New Financial Services market report from Business Monitor International: "Lithuania Insurance Report Q1 2015"
Boston, MA -- (SBWIRE) -- 11/20/2014 -- Lithuania's insurance sector has many strengths. However, the outlook, both over one and five years, is fairly uninspiring. As of late 2014, we see the strong sales in new business reported by some life insurers as being a one-off factor associated with Lithuania's adoption of the euro (and, therefore, 0% interest rates on bank deposits). The life insurance segment remains very under-developed by most metrics. Accordingly, we think that the main challenge - the low levels of income of most households - persists. This means that we still look for (low) single digit growth in life premiums through the forecast period. In the non-life segment (which is also under-developed) the main challenge is different, but should also result in sluggish premium growth. In spite of consolidation in the market, of which PZU's acquisition of Lietuvos Draudimas is the latest (and biggest) example, price competition will remain intense.
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The strengths of Lithuania's insurance sector are those of the multi-national companies that dominate it. These strengths, in no particular order, include: access to capital; strong brands; ability to innovate and to develop attractive new products; multi-channel distribution; and access to economies of scale that come from pan-European geographic footprints. Adoption of the EUR, with effect from January 1, 2015, will reinforce the stability of the economy and the financial system.
Total premiums across the sector as a whole are equivalent to about 1.6% of GDP or around USD260 per capita. The life segment accounts for just under one third of all activity; the non-life segment for a little over two-thirds. A life insurance sector that has the strengths which are evident in Lithuania, yet where life premiums are only about USD80 per capita, is almost invariably one where too many households are too poor to afford life insurance. In this respect, Lithuania is similar to a number of the poorer countries in Central and Eastern...
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