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Euroins Insurance Group
We are ambitious to make Euroins Insurance Group one of the biggest independent insurance companies in Eastern Europe.
We are ambitious to make Euroins Insurance Group one of the biggest independent insurance companies in Eastern Europe.


We are ambitious to make Euroins Insurance Group one of the biggest independent insurance companies in Eastern Europe
August 17, 2015
Mr. Boshov, first of all I would like to congratulate you for this successive transaction for the acquisition of a life insurance company in Greece. How did you come to this transaction? And if possible, tell us about some of its parameters...

- We have been working on the transaction for acquisition of Crédit Agricole Life for a long time. Greece has been our priority during the last several years. It is not a chance that we opened an office there in the middle of the last year based on the Directive for the Freedom of Provision of Services within the EU. We started with a small team and now we have about 15 employees in Athens who work mainly on motor insurance products. From the beginning of 2015, our income from motor products in Greece exceeds 1 million euro, and irrespective of the crisis, or of the situation in the country in general, the acquisition of the insurance company has been the natural new step to our more powerful penetration on this market. We consider this a priority, and I should confess that the crisis has made Greece more interesting market for us. Why a life insurance company? You know that in 2013 we acquired Interamerican Life. The strategic goal of the group has been to start life insurance business as part of our efforts to diversify the portfolio. After the steps we made for the purchase of non-motor portfolios, the natural outcome was to appear on this market as well. We have studied several companies in the region, and finally we found this the most interesting combination between market and company. Life insurance market in Greece is in very interesting situation – it turned out to be that the crisis affects this market positively, because people there are concerned about the condition of the banking market in the country and the purchase of life insurance products is considered a kind of natural investment and a way to acquire an exposure outside Greece by investing in life insurance products. All life insurance companies invest their clients’ funds outside Greece and it is no chance that this is one of the reasons for the Greece’s life insurance market 20% growth since the beginning of the year.

But the specific company you buy shows income and market decrease. Is that true?

This specific company, as a buyer, has decided to leave this market and this decision made by the owner has been aimed at limiting the sale of products. This is the only reason for the company’s income decrease. Nevertheless, assets continue increasing, irrespective of such decrease, as the huge portfolio of active products held by the company generates new growth of portfolio and assets even in such situation.

It’s a fact that Crédit Agricole Life is part of a bank assurance group, which sells bank assurance products as a priority. Without the existence of a bank, how do you think to develop this company?

There is no need to have a bank to develop bank assurance. In Bulgaria and in other regions in the world, there are plenty of successful cooperation examples between a bank and insurance company that are not belonging to one and the same owner. In Bulgaria we also have examples for successful cooperation with local banks, with Greek banks, for example, we have wonderful cooperation with Piraeus Bank. And as we all can see, the banking market in Greece is very dynamic. We will try to continue our cooperation with the current bank and will seek opportunities for new partnerships with other banks. Finally, as a recent trend in the whole Eastern Europe we witness a kind of breaking of the banks that become open to more partners, and not to one exclusive partnership only: one bank – one insurer, as this is sometimes risky for both parties.

What else can we expect for your new company in Greece? Observance of all procedures for official acquisition, possible change of the name, and...

Yes, this is the usual process we have enough experience for. This is neither our first, nor last transaction. Yes, we are to carry out a long process of regulatory approvals. The objective is to complete this process until the end of the year. We are very satisfied with the existing team of the company. These are extremely serious life insurance specialists in all aspects – products, investments, who have very good knowledge on Solvency ІІ, and we even think to integrate the team for development of life insurance not only in Bulgaria, but in all other countries we are operating in. Finally, for us life insurance has the same priority as non-life insurance in all our companies. Of course, after we finalize the transaction, the name will be changed. I believe that for all these years Euroins has developed a brand that is successful enough. This is also an opportunity for us.
If I have to summarize our transaction in Greece, we believe that the purchase of the life insurance company will give us rather more solid infrastructure, and through its synergies, we will develop non-life insurance much better, because at this stage it is an advantage in the area of Third Party Liability.

Can you tell us what the price at which you acquired the life insurance company in Greece is?

- I cannot tell you anything about the price.

And how your company in Macedonia is doing?

The market in Macedonia during the last year does not grow, actually. In general, the market growths are very modest. Our company overtakes the market development. Probably, this year we will report premium income exceeding 9 million euro. During these whole 7 years we proved to be one of the major stakeholders on the insurance market there. And again, we focus on the development of non-motor insurances. We already have the great support of the other business of Euroins in Macedonia. The leasing company is one of the biggest non-banking leasing companies. In general, Eurohold Group is fully represented on the Macedonian market with all its business.

What is the market share of your Macedonian insurance company?

- Some of the companies are ranking between the 3rd and the 5th place with similar market shares within the range 7-8%, where Euroins is also positioned.

