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June 8, 2009updated 13 Apr 2017 8:56am

Poland confirms growth status in style

Exceeding all but the most optimistic forecasts, Polands life insurance market set a cracking growth pace in 2008 with a number of market players producing spectacular premium income growth Shrugging off deteriorating economic conditions Polands life insurance market continued to grow apace in 2008 with gross written premium income bounding ahead by 52.8 percent to PLN38.99 billion ($12.2 billion)

By LII editorial

Exceeding all but the most optimistic forecasts, Poland’s life insurance market set a cracking growth pace in 2008 with a number of market players producing spectacular premium income growth. Though a repeat performance in 2009 is out of the question, the market continues to hold significant long-term potential.


Shrugging off deteriorating economic conditions Poland’s life insurance market continued to grow apace in 2008 with gross written premium income bounding ahead by 52.8 percent to PLN38.99 billion ($12.2 billion). For Central and Eastern Europe’s largest insurance market the increase in premium income in 2008 was the highest in a decade of uninterrupted growth and exceeded the previous record increase of 37.8 percent achieved in 2006.

Last year was also especially notable for the strong comeback made by Poland’s largest insurer, state controlled PZU Group, which reported that its life insurance unit PZU Žycie recorded premium income of PLN13.08 billion, up a massive 80 percent compared with 2007. Highlighting the significance of PZU Žycie’s 2008 performance, the PLN5.82 billion increase in its premium income represented over 40 percent of the total PLN13.48 billion increase in premium income recorded by the life industry as a whole.

PZU Žycie’s premium income surge also boosted its market share from 28.5 percent in 2007 to 33.6 percent, ending a decline in market share which as recently as 2002 stood at 50 percent. PZU Žycie’s profitability also held up well in 2008 though investment income, which fell from PLN1.57 billion in 2007 to PLN203 million, took its toll with net profit falling 35 percent in 2008 to PLN1.42 billion.

In total PZU Group’s net profit fell 35 percent at PLN2.34 billion with general insurance contributing PLN859.5 million (down 40 percent) and other operations including asset management and insurance units in Latvia and Ukraine contributing a net PLN60.5 million.

At the end of 2008, PZU reported total assets of PLN58.2 billion, up 11 percent compared with 2007.

PZU Žycie’s resurgence was set in motion in 2004 under the leadership of then-director Krzysztof Rosinski, who was tasked with aggressively expanding the insurer’s bancassurance channel.

A successful strategy, PZU Žycie is today a leader in the bancassurance channel. Notably, bancassurance played the major role in PZU Žycie’s growth in 2008 with premium income via the channel increasing from PLN957 million in 2007 to PLN6.38 billion in 2008.

In 2005, reorganising PZU Žycie’s entire sales structure was entrusted to Rosinski who explained his approach to this challenge in a recent interview.

Rosinski said that his decision was to work in two directions. Firstly came what he termed “quick wins” that enabled an immediate increase in sales. Secondly, he started working on longer-term work on enhancing the entire sales network.

In December 2008, building on the foundation laid by Rosinski, PZU Group unveiled a strategic plan covering the period 2009 to 2012. Among key objectives of the strategy is to service PZU’s substantial customer base more effectively and take greater advantage of the group’s extensive branch network and high brand recognition. According to PZU it currently has 5.7 million customers, 750 branches and a 93 percent brand recognition rate among Polish consumers.

Focus of sales growth is on PZU’s traditionally strongest areas, the group life and motor insurance segments, and on expanding in other market segments such as health insurance and individual life insurance.

Ploish life insurers

Homegrown success

Poland’s dynamic life market has acted as a magnet to foreign insurers, with 23 of the 30 life insurers operating in the country at the end of 2008 foreign-controlled, according to the Polish Financial Supervision Authority (PFSA). However, foreign insurers have not had it all their own way, with one domestic insurer in particular standing out as a huge success: TUnŽ Europa (TUE).

Premium income

Founded in 1994 as a general insurer TUE entered Poland’s life market in 2002 with the establishment of TU na Žycie Europa (TUE Life). The new unit gained ground rapidly, producing premium income of PLN170 million in its first year of operation according to the PFSA. This ranked it eighth out of the 32 life insurers in the market at the time.

TUE Life continued to enjoy rapid growth with premium income increasing at a CAGR of 63 percent between 2003 and 2007. Eclipsing this impressive showing TUE Life recorded a 120 percent increase in premium income in 2008 to PLN2.66 billion, lifting its market share from 4.7 percent in 2007 to 6.8 percent in 2008.

Playing a key role in the insurer’s success has been Rosinski who, after his term of office at PZU Žycie expired, joined TU Europa in June 2006 as a vice-president. Since 2007 Rosinski has been on the management boards of TU EUROPA’s life and general insurance units. He is also president of the board of Polish financial services company Getin Holding, which has a 99.8 percent stake in TU Europa.

