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Private insurance in Greece is in the red zone, as is the whole country

23 September 2011 / 18:09:44  GRReporter
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Over 10 million euros losses recorded private insurance companies in 2010, according to a report by the Union of Insurance Companies in Greece. The results seem particularly painful for the industry when compared with profit after tax in 2009 which was over 28.5 million euros. Apparently what "ate the head" of private insurance last year was not just the sudden lack of liquidity and the mass termination of “Life” insurance contracts, but also the higher corporate taxes and the extraordinary income tax for all companies with turnover of over one million euros. 

The insurance companies in 2009 were 81 and their profits before tax were 106.4 million euros, a year later 73 companies record losses with profits before tax of 101.1 million euros. Total investment in the sector, representing over 58 percent of the active capital of the companies also fell by around 10.1 percent and from 12.5 billion euros two years ago, they have dropped to 11.3 percent. 

Serious blow to the revenue of insurance companies has come by the decline in interest in property insurance. There the decrease is 38.7 percent as well as smaller insurance services, which fell by 31.7 percent. The bonds have a rise of around 7.2 percent in 2009 and their volume was 5.8 billion euros, and a year later, they rose to 6.3 billion euros. 

Money intake also decreased in 2010 by 15 percent compared to the previous reporting period and the value of equipment in total assets of companies in the sector, according to statistics of the Union of insurance companies, has decreased by 3.8 percent. The most important was dedicated to free financial means, which companies have tried to accumulate from different channels with an increase of 280.6 percent. The union points out that 42 percent of money intake comes from insurance deposits under existing contracts and 51 percent are from other sources. 

Passive part of the budget of the companies in the sector has reached 15.7 million euros. There noted is another decline but at a much slower pace, of around 3 percent, compared with levels in 2009. Most of this decline is a result of reduction of capital, which is converted to 1.5 billion euros from 1.7 billion euros in 2009. In between all the financial drama of Greece the share capital of insurance companies has fallen by 10 percent. The reserve capital has shrunk  with 50.6 percent during this year and after the formal losses report the remaining decreased by another 58.5 percent. 

Meanwhile it became clear that a gang has robbed the largest private insurance company in Greece, Ethniki Asfalistiki, with over 1.72 million euros, because they were faking accidents and withdrawing benefits from the company. Police are investigating 182 suspicious cases, which are supposed to have been settled in order to drain money from the insurance company. 11 people are arrested and one was directly charged with fraud. The gang acted mainly in Northern Greece, in Thessaloniki since 2008 and ones close to them commented that their method was too sweet in order to try and stop time. 

While insurance companies are licking their wounds from 2010, the news that the credit rating agency Moody's came that it has downgraded the credit re-evaluation of eight Greek banks. The National Bank of Greece, EFG Eurobank Ergasias, Alpha Bank, Piraeus Bank, Agricultural Bank and Attica Bank are now evaluated at Caa2 level and not at B3 level. The credit rating of Emboriki Bank and Geniki were reduced from B1 to B3. 

Tags: Greece economy crisis insurance companies banks
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