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Life Insurance Changes the Market

LICs showed an increase in premiums and net profit at 2019 year-end and changed the structure of premiums as well.
Life Insurance Changes the Market

According to the results of 2019, total gross premiums increased by 55.7% reaching KZT197.2 bn. compared to the same index as of 2018 due to the high collection dynamics as well as the entry of new players to the market. An important result of 2019 was a change in the LIC premium structure.

Life insurance became a leader in terms of premium dynamics (+67.5%) and revenue (54.7 billion tenge) in 2018. It made 43.2% in total LIC premiums. In 2019, life insurance premiums were growing slower (+40.7%), but the premium amount outplayed the results of 2018 reaching 76.9 billion tenge. The share of life insurance amounted to 39% in total LIC premiums.  

The maximum dynamics of premiums in 2019 was ensured by annuity insurance (+106.6%) and retirement annuities (+131.6%), which slightly increased in 2018. The annuity insurance premium amount reached 71.3 billion tenge and took 36.2% in total LIC premiums allowing for life insurance in absolute terms. In 2019, the activity of LICs in accident insurance fell significantly with a simultaneous interest in compulsory accident insurance which premiums from negative growth in 2018 turned to a positive trend of 40.9% in 2019.

Life insurance remains an important area of ​​activity for LICs. By results of 2019, seven companies were collecting life insurance premiums. However, three largest LICs have the upper hand in this market collecting a total of 96%. LIC Halyk life retains a leading position. The company collected 35.8 billion tenge of premiums showing an annual growth of 36.1% and occupying 46.6% in the overall life insurance portfolio of LICs in 2019. LIC European Insurance Company (EIC) collected 21.9 billion tenge increasing the result by 55.3% (year-on-year) and occupying 28.5% of the life insurance market. The third major insurer LIC Nomad Life with a portfolio of 16.1 billion tenge also showed positive dynamics of premiums for the year (+27.8%). The company occupies 20.9% of the life insurance market. LIC Standard Life demonstrated the maximum dynamics of life insurance premiums (+381.2%) following the results of 2019. In absolute figures, it collected 957.3 million tenge occupying 1.2% of the life insurance segment.

Annuity insurance mostly based on retirement annuities became the fastest growing segment in the LIC business in 2019. If, the premiums on annuity insurance and retirement annuities as of 2018 increased by 2.9% and 3.5% respectively, the premiums as of 2019 showed a three-digit increase. In absolute terms the fees for annuity insurance amounted to 71.3 billion tenge, and retirement annuities 65.3 billion tenge.

Nomad Life retains a leading position in the annuity insurance sector including the retirement annuity segment; its annuity fees reach 33.6 billion tenge having increased by 108.7% over the year. For comparison, the company grew by 28.3% in annuity insurance in 2018. The company's growth in retirement annuity premiums as of 2019 amounted to 146.5%, increasing to 31.3 billion tenge (as of 2018 the dynamics was 27.4%). The market share of JSC Nomad Life for annuity insurance made up 47.1%, retirement annuities - 47.9% increasing by the end of 2018.

LIC Halyk life is in the second place in terms of premiums. The company drew 25 billion tenge in annuity insurance, including 22.4 billion tenge in retirement annuity premiums. The annual growth of premiums was 138.6% and 156.1%, respectively. The market share of Halyk life in the annuity insurance and retirement annuity segments grew to 35.1% and to 34.4%, respectively (year-on-year).

Standard Life Insurance Company holds the third place; it has collected 6.4 billion tenge in annuity insurance, including 6 billion tenge in retirement annuities. By the year end, the dynamics of premiums in annuity insurance (+11.8%) and retirement annuities (+13.8%) turned out to be worse than the market average. LICs hold 9% of the annuity insurance segment, including 9.3% of the retirement annuity segment. All companies operating in the retirement annuity segment showed a positive revenue result.