Commenting on reasons for TU Europa’s success Rosinski explained that bancassurance was playing a major role, stressing that “we are completely focused on bancassurance”.

“We, bancassurance specialists, provide something more than just products,” Rosinski continued. “We offer complete solutions, including advertising campaign proposals, market analyses and IT applications.”

He added that it takes TU Europa just a week to create a brand new structured product that can be implemented at any branch of any bank, financial advisor or insurance agent.

TU Europa currently has agreements with 11 of Poland’s 15 largest banks.

Rosinski also emphasised “significant support from shareholders.” Notably, Leszek Czarnecki – one of Poland’s most dynamic entrepreneurs – holds a 56 percent stake in Getin Holding, which in addition to TU Europa has interests in banking, investment management and leasing.

Among many accolades, Czarnecki was named by UK publication The Financial Times as one of the 25 “emerging stars of European business” in 2004.

Underscoring the potential that exists in Poland’s life insurance market, a number of foreign players have also enjoyed exceptional growth in recent years.

Not least of these is Belgian bancassurer KBC Bank, which in 2000 acquired a 40 percent stake in WARTA Insurance and Reinsurance Company, a composite insurer that together with PZU is the only Polish insurer that survived the Second World War. KBC systematically upped its stake in WARTA, acquiring full control in 2006.

A market of opportunity

Initially WARTA’s life unit WARTA TUnŽ made modest progress under the KBC banner, its gross premium income recording a CAGR of 11 percent between 2003 and 2007. However, in 2008 a major improvement occurred with premium income increasing by more than 300 percent to PLN2.93 billion. This lifted the insurer’s market share from 2.8 percent in 2007 to 7.5 percent and improved its ranking from 10th to 4th. primium income Dutch bancassurer ING also recorded an impressive improvement in its position in Poland’s life market in 2008, lifting gross premium income by a hefty 180 percent to PLN3.88 billion. This boosted ING’s market share from 5.4 percent in 2007 to 9.9 percent, and brought it within striking distance of toppling UK insurer Aviva from its long-held second position in the market.

Notably Aviva’s premium income growth has lagged that of the Polish life industry in three out of the past four years, reducing its market share from 12.4 percent in 2005 to 10.2 percent in 2008.

Another major international player making strong inroads into Poland’s life market is French insurer Axa, which in 2008 registered a hefty 320 percent increase in premium income to PLN1.61 billion. This lifted Axa’s market share from 1.5 percent in 2007 to 4.1 percent in 2008 and its market ranking from 12th to 7th.

Strong competition for market share is also being exerted by a number of smaller foreign players that have made impressive inroads into Poland’s life market in recent years. Particularly impressive have been gains made by Austrian composite insurer UNIQA which has as a key part of its strategy expansion into Central and Eastern European markets.

UNIQA’s acquisition of composite insurer Polonia in 2000 marked its entry into Poland. Though a number of small acquisitions followed, by 2003 UNIQA’s life premium income was still a minimal PLN5.6 million.

Steady progress was made after 2003 with a big breakthrough coming in 2008 when UNIQA recorded a 402 percent increase in premium income to PLN1.16 billion. This lifted its market share from 0.9 percent in 2007 to 3 percent and its market ranking from 15th to 11th.

UNIQA follows a multichannel approach in Poland with Austrian bank Raiffeisen’s Polish unit playing a key role. Notably, in its review of 2008 results UNIQA noted that bancassurance sales had been the main driver of increased premium income.

Vienna Insurance Group (VIG) is another Austrian insurer making strong headway in Poland where it operates in the life market under the brands Compensa, a composite insurer acquired in 2001, and Benefia, a composite insurer acquired in 2005. Also acquired in 2005 was insurer Royal Polska, now part of Benefia.

VIG’s Polish life units produced consistently robust growth since 2005, notching up a CAGR of 95 percent during the period to reach total premium income of PLN1.35 billion in 2008.

This gave VIG a market share of 3.5 percent and ranked it 9th in the life market compared with 14th in 2005.

How Poland’s life market will fare in 2009 remains to be seen. However, the impression gained from insurers reporting first quarter 2009 results is that the going is tough.

VIG, for example, reported a minimal 0.1 percent year-on-year increase in premium income in the first quarter of 2009. Faring worse PZU Žycie reported a 10.5 percent fall in premium income.

Also reporting first quarter 2009 results was Italian insurer Generali which saw it’s Polish life unit Generali Žycie’s premium income slip 6.4 percent compared with the first quarter of 2008 to PLN178 million.

Commenting on first quarter 2009 results, Generali noted: “According to expectations, this year the Polish life insurance sector will be affected by a sharp decrease in the sales of products with a single premium payment.”

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