I'm the Operator With My Pocket Calculator

We have been waiting for it, and it has finally happened. The first contract has been placed at Lloyd's via iPad. http://www.ameinfo.com/254552.html

Return of Kaliningrad Fried Chicken

Do you remember the multimillion barbeque at Kaliningrad-based meat plant Konkordia this past June? Well, somebody had to pay for the party – and this somebody has finally dug deep in their pockets.

A couple of days ago, Russian insurer VSK made the first insurance settlement tranche to Konkordia’s owner, Miratorg. The tranche amounted to RUR1.002 billion (around EUR24 million), which, according to VSK, is the largest ever payment in the history of Russian industrial insurance. Last fall, Scor estimated the total insured losses of Konkordia at approximately EUR90 million, or around 60% of the country’s industrial insurance premium.

Under the contract agreement, VSK covered property and business interruption risks of the plant, as well as damage to Konkordia’s machinery and equipment.

Loss adjustment firm Cunningham Lindsey Russia has assessed property and, partly, BI damage to Konkordia - apparently, the first tranche has absorbed these loses. Currently, CL is assessing damage to the plant’s machinery and equitment and the remaining BI damage.

According to VSK’s somewhat mysterious statement, the fire at Konkordia was caused by the “emergency operation mode in the local electricity supply network”.

The current loss amount was paid by VSK and its reinsurance providers, with Swiss Re leading the treaty. The Russian insurer lists the following players that participated in paying the damage: GIC of India, Hannover Re, Milli Re, Partner Re, Polish Re, Sava Re, Scor, and Sirius – on the international side; Energogarant, Gefest, Kapital Re, Progress-Garant, Reso-Garantia, Russian Re, Surgutneftegaz, Transsib Re, Ugoria, and Unity Re – on the Russian side (we may safely assume that Russian groups have ceded a large part of their Konkordia risks to the West, so international players will pay twice). Perhaps, it would have been easier to say that the ‘barbeque’ losses were covered by basically all key players in the Russian P&C segment.

Triglav: Looking for Strategic Partner

In early December 2010, Triglav Group, the largest insurance provider in South-Eastern Europe, announced plans to find a strategic partner for Triglav INT (Triglav International), the recently formed entity that unites the group’s subsidiaries outside Slovenia. The Insurer talked to Igor Stebernak, member of Triglav’s management board, about the group’s expansion joys and troubles, and the financial standing of its international subsidiaries.

First Russian Insurance M&A in 2011

Axa has just increased its share in Reso-Garantia, one of the largest players in the Russian insurance market, two industry sources have independently told our blog. Axa's media department denied the info, but the sources are too informed to simply ignore them.

Besides, under the 2008 agreement, the French group acquired not only 36.7% of Reso but also the option to buy out the remaining interest in 2010 or 2011, so the rumour seems twice as plausible.

In late 2010, Axa bought 51% in Azerbaijani-based MBASK (a top-five company) and 80% in Belarusian B&B insurer (a 10% market share, #2). Since 2007, the French also own a 50% stake in Axa Ukraine and Axa Insurance (11% of the Ukranian market, #1). If the Reso rumour proves true, Axa has become the largest foreign insurance investor in the CIS region putting Allianz on the second place. Quite an achievement for the group that until recently was considered an also-ran.

Axa's recent acquisitions in Romania and Serbia (Omniasig de Viata and Credit Agricole Life Serbija) only support the impression that the French are firmly intended to fight for leadership in the whole New Europe region.

Small Big Bang

Another story from the latest issue of The Insurer

The crisis may be over for more developed European emerging markets, like Poland, the Czech Republic or Slovenia – but in the CIS, the effects of the recession are still very visible. Therefore, a sharp increase in the number of players in any of the regional insurance industries has been very rare recently.

Azerbaijan is exactly such a rare case. According to estimations of local companies, early 2011 may see establishment of three to six new life insurers in the country. However, the reason for the surge is more legal than economic:

Belarusian Challenges

Belarusian insurance affairs didn’t make it to the top of our events-of-the-year poll yet charms of the local market are not lost on major international players.

Right before New Year’s Eve French-based Axa announced acquisition of 80% in B&B, second largest  – and simply the largest private – insurer in Belarus. As the M&A tradition goes, Axa claims the Belarusian insurance industry has “a very significant potential for growth as less than 20% are covered with casco insurance and less than 15% of households benefit from home insurance”.

Judging by this description Belarus of tomorrow, with its ten million population, will be something like the Czech Republic today – small but successful. It just needs some help from experienced players.

However, according to Irina Merzlyakova, head of the Belarusian Association of Insurers (BAI), and some other local experts, penetration rates are by far not the only thing the market should work on. In their conversation with The Insurer (find the full version in the latest issue of our magazine), Belarusians named several key challenges of the country's insurance environment. Although head of BAI and her colleagues mainly described them in the context of the planned life market liberalisation  – which, as we know now, didn’t happen in 2010 – some of the issues are rather relevant for non-life companies like B&B as well.