According to the results of 2019, the premiums in the Employer Liability Annuity (ELA) class were in the red, falling by 0.2% to 4.7 billion tenge. The share of ELA premiums in the overall LIC portfolio amounted to 2.4% against 3.7% a year earlier. At the end of 2019, two companies operating in this segment showed positive and three showed negative growth.

Nomad Life obtained the maximum result; the company received a total of 1.872 billion tenge and held 39.4% of the AOR market. Halyk life showed the second result attracting 1.824 billion tenge of premiums and occupying 38.4% of the AOP segment. State Annuity Company (SAC) is in the third place; it takes 11.4% of the AOP segment collecting premiums of 543 million tenge.

The “Other types of annuity insurance” segment continued to fall at the end of 2019. The fees decreased by 18.7% to 1.2 billion tenge to the same period last year. Negative dynamics keeps a share of other annuities in total LIC premiums at extremely low level of 0.006%.

Accident insurance premiums collected by LICs in 2019 reduced the dynamics (+2.4%) amounting to 10 billion tenge. The segment makes 0.5% of total LIC portfolio. Three LICs showed a positive trend in premiums, two - negative, one - neutral. LIC Halyk life CSG has the maximum accident insurance portfolio among LIC premiums of 5.4 billion tenge (+26.5% by the end of 2018). It occupies 54.8% of accident insurance among LICs. The leader’s share continues to decline in favor of other companies. Thus, the dynamics of premiums at LIC Nomad Life grew by 797.5%, and LIC Standard Life - by 636.7%. The European Insurance Company (EIC) which ranks second in this segment (35.2% of premiums), has fallen by 17.8% in premiums collecting 3.5 billion tenge. LIC Freedom Finance Life holds the third place with the volume of premiums of 724.5 million tenge. It occupies 7.2% of the segment. According to the results of 2019, LIC Freedom Finance Life showed a negative (-36.6%) fee dynamics. LIC Halyk life and EIC form 90% of premiums in the accident insurance segment (among LICs).

According to the results of 2019, the health insurance (VMI) portfolio among LICs fell by 57.9% to 19.3 million tenge. For comparison, by results of 2018, the drop in premiums amounted to 4.8%. In fact, only two companies remained on the market. LIC Standard Life occupies 55.4% of the market segment with the volume of premiums of 10.6 million tenge (+52.6%). LIC Freedom Finance Life occupies 40.39% of the segment with a premium of 7.8 million tenge (+47.3%) compared to the same period in 2018. The third market player LIC Halyk life dropped the premiums by 97.6% by the end of 2018 to 816 thousand tenge. The company retains a market share of 4.22%.

According to the results of 2019, the premiums in Compulsory Accident Insurance (CAI) segment showed an increase of 40.9% against a decline of 0.3% in 2018. The premiums have amounted to 38.9 billion tenge and occupy 19.7% of the total LIC premiums. Four companies showed positive dynamics of premiums, and one - negative. LIC Nomad Life, same as in 2018, remains a leader in terms of premiums. It collected 11.3 billion tenge showing an increase of 11.4% and occupied 29.1% of the CAI segment. LIC Halyk life is in the second position, its CAI portfolio is 10.7 billion tenge (+9.4%), and market share is 27.6%. LIC Standard Life, the third largest insurer in the CAI segment, collected 4.3 billion tenge of premiums (+44.5%, year-on-year) occupying a share of 11.3% in the segment. New companies are growing fast enough in CAI premiums. Thus, LIC Eurasia which started collecting premiums in February, 2019, accumulated 3.89 billion tenge and occupied a 10% stake in the segment. LIC KM Life that had begun work in November 2019 raised 3.4 billion tenge and took 8.7% in the CAI segment. The top three accounted for 68% of premiums and 83.3% of CAI premiums by results of 2018.

By results of 2019, the total assets of LICs showed a significant increase to the year of 2018 rising by 33.1% to 438.6 billion tenge. Halyk life and Nomad Life remain the largest LICs; they form 70.7% of all LIC assets. Insurance reserves increased by 27.8%, to 338.1 billion tenge. The consolidated LIC profit grew by 54%, up to 20.5 billion tenge.

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