Except in Macedonia, you have a 10% share in the Serbian insurance company Takovo Osiguranje. How does your investment on the Serbian market develop?

- Serbia is not among our priorities. In relation to the Serbian company, I could not say that it is interesting for us in terms of its future development. The reason I do not like Serbia for the time being is their regulatory framework. When we made this investment, we believed that the market there would develop faster in order to equalize with the European legislation. Unfortunately, 7 years later, the prices of Third Party Liability insurance are still regulated, the main channels are still the technical inspections, reinsurance can be performed by specific companies only, investments may be made on the territory of the Republic of Serbia only, and all this tightens the management opportunities, and therefore, if you are not a traditional player there, it is hard to find your place. If you make a review of our transactions during the recent years, they are mainly in European countries, except Ukraine.

When we speak about Ukraine, at what stage the finalization of the transaction you announced in February this year is?

- In Ukraine, we obtained the permit from the anti-monopoly commission, which was the first step in the acquisition of HDI Strahuvannja. The company develops very well, irrespective of the situation in the country. We have very good portfolio of corporate clients with long-term contracts, which was part of the transaction with Talanx. By this acquisition, Euroins will continue to administer this portfolio, which is a very good base – even without making investments due to the current situation, for the development of new channels, branch network, etc. The company has its own fundament to continue being profitable in its current position. And we hope that after the clarification of the political situation there, we will develop new channels and new products. We are also very pleased with the management there. This has always been one of the main criteria for investment – what is the company’s management and will it continue to manage under the umbrella of Euroins. The team there will stay, it has rich experience within the structure of Talanx, and I believe there will be interesting opportunities for development.

Will you make rebranding?

- The process is one and the same everywhere, we work only with the brand Euroins.

Until now you have been acquiring companies in Bulgaria neighbour countries. Ukraine is the first exception. What kind of adventure is this?

- Every new country we enter in is a kind of challenge. We learn a lot of new things and every purchase gives us new lessons, so I cannot hide my ambition to make Ukraine a major market. We should not forget that this is a country with 50 million inhabitants. The average Ukrainian spends less than 50 US dollars for insurance per year. This is twice less than the Bulgarian standards, and I do not think Bulgaria is fully developed yet. So the scope for development of the Ukrainian market, and our company in particular, is very wide.

In relation to HDI in particular, except the acquisition of the two companies in Bulgaria and Ukraine, are there any other global agreements relevant to reinsurance programs you have been obliged to enter into with the ex-owners of the companies?

- Both Hanover Re and Talanx are our reinsurance partners, and every transaction of this kind strengthens our cooperation. With view of the transaction we made with QBE, we have wonderful cooperation with this company, so we consider such kind of transactions an opportunity for opening new doors giving us more chances for cooperation in several directions: on one hand, in relation to reinsurance, and on the other hand, in relation to the fronting service of big corporate clients. When a given company leaves the market, it cannot just abandon its clients and for the company buying the portfolio is easier to keep such service in order to enable the reinsurer to administer them indirectly.

Before looking at the development of your insurance business in Bulgaria, let me ask you for your first international investment – the investment in Romania. You had some troubles with the local supervisory authorities...

Romania was and still is a difficult insurance market. We made a lot of changes in several directions. Firstly, last year we increased the capital with about RON 100 million (20 million euro). Probably, with view of the requirements of Solvency II, we will make another increase of RON 100 million, because the last year we made an analysis that the company would need another 40 – 50 million euro in order to react to the significant growth it achieves.

As far as I know, the local supervisory authority carried out a kind of stress tests...

- For us, internal stress tests have always been more important. We have made this analysis far before the beginning of the stress tests in the country. This is why we made the step for the first capital increase in 2014. We introduced a lot of changes in our behaviour in relation to the sales of Third Party Liability and I could say that today we have one of the best segmentations in the country. We have a lot of criteria: division by regions, by age, by driver’s risk characteristics, and depending on such indicators, we have one of the most complex matrixes for price formation in the country, which already shows its positive results. We made serious changes in the team and our last change is that at group level we have a new chief operating director – Jeroen van Leeuven, who has been the chief executive director of KBC in the Czech Republic during the recent years. He has great experience both in motor and life insurance.

Except the need to increase the capital, in Romania you had a lot of troubles with the numerous complaints against your company.

