December 15 (SeeNews) - Slovenia's largest insurer Triglav plans to expand in Albania and Kosovo to cement its position as the market leader in the Balkans, Bloomberg reported on Tuesday.
“In the map of southeast Europe we aren’t present only in one part, and that is Albania and Kosovo, so we will have this natural market under one roof soon,” Chief Executive Officer Matjaz Rakovec told Bloomberg in an interview.
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“We are targeting growth in markets where our market share doesn’t exceed 10 percent,” Rakovec said.
The company has signed a letter of intent to acquire Albanian insurer Albsig, and expects to complete the deal within two months, he added.
Albsig (www.albsig.com.al), based in the Albanian capital Tirana, had 4.5 million euro ($6.6 million) of premiums last year, giving it about seven percent of the country’s market. It also has a unit in Macedonia that had 8.0 million euro of premiums in 2008.
Triglav, which is expanding in the countries of the former Yugoslavia, has 25% of the market in Macedonia and 55% in Montenegro, and it aims to increase premiums in Serbia, Bosnia and Croatia, the CEO told Bloomberg. Growth potential in the region “is enormous” as the former communist economies catch up with western European standards, he added.
Triglav plans to introduce health insurance in the region once legislation is aligned with European Union standards. All the former Yugoslav nations aim to eventually join the EU, with Croatia in the forefront, targeting 2012, Bloomberg reported.
“These countries are somehow at the stage where Slovenia was in the early 1990s, when we had to reform our pension and health systems,” Rakovec said.
“Just to compare, in western Europe the average insurance amount per capita is around 2,000 euros ($2,913), in Slovenia it’s about 990 euros, while in the rest of the Balkans it ranges from 30 euros to 90 euros.”
Triglav collected a total of 1.0 billion euro of premiums last year and will target the same amount for 2009 and 2010. The company is seeking to offset a decline in life insurance, which was hurt by the global recession, Rakovec said.
Rakovec said the biggest risk to revenue growth is the change in weather patterns for Slovenia as payouts increase for agricultural and auto claims. “Swiss Re has also noted that weather patterns in Slovenia are worsening, as they are in Austria, for instance, and that makes Slovenia more risky in the eyes of reinsurers,” Rakovec said.
Triglav wants to raise as much as 30 million euro by selling subordinated debt to lower costs.
“We are selling new bonds to repurchase old ones,” Rakovec said in his interview with Bloomberg. “We have thought about selling bonds on the international market, but the amount has to be much bigger and we don’t need any additional funds for now.”
Triglav, part of the blue-chip SBITOP index on the bourse in Ljubljana, did not trade on Tuesday.
($ = 0.6868 euro)
Zavarovalnica Triglav d.d. is among the biggest insurers in SEE, for more reference take a look at Top 100 insurers