Erste Bank JPMorgan Merrill Lynch International

In 2005, the Austrian insurance industry recorded total premiums of EUR 15.3 billion, an increase
of premium by 9.5%. At the same time, insurance payments increased by 2.8% from EUR 8.5 billion
to EUR 8.8 billion. Private health insurance premiums rose by 4.0% from EUR 1.3 billion to
EUR 1.4 billion. Life insurance premiums recorded an increase of 15.6% (EUR 7.1 billion). Property
and casualty insurance premiums rose by 4.8% to EUR 6.8 billion. This strong growth in the life
insurance area resulted from an increase in the trend toward private and government sponsored
retirement provisions, as well as strong growth in the single-premium policy area. Growth in the health
insurance area was equal to the long-term average. In the property and casualty area, above-average
growth was recorded primarily in property insurance.
Total gross premiums written increased by 1.9% in 2006. This weak growth was due to volatilities
in the single-premium life insurance area. Overall growth in the life insurance area was 0.8%. The
health and property and casualty insurance areas experienced moderate growth, with premium
increases of 2.8% and 2.9%, respectively. Weak growth in the property and casualty area was due to
flattening out of rates increases in motor vehicle insurance. Insurance industry payments for loss
events resulting from natural catastrophes amounted to EUR 9.7 billion, an increase by 10.1%
compared to 2005.
The VVO forecasts that premium revenues will increase by 1.9% to approximately 15.9 billion in
2007. This is more or less the same level as 200 (1.9%). In spite of storm losses, insurance payments
are likely to reach EUR 10.7 billion in 2007. Premium growth of 0.4% to EUR 7.2 billion is expected
for life insurance, with a further decrease expected for single-premium policies. In contrast, revenues
from regular premium policies are likely to grow, due in particular to the strong demand in the area of
government sponsored retirement provisions. Property and casualty insurance continues to be
affected by the tense situation in the motor vehicle insurance area. The premium volume from health
insurance is likely to increase by 3.2% in the long-term average.
The insurance market in the Czech Republic
Since the turnaround of the political system in 1989, the Czech insurance market has been a very
dynamic market, which gathered momentum after the end of the monopoly of the formerly stateowned
company Česká pojisˇt’ovna. After the accession of the Czech Republic to the EU on May 1,
2004, the regulatory environment was harmonized with that of the rest of the EU.
A total of 29 insurance companies were operating in the Czech Republic in 2006, 18 in the life
insurance area and 25 in the non-life area (Source: Czech Insurance Association). Insurance density,
measured as premiums per resident, rose from USD 431.0 in 2004 to USD 478 in 2005 and USD 520
in 2006, showing the dynamic growth in this market. In addition, the insurance density of USD 520 in
2006 was significantly below the level of USD 3,305 for the EU-15 countries, indicating the high
growth potential that exists in the Czech Republic. The Czech insurance market follows Slovenia as
the second highest in terms of per capita expenditures for insurance services in the CEE region
(Source: Swiss Re sigma No. 4/2007).
The table below sets forth gross premiums written and benefit payments for the Czech Republic
for the periods presented:
2007e (*)
2006 2005 2007e (*)
Gross premiums written
Claims/Benefits paid
Fiscal year ended December 31, Fiscal year ended December 31,
2006 2005
(in CZK million) (in CZK million)
Non-Life . . . . . . . . . . . . . . 76,404.5 74,888.1 72,219.9 37,159.9 39,828.9 39,613.1
Life . . . . . . . . . . . . . . . . . . 53,864.7 47,233.3 44,954.3 24,237.2 19,316.9 20,102.9
Total . . . . . . . . . . . . . . . . . 130,269.2 122,121.4 117,174.2 61,397.0 59,145.8 59,716.0
(Source: Premiums: Czech Insurance Association; Benefits: Czech National Bank)
(*) Forecast based on a projection for 2007
The Czech insurance market continues to show strong growth potential. Following a slight
weakening of growth in 2005 and 2006, premiums once again recorded a strong increase in 2007.
Very strong growth of 14.0% was recorded in the life insurance area in particular in 2007, primarily
due to growth in unit-linked products. In addition, pent-up demand for non-life insurance and,
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