financial stability report - Banka Qendrore e RepublikÃ«s sÃ« KosovÃ«s

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Number 3 Financial Stability Report capacity of the insurances companies to withstand the potential losses, was 83.7 percent, compared with 81.1 percent in June 2011. 15 This ratio is higher in the first half of 2012 due to a faster growth rate of the capital, compared with the growth rate of the technical reserves. While the balance sheet of the insurance companies in the first half of 2012 indicates an expansion in the insurance industry activity, the analysis of the revenues and expenditures indicates a decline in performance of this industry. This is because the net profit of the insurance companies, which represents one the main performance indicators, recorded a value of euro 0.6 million, which is around half of the value of the last year’s net profit, registered in June 2011. The lower net profit in the first half of 2012, also reflected in the deterioration of the two other performance indicators, namely, Return on Average Assets (ROAA) and Return on Average Equity (ROAE). In June 2012, ROAA was 0.6 percent, compared with the 1.2 percent in June 2011. The ROAE indicator followed a similar trend, declining to 1.4 percent, compared with the 3 percent in June 2011. 16 45 38.0% 40% 35.3% 35.2% 40 35% 33.1 34.8 35 39.6 38.1 30% 16 The ROAA and ROAE indicators are annualised. 30 25 24.2% 25% 20% 20 15 13.2 13.4 13.9 15% 10 8.0 10% 5 5% 0 0% June 2009 June 2010 June 2011 June 2012 Received premiums Paid claims Claims/primiums (right axis) Source: CBK (2012) Figure 65. Structure of received primiums of the insurance companies 29.8% 13.3% 56.9% TPL polocies Border policies Other 15 The technical reserves are necessary to ensure a permanent fulfilment of the liabilities of the insurance companies against the policy holders, until the expiration of the insurance agreement. In June 2012, the number of policies sold by insurance companies operating in Kosovo reached at 304.1 thousand, which represents an annual growth rate of 24.8 percent. The value of the premiums received during this period rose by 4 percent, reaching a value of euro 39.6 million. The value of the claims paid followed a similar pattern during the first half of 2012, reaching a value of euro 13.9 million and an annual growth rate of 3.6 percent. An approximately similar growth rate of the premiums received, as well as of the growth rate of the claims paid, resulted into the same ratio of the premiums received and claims paid with the ratio of the last year, i.e. 35.2 percent (Figure 64). Figure 64. Received primiums and paid claims, in millions of euro Source: CBK (2012) Within the premiums received, only about 0.8 percent are generated from the life insurance premiums, whereas the rest are non-life insurance premiums. 68 |
Financial Stability Report Number 3 The activity of the insurance companies in Kosovo is mainly concentrated in the issuance of the involuntary policies. Most of the involuntary policyholders Figure 66. Structure of paid claims of insurance companies consist of the Third Party Liability (TPL) policies, which 31.9% generate the largest share of the premiums received (Figure 65). 64.7% The TPL premiums, in June 3.4% 2012 reached a value of 22.5 million euros, recording an annual decline of 3.3 percent. An important part of the premiums received are derived TPL polocies Border policies Other from the involuntary border Source: CBK (2012) policies, which in June 2012, almost doubled by reaching a value of euro 5.3 million. The border policies represent 13.3 percent of the total premiums received. Besides the TPL's and border policies, which fall under the involuntary policies category, a part of the premiums received is also generated from the voluntary premiums (e.g.: Casco insurance, health insurance, etc.), whose value reached at euro 11.8 million in June 2012 and recorded an annual decline of 1.2 percent. The value of the claims paid during this period was euro 13.9 million. Most of the claims paid were regarded to the TPL policy holders, which represent 64.7 percent of total claims paid (Figure 66). 7.2. Pension Funds Pension funds are one of the Figure 67. KPST share price and the DJI index sectors with the highest growth rate within the financial system, whose assets grew by 19.5 percent in June 2012. The assets of the 11200 9200 pension system comprise 18.6 7200 percent of the total financial sector assets, with a value euro 659.1 million (13.4 percent of GDP). The 5200 3200 1200 majority of the pension system assets is managed by the Kosovo Pension Savings Trust (KPST), DJI KPST share price (right axis) whereas the remaining of 0.6 Source: Trust (2012), DJI (2012) percent is managed by the Slovenian-Kosovo Pension Fund (SKPF). Jan Mar Maj Korr Shta Nën Jan Mar Maj Korr Shta Nën Jan Mar Maj 2008 2009 2010 2011 2012 Korr Shta Nën Jan Mar Maj Korr Shta Nën Jan Mar Maj 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 During January-June 2012, KPST asset performance was characterized with a slow increase in the unit price, which reached the value of 1.05 euro. The recovery of the financial and capital markets during the second half of 2012 is expected to further improve the performance of the KPST investments during the remainder of the year. On the other hand, the unit price of the SKPF grew by 0.3 percent. | 69
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financial stability report - Banka Qendrore e RepublikÃ«s sÃ« KosovÃ«s

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