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Market environment

With 300 million inhabitants, the region of Central and Eastern Europe still offers huge growth potential for insurance business.  For example, the per-capita expenditure for insurance products in the CEE region is still significantly below the level in western Europe. Whereas Austrians invest an average of approx. € 2.007 per person per year for their security, the equivalent amount per capita in Albania is just € 30. The annual figure is € 37 in Ukraine, € 277 in Hungary and € 477 in Czech Republic. 

Economic environment


The eurozone economy began 2015 in a slightly better position and the economic forecasts have
been revised upwards slightly over the last few months. Gross domestic product (GDP) rose in
2014 by 0.9 per cent, and the growth forecast for 2015 is 1.5 per cent. There are presumably three
drivers for this: the lower price of oil on the global market; a lower euro exchange rate; and the
quantitative easing monetary policy of the European Central Bank (ECB). However, the Austrian
national economy performed below average in 2014 compared with the rest of the eurozone
and was nearly at the point of stagnation. Whether the positive momentum for the eurozone
economy is temporary or sustained will be seen in the next few months. From today’s point of
view it appears relatively clear based on communications from the ECB that its monetary policy
will remain very loose over the longer term. The main refinancing rate is currently unchanged
at 0.05 per cent. Following its announcement in January 2015, the ECB started its monthly bond
purchases from private and public issuers amounting to € 60 billion in March (i.e. quantitative
easing), and will maintain this at least until September 2016, or until inflation develops in line
with the ECB’s mandate for price stability. As such, monetary policy remains a driver for the
general interest rate environment. The reference interest rates in the eurozone – particularly
with long maturities – fell to extremely low levels in recent months. For instance, the yields on
German government bonds with maturities of 30 years were only 0.5 per cent in March 2015
(compared with 1.4 per cent in January 2015).

Economic changes in Central and Eastern Europe are split into two camps: on the one hand,
most countries continued with their economic recovery; on the other hand, Ukraine and Russia
are in recession. The Central European countries (Poland, the Czech Republic, Slovakia and
Hungary) show solid economic growth in real terms of around 3 per cent, representing a positive
development as compared with most of the other regions in Europe. The first signs of an
easing of tensions have also been seen most recently on the labour markets of Central Europe.

In Russia, on the other hand, the recession is in full swing. The global market for crude oil
has stabilised following the rapid fall in prices last year, with the rouble also stabilising as a
consequence. However, the international economic sanctions are a factor that is inhibiting the
Russian economy. Many observers would see a sustained ceasefire as a prerequisite to Ukraine
being able to come out of its deep recession. However, the macro-economic indicators deterio
rated further in the first few months of the year. A new agreement with the International Monetary
Fund is at least acting to stabilise the financing of the national economy.

The economic picture remains mixed for the Balkans: the economies of Croatia and Serbia
are weak, but there have been no signs recently of any further deterioration looming. Bulgaria has
recorded a slight upturn. The growth rates assumed in the western Balkan countries (Albania,
Bosnia and Herzegovina, Kosovo, Macedonia and Montenegro) are generally assumed to be
above average for the region.

Market categorisation

We categorise the European markets in the following regions:

  • Austria
  • Central Europe (Czech Republic, Hungary, Poland, Slovakia)
  • Southeastern Europe (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Macedonia, Montenegro, Serbia)
  • Eastern Europe (Romania, Ukraine)
  • Western Europe (Italy, Liechtenstein, Switzerland)

We also are actively involved in Russia. In Slovenia we trade exclusively as a sales partner for banks.

Market positions

We are the market leader in some of these countries, while we hold top market positions in many of them. In a few others, we still have some catching up to do. However, there is still plenty of room for expansion in most of these markets irrespective of our own market position. 

Update 12/2013