The annual results of Bulgaria's insurance companies indicate a rapidly growing market.

Now that Bulgaria is a European Union member, a large number of foreign companies have announced they are planning to establish branches in the country, some to ensure corporate partners coming into the market, others to compete for the growing domestic sector, in which life insurance is growing particularly strongly. At the beginning of the year, there were 31 insurance companies in Bulgaria. Three were life insurance companies, 20 non-life and eight composite insurers. Bulgaria's life insurance market came to a total of $129.6 million last year, an increase of more than 25 per cent on the previous year. However, the figure fell below the 200 million leva ($137 million) target some had predicted. The life insurance sector has traditionally come behind motor vehicle and home insurance as a priority in Bulgaria, industry insiders told OBG. However, this is changing. The local press reported this month that about 60 foreign insurance companies have filed notifications of interest to enter the Bulgarian market this year. Many are from Switzerland and the Netherlands. There has also been interest from firms based in Luxembourg, the United Kingdom, France, Germany, Italy and Austria. Many will come in to provide services for international corporations that they already insure in other countries. Austrian insurers are particularly active in the region.

On March 20, Uniqa Insurance announced that it was increasing its stake in Bulgarian firm Vitosha to 51 per cent from 20 per cent, and outlined plans to increase this to 100 per cent by 2011. Vitosha, which claims a 6.6 per cent market share and 100 outlets in Bulgaria, will be incorporated into the Uniqa brand as a result. The increase in share may be attributable to its impressive performance last year. The company achieved a 29 per cent rise in revenues to $56.2 million in 2006. Vitosha's general insurance premiums amounted to $45.4 million, with the biggest contributor to this being car insurance. Life insurance premiums brought in $10.8 million. The consolidated assets of Vitosha and its sister company, Vitosha Life, amount to $61.5 million and their reserves are $37.6 million.

Belgian financial services company, KBC Group, announced in January that it would buy a 70 per cent share of Bulgarian insurer DZI Insurance for a total of $239.3 million. DZI is the market leader in both life and non-life products, with a market share of 26 per cent and 18 per cent respectively. The company had a market capitalisation of $549 million at the time of the deal. The firm reported a net profit of $110.7 million last year, a success partly attributed to the sale to Greece's EFG of the financial group to which it belonged.

Allianz Bulgaria Holding, the local subsidiary of German insurer, Allianz AG, reported a 42 per cent rise in net profit in 2006 to $47.1 million. The insurance units achieved a gross premium increase of more than nine per cent to $162 million last year, $127.9 million of which came from general insurance, making the group the biggest player on the general insurance market in 2006 while Allianz Bulgaria Life saw an increase of gross premium income to $33.5 million. Allianz is the largest financial group in Bulgaria and offers general, life and pension insurance as well as banking.

Another strong performer last year was Bulstrad, which saw a 40 per cent increase in its premium income to $9.2 million. Bulstrad Life's chairwoman, Sveta Nestorova, told the local press she expected 2007 to see similar growth due to increases in the retail segment. Bulstrad, previously the state insurer, has a 7.1 per cent market share in Bulgaria. Nestorova said that the company was aiming to maintain this market share, even as foreign competition comes onto the market. The company, like some others, says it will be concentrating on increasing its life insurance business, after Bulstrad Life's net profits grew by 81 per cent last year. The target for 2007 is a more modest but still impressive 35 per cent to 40 per cent. Bulgaria's insurance sector looks set to continue to grow strongly in 2007, and the competition, capital and expertise brought by foreign players should ensure a good deal for increasingly insurance-conscious consumers.