ASA KINDLUSTUSE AS

ANNOUNCEMENT

01.04.99

 

 

The insurance premiums collected by the insurance company in 1998 

amounted to 125 million EEK (in 1997, 138 million EEK).

General decline in the volume of insurance premiums collected in 1998 

can be explained by general economic climate in the country. This is 

also confirmed by the fact that although the volume of premiums 

account decreased by 9.5%, ASA lost only 2.2% of its market share, 

thus the company still ranks third by premiums collected.

 

Net premiums earned amounted to 114 million EEK, i.e. compared with 

1997, the volume of net premiums collected in 1998 decreased by 3 

million EEK, which indicates the effectiveness of reorganization of 

reinsurance contracts in 1997, especially considering the decline of 

gross premiums account by 13 million EEK. 

 

The company’s claims ratio increased from the level of 51% to 60%. 

This result was expected, since it generally occurs together with 

decline in the volume of premiums. When this process brought along 

the increase in claims provisions of 13.5 million EEK in the 

beginning of the year, then this growth trend stopped in the third 

quarter, and decreased by 4.3 million EEK in the fourth quarter.

 

The most substantial problems faced by the company during the year 

included worsening of the economic climate in the country, and 

gradually rising costs of sales process due to competition with  

other insurance companies. For instance, providing that the level of 

sales volumes remained the same, the acquisition costs during the I 

quarter totaled 8 million EEK, 9 million EEK in the II quarter, and 

10 million EEK in the III quarter. Since the company had a goal to 

cut the costs, and enacted in September a strict saving policies, the 

management succeeded to lower these costs to the level of 8 million 

EEK in the IV quarter. When after 9 months the acquisition costs 

accounted for 28.9% of the premiums collected, then the respective IV 

quarter figure was 27%, and the annual result was 28% of the premiums 

collected.

 

In 1998, the administrative expenses amounted to 23.5 million EEK, 

which is 3.8 million EEK less than in 1997, and their relative 

importance decreased from 20 % to 19 % of .

 

Regardless of the aforementioned positive changes in the company, in 

light of decreased volume of premiums and increase in the claims 

ratio and acquisition costs, the insurance technical result of 1998 

was -22.5 million EEK. In 1998, the company earned 7.0 million EEK of 

income on investments, whereas the expenses from investments totaled 

9.5 million EEK. Considering all the respective figures, the annual 

result was loss of 29.2 million EEK.

 

The annual decrease in the balance sheet volume amounted to 13 

million EEK. The most substantial structural changes were related 

with the decrease in owners’ equity due to the loss for the financial 

year, and decline in the volume of investments. On the investment 

account, the relative importance of bank deposits decreased and the 

share of mortgage loan increased.

 

Nadja Tarmak

AS AB Kindlustuse Grupp

Tel. +372 644 0542