Return on assets edges higher in insurance

Return on insurers’ assets totalled 7.1% for the third quarter of 2018, which is a two-year high, according to the Review of Insurers’ Key Indicators.

These figures were helped by the strong growth of non-life insurance performance indicators alongside rising investment incomes seen by insurance companies.

The focus of insurance companies’ investment activities remains on government and municipal securities. This comes as a result of both their positive growth trends and a rise in investment life insurance (ILI) payments. Government stock is the core portfolio for ILI.

Total insurers’ assets for the third quarter exceeded 2.8 trillion rubles, posting a rise of over 20% vs the 2017 mark. The assets to GDP ratio rose to 2.81% (by 0.2 pp on the prior year).

In the third quarter of 2018, insurance payments posted a twofold annual growth rate compared to the same period last year hitting 14.4%, with insurance payments totalling 362.1 billion rubles. The market growth was supported by voluntary types of insurance (95% of total growth), with life insurance in first place. The insurance payments to GDP ratio for the third quarter totalled 1.42% (a rise of 0.03 pp for the year).

The pace of new contract execution — at 22% in in the third quarter — outruns that of payments. The same period in 2017 saw a drop in this indicator (11.4%). As many as 56.1 million new contracts were executed. As before, the majority of such contracts (almost 90%) were for retail insurance. Demand for insurance services from individuals (up 21.7%) grew at a similar pace to that from legal entities and private entrepreneurs (up 24.9%).

Of the core insurance types, life insurance once again saw the highest growth in the third quarter (by 56.5% on the same period last year). Also, there was strong growth in the number of property insurance contracts with legal entities (27.7%) and of motor own damage insurance contracts (22,3%).