ECONOMY

Realignments ahead in insurance sector

The insurance sector has offered the strongest resistance to the stock market slide this year, and is in a state of expectancy over developments that will signal company realignments. These are already underway and considered capable of overturning the negative picture which first-half results have created. Interamerican The results of Interamerican, the country’s largest insurer which now belongs to the Eureko group, ushered in the negative climate. Under the burden of settling outstanding financial obligations ahead of its acquisition, the company reported a first-half loss of 17.3 billion drachmas against a profit of 11.4 billion in the same period last year, while the consolidated loss amounted to 19.4 billion against profits of 21 billion drachmas. Interamerican’s case confirms that the next moves will focus on mergers and acquisitions, a process already thought to be occurring late for Greece. Bank assurance, still in its infancy in Greece, is expected to play an important role in providing dynamism to the sector through the foreign banking groups expected to invade and bring their considerable experience. This dynamism is expected to provide the antidote to falling profitability, which has resulted from the stock market slide and lower investment returns, particularly from unit-linked products. The Commercial Bank has already set up a joint venture with Predica, a subsidiary of France’s Credit Agricole group with which it has a partnership, and is at the stage of planning the new products. At the same time, the group is working on the merger of its two insurance subsidiaries, Metrolife and Phoenix, designed to contain operating costs and exploit economies of scale, and projected for completion by year’s end. Despite boosting its first-half premium turnover from 9 billion drachmas last year to 14 billion this year, Metrolife recorded a fall in profits from 1.2 billion to 200 million drachmas between the two periods. Phoenix, which is not active in life insurance, restricted the adverse effects of the stock market slide and increased turnover by 20 percent, maintaining profits at last year’s 1.7-billion-drachma level. Alpha Insurance The Alpha Bank group’s Alpha Insurance, which has emerged from the merger of Ellinovretaniki and its former Emboriki subsidiary, avoided the angst of stock market developments by shelving its plans for listing and focused on bank assurance. Its first-half results are a positive reflection of this two-year effort, with 30 percent of total premium revenue originating in bank branches. This was up 22 percent in the first half from the same period last year. And in just two months insurance salespersons sold 10 percent of the bank’s mortgage products. Alpha Insurance expects to play an important role in the framework of the parent bank’s ultimate agreement with BNP Paribas – which is now the subject of negotiations and is considered probable. The French bank has two insurance subsidiaries with considerable experience in bank assurance. And the Agricultural Bank is working on the merger of its two insurance subsidiaries after arriving at agreements with Italy’s San Paolo Imi for partnerships in bank assurance.