“For the first time, I was optimistic and hoped that the market would reverse its trend in terms of profitability this year. I thought company shareholders would demand profit in 2009, and would not be willing to take money out of their pockets to cover losses. But this did not happen and money is still coming from shareholders,” said the General Manager of Allianz-Tiriac, Cristian Constantinescu. In the first eight months alone, foreign shareholders of companies operating on the local insurance market made capital infusions worth some €350 million.
The battle for market share can lead to imbalances, Constantinescu warns. Allianz-Tiriac is one of the few companies on the insurance market that manages to make “a small profit.” “But this small profit is very difficult to make, because we operate on a market willing to lose, where our competitors do not have problems with the level of losses, at least visibly. Hence, some insurers opt for absurd quotations. The problem is that we are in competition with them,” said Constantinescu. The absurd quotations mean low rates, prices of insurance contracts which do not cover the risk taken by companies.
“A normal profit should make up no less than 4-5 percent of sales. For several years in a row, we posted some 2.5 percent. This year we will probably be below this percentage. The only consolation is that, on a market with massive losses, we will continue to have a small profit,” said the official of the German group’s subsidiary, which has been leader of the local insurance industry for seven years. Last year, the profit announced by Allianz-Tiriac was of €9 mln, while in 2009, the company estimated a profit 50 percent lower year-on-year.
