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Thursday, 25th April 2024 |
| Insurance - who is winning and who is slipping, as the non-life sector picks up with profits of €217 million |
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| The IIF figures recently released simply detail the gross premium income from life and pensions and gross written premiums in the non-life sector. But to facilitate a more detailed analysis of who has gained and who has lost market share, FINANCE has conducted its own analysis of the IIF figures to establish who has fared best and worst in the Irish market. The life and pensions market continues to experience tough trading conditions Brendan McGrath finds in this analysis of the market shares of Irish insurers. However, he also finds that the non-life sector has recovered remarkably, and boasted double-digit premium growth in 2002. |
The past few years have been difficult ones for the life assurance and pensions industry in Ireland. The collapse in global equity markets has decimated the value of life assurance and pension investments and the private investor has looked to other asset classes in which to put their money.
Recent figures from some of the publicly listed insurers indicate a 40 per cent fall in new business in 2003 and this collapse in new business follows 2002 when total premium income in the sector increased only marginally while sales of single premium life and pensions products fell by more than €540 million.
Overall, however, when a 11 per cent increase in regular premium sales is factored into the APE formula for calculating new business, the Irish life and pensions industry saw a 35 per cent increase in new business in 2002. Not for nothing has the Irish Insurance Federation described the environment for life and pensions as ‘very difficult’.
But while the life and pensions industry is experiencing the most difficult trading conditions for years, the non-life market has recovered remarkably with double-digit premium growth being accompanied by a lower cost of claims. The turnaround has been such that underwriting in the motor market - for many years lossmaking - is now profitable. Overall in the non-life sector, there were underwriting profits of €217 million.
But behind those industry statistics, figures produced by the Irish Insurance Federation in its 2002 Factfile show that the consolidation that many in the industry believe is essential is taking a long time to materialise.
There are still 17 companies active in the life and pensions industry - although the reality is only half a dozen or so have any serious market share. There are also 17 players selling the various categories of non-life insurance - motor, property and liability, but again most of the business is concentrated on half a dozen major players.
The IIF figures simply detail the gross premium income from life and pensions and gross written premiums in the non-life sector. But to facilitate a more detailed analysis of who has gained and who has lost market share, FINANCE has conducted its own analysis of the IIF figures to establish who has fared best and worst in the Irish market.
Life and pensions
In times past, there was a belief in some sections of the industry that any company with a single figure percentage market share had no long-term future - in either life or non-life insurance. But despite the belief that scale is important, in the life and pensions sector the combined market share of the four biggest players - Ark Life, Bank of Ireland Life, Irish Life and Hibernian Life actually fell from 64 per cent in 2001 to under 61 per cent last year.
That fall was due almost entirely to a sharp fall in both premium income and market share at Hibernian. Premium income for the Aviva-owned insurer fell some 29 per cent to €772 million and its market share fell almost 4.5 percentage points to 10.7 per cent.
The biggest beneficiary was Bank of Ireland Life - which takes in the old Lifetime and New Ireland subsidiaries - where market share grew more than one percentage point to 17.2 per cent. Irish Life remains the clear market leader although its market share stood still at just under 21.5 per cent. The sharp fall in Hibernian’s premium income has meant that AIB’s Ark Life subsidiary has taken the number three market share position from Hibernian.
Outside the big four, the main features were strong gains by the Zurich-owned Eagle Star where premium income grew almost 21 per cent while market share increased more than one percentage point. In recent weeks, there has been speculation that Zurich might sell Eagle Star’s life and pensions operations to AIB. If this did come to pass, it would make the enlarged AIB life and pensions business the second largest insurer, ahead of the current number two, Bank of Ireland Life.
Non-life insurance
In the newly buoyant non-life insurance sector, the main story in terms of change in market share also involved Hibernian. The Aviva subsidiary, which takes in the old Hibernian and Norwich Union brands, saw its market share tumble almost two percentage points although Hibernian remains the clear number one in the market with a 21.69 per cent market share.
Overall in the non-life sector, there were steady gains for most companies with only Hibernian, Royal & SunAlliance and the small St Paul suffering a fall in market share. AXA, which takes in the old PMPA, remains the clear number two with an unchanged 23.6 per cent market share -just behind Hibernian.
AXA has been touted as a possible buyer of Zurich’s Eagle Star non-life business. If this does occur, it would catapult an enlarged AXA to the number one position with 23 per cent of the market. More significantly, a combination of AXA and Eagle Star would have almost one-third of the motor insurance market.
In the motor insurance market, which accounts for almost half the total non-life gross written premiums, Hibernian’s market share fell from 27.1 per cent to 25.3 per cent as Allianz, Eagle Star, FBD and Quinn-Direct all increased their share of the motor market. In property insurance, where premiums last year rose to more than €1 billion for the first time, Hibernian, Royal & SunAlliance with 22 per cent each, and Allianz with just over 20 per cent, dominate the market.
Similarly, Hibernian and Allianz are neck-and-neck for the number one position in liability with both having more than 20 per cent of the market, with Eagle Star, FBD, Irish Public Bodies and Royal SunAlliance all closely grouped with between 9 per cent and 10 per cent of gross written premiums. |
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| Article appeared in the December 2003 issue.
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