- This is another myth. It’s all relative. One should not just consider the number of complaints, but rather the nature of the complaints, because a complaint could be “you refused to pay me compensation with no reason” or “you paid me less than I wanted”, and there are other complaints, for example “I called by phone and I didn’t get the answer immediately”, or “I wanted you to make an inspection in my city located 100 km away from Bucharest, and the team arrived quite late”, you know, this kind of complaints. Therefore, on one hand, the nature of the complaints is very important. On the other hand, the number of complaints in comparison to the number of the valid policies and the number of compensations is also of great importance. If we recalculate statistics, we would find out that Euroins Romania is actually in the middle of the table by number of complaints. Nevertheless, we made a lot of efforts in this direction, and since a year we have completely new call-centre, which deals only with customers’ relations and its aim is to service each client in a better way. It’s true that at present, if I can give an example, we have about 1 million clients in Romania, and the number of complaints per month is about 40. You can try yourself to divide 40 to 1 million and make the conclusion. It’s a fact that the media in this country consider this one of the most important criteria for assessment of specific insurance company. Without making any comments, I would rather say that the assessment of an insurance company should be further based on many other criteria, and the complaints should be just one of these criteria.
Let’s give Bulgaria as an example – yes, there are complaints, but have you ever heard this is a serious problem on the market? Even though, if we calculate the number of complaints of Bulgarian clients in comparison to the number of policies, it would not be quite different from their number on other markets.

Apart from the countries we are talking about in which you have companies and shares in companies, as far as I know you develop successful business in some other counties.

- Yes, that’s true. With view of the free provision of services in the EU, we are now working on different lines of business in Spain and Poland. In principle, this is a kind of development. Sometimes, this helps us to get familiar with the market more carefully, to find appropriate people, and in its turn, this is a possibility for taking more serious step.

Now it’s time to tell us what is happening with your insurance companies in Bulgaria?

- In Bulgaria we started the integration of HDI business after we have obtained the permit from the Competition Protection Commission. We are still in process of obtaining permit from the Insurance Supervision. The operational cooperation between the two companies is further deepened at product level, branch network level and team level. You know that Mr. Petar Avramov is also a chief executive officer of Euroins and has responsibilities both in Euroins and HDI. Some of our HDI colleagues are now employees of Euroins. I believe that the first results from this acquisition are good. We think that the portfolio of HDI will strengthen the retail sector of Euroins, as they hold good positions in this segment. I say this because each transaction is different. If Interamerican has been very well presented in the Greek business, among the banking products, where we kept this portfolio in full, QBE has been fully non-motor company and strengthened the non-motor sector of Euroins, and with HDI we reinforce the retail network and the retail products.

Will the merger be finalized until the end of the year?

- We hope to be finalized before the end of the year.

In relation to the branch network, will you optimize it as your previous offices duplicate those of the newly acquired companies?

- QBE and Interamerican branch network has been successfully and fully integrated with the Euroins network. In most cases, the branches of the newly acquired companies merged with those of Euroins, and where they have been sufficiently large, they were kept as second or third location in the respective city. At present, we have 104 branches, and I believe this is an optimal number, with view of the size of the country and the market.

Did you manage to keep the business and clients of Interamerican Bulgaria in non-life and life insurance, as well as the two branches of QBE in Bulgaria and Romania that you bought 2 years ago?

We mostly kept the business and the clients, which were worth keeping. It was very important for us to keep and develop the sales channels, and we did this quite successfully, I believe. We succeeded to integrate many high quality employees of these companies into our team, and I think this is another great achievement. In general, during all years of existence of Euroins, one of our greatest achievements was that we managed to create a very good team of managers and employees to help us attain the high goals we set.

A little is said about the other company you have in Bulgaria. This is your health assurance company.
- Health assurance is a major priority for us. Yes, we have a health assurance company. Now, due to the new regulatory framework introduced one and a half year ago, we are now in process of transferring clients from our health assurance company to non-life insurance. I can assure the clients of our health assurance company that they will be serviced in the same high quality manner in the future as they are now.

Mr. Boshov, we talked about your business country by country. Let’s summarize your expectations for the whole group’s premium income?

- Our short-term objective – for 2 years ahead, is premium income of 350-400 million euro, and our long-term estimates are for more than 500 million euro. We think this is one of the indicators to consider an insurance group a big group, especially for the Central and Eastern Europe region. Of course, the premium income has never been an end in itself, it’s important what stands behind this income.

And what is your next investment goal – a country, a company? To the north, to the east, to the south, or to the west...

- If we go back 8 years ago, in March 2007 Eurohold made an IPO, and while we have been raising these funds, we said that the main part of them would be used for the development of the insurance business and for acquisitions in neighbouring countries. We have not stopped doing this for eight years now with the ambition of Euroins Insurance Group to become one of the biggest independent insurance companies in the Eastern Europe region. We will continue to develop in this direction. I will not name specific company or country as subsequent possible investment. However, I will say that the regulatory framework of the country we would invest in is very important. Mainly some EU member states meet this requirement of ours, but this does not mean that no exceptions or surprises could happen. As an example, I can give the company we bought this year in Ukraine.

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