance and travel insurance).

Out of 20 existing insurance classes, 18 are used in the insurance  market of Armenia, with the exception of liability insurance for the  use of railway transport and insurance of legal and extra-judicial  costs. Only 3 companies operate in the agricultural risk insurance  class - LIGA Insurance, INGO and Sil Insurance. Only Armenia  Insurance is licensed for railway insurance. INGO and Armenia  Insurance are licensed for the largest number of classes - 16, and  LIGA Insurance - 15. (The calculated exchange rate of the dram to the  dollar on 12/31/24 was 396.56 dr/$1).