Coface Lithuania insurance premiums this year increased by 78 percent
From the start of 2011, in less than four months, the insurance premiums of business risk Management Company Coface Lithuania reached 1.9 million litas, i.e. nearly 78 per cent more than during the same period in 2010.
Such growth of the amounts of signed insurance premiums indicates greater activity of Coface Lithuania and higher volumes of new insurance contracts signed. It also shows the continuously increasing extent of risk exposure enabling our customers to increase sales and regain lost market positions. "We expect this year to be successful and we hope that together with our clients will achieve business objectives," says Mantvydas Stareika, Head of Marketing and Sales Department of Coface Lithuania.
Assessing the results of the previous year after a difficult year of 2009, the financial recovery of the entire Coface Group can be observed. In 2010, the Group's turnover totalled 5.6 billion litas (1.622 billion euro), i.e. 3.8 per cent more than in 2009. Turnover growth, which resulted in credit insurance and factoring turnover growth, accelerated in the second half of 2010, especially the last quarter of the year, when turnover increased by 10 per cent. Coface Group's net profit amounted to 210.62 million litas (61 million euro), i.e. 773.43 million litas (224 million euro) more than in 2009.
Coface Group's credit insurance turnover in 2010 grew by 4.9 per cent. Earned insurance premiums grew by 6.4 per cent last year. This was determined by price increase in 2009 and mostly by the company's active business that is best reflected by high 86 per cent customer retention rate covering a slight decline in client operational activities.
In 2010, the volume of coverage returned to the level it stood at before the 2008-2009 credit crunch. Insurance benefits to customers decreased significantly compared with the record levels reached during the crisis. In addition, the loss ratio declined by 45 percentage points - in 2010, it was 53 per cent., while in 2009 accounted for 98 per cent. This ratio has been improving continuously, starting from the second quarter of 2009 - the crisis peak.
Despite the improvement in turnover, the costs were strictly controlled and adjusted to reflect changes in income. In 2010, total expenditure increased by only 0.7 per cent at constant structure and exchange rates. This trend has also contributed to growth in operating profit.
Coface Group's operating profit in 2010 rose to 1.226 billion litas (355 million euro), followed by accelerated development in credit insurance, the company's core business. "To maintain a transparent relationship with our customers, we now offer a range of new credit management tools, giving our clients access to credit rating information of their customers and risk exposure information by positions evaluated according to the risk" Mantvydas Stareika said.
At the end of 2010, Coface Group presented its strategic re-orientation plan that should facilitate the company to finance an independent, profitable and consistent development. This development will shift the focus of Coface's core business - credit insurance, allowing for a gradual reduction of low-value-added services and focusing on the most profitable niches for factoring, which can most effectively interact with credit insurance. It is also intended to abandon the idea of establishing the European rating agency, but through the activities of credit insurance, Coface will continue to provide private credits to companies that can not be used for control purposes.
At the beginning of 2010, Natixis, the French investment bank, has strengthened the Coface Group's financial position, increasing the capital to 604.24 million litas (175 million euro). For the company's financial stability recovering, rating agency Fitch raised the external ratings of Coface from A + to AA- with stable outlook, while Moody's agency confirmed the A2 rating with stable outlook.
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