BMI's Executive Summary for the Hungary Insurance Report

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This report differs from its predecessors as it includes BMI's Insurance Business Environment Rating (IBER). The rating brings together a number of pieces of relevant quantitative data, together with BMI's Country Risk Rating (CRR). It is now much easier to consider the business environment for the insurance sector in any country relative to the business environment for other industries in that country that are surveyed by BMI, and the business environment for the insurance sector in other countries.

Hungary's IBER is 60.7. Relative to other countries in Central and Eastern Europe it is a medium sized insurance market for foreign insurers. In the region Hungary stands out for its measure of openness of the non-life and life segments. Economic growth is expected to be modest in the near future, with ongoing political uncertainties and a growing budget deficit. The IBER is held back by the small size of the insurance industry and low levels of expected growth and penetration of the life and non-life sectors. It is also held back by the levels of tax, GDP volatility, bureaucracy and high levels of external risks.

Over the forecast period we anticipate that non-life premiums will grow by 13% annually in local currency terms and by 12% in US dollar terms. Life premiums are expected to increase by 11% annually in local currency terms and by 10% in US dollar terms. The key drivers of growth in the non-life segment in 2007-2012 are the anticipated rise in nominal GDP from around US$135.0bn in 2007 to US$180.0bn in 2012 and an expected increase in non-life penetration from 1.78% of GDP to 2.40%. The key driver of growth in the life segment is the envisaged rise in life density from US$219 per capita in 2007 to US$350.00 per capita in 2012. Hungary's total population is declining very moderately.

The Hungarian non-life market is similar to that of Slovakia and the Czech Republic: amazingly crowded. The market is also small, making it not particularly attractive to cross-border firms. The story for the life market is similar, and again the market is small by world standards and yet crowded with cross border firms. In 2005, however, both sectors were dominated by single major players, Allianz in the nonlife sector and ING in the life sector. Both companies hold around one-third of the total market share.

The strengths of the sector lie in its relative openness to foreign players and Hungary's overall excellent regulatory framework, development and competitive landscape. The country also possesses a good overall financial infrastructure and has a relatively high GDP per capita in comparison to other countries in Central and Eastern Europe. The main weakness of Hungary's insurance sector is the relatively low total size of the sector and the low expected growth and penetration rates. There is considerable political and economic uncertainty at present, and our estimates for economic growth have been revised down to 2.6% GDP growth for 2007. There may also be threats from a possible slowdown in eurozone growth, as the Hungarian economy is reliant on exports.

Contents of the Hungary Insurance Report

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Chapter 1 - The Sector At A Glance 5

Table: Overview

Key Features Of This Report And Likely Future Changes

Chapter 2 - Latest News

Recent Developments

Chapter 3 - Evolution Since The Mid-1990s

Table: Hungary Evolution of the Insurance Sector (in millions of currency specified)

Evolution

Chapter 4 - Projections And Forecasts

Table: Hungary BMI Projections (in millions of currency specified)

Projections And Drivers Of Growth

Chapter 5 - Macroeconomic Outlook

Table: Nominal And Real GDP

Chapter 6 - Country Update

Political Risk Reform Minefield

Economic Risk Looming Downturn

Business Environment Looking Less Attractive

Chapter 7 - Analysis of Competitive Conditions

Table: Non-Life Segment Rankings of Markets

Table: Presence of Non-Life Cross-Border Insurers

Table: Selected Local Non-Life Insurers

Table: Life Segment Rankings of Markets

Table: Presence of Life Cross-Border Insurers

Table: Selected Local Life Insurers

Chapter 8 - Regional Context

Table: Regional Context premiums

Table: Regional Context Total premiums

Chapter 9 - Methodology And Objectives

Introduction

Background

Forecasts

Chapter 10 - Appendix

Table: Latest Estimates / Actual Figures For 2005

Table: Latest Estimates For 2010

Table: Latest Estimates For 2005-2010 (Growth In US Dollar Terms)

Competitive Landscape for Europe Insurance Reports: Sample of
    Companies Ranked

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A cross-border overview of key players and their insurance market share across Europe. Tables and graphs show country presence of multinationals across the region. Comparative company analyses and rankings by premium income (life and non-life). Company SWOTS for leading life and non-life insurers, covering network of offices, presence of foreign stakeholders, strategic relationships, joint ventures; portfolio of clients; diversity of product range; profit growth, investment strategy and risk exposure.

Network of Insurance Sources

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BMI's European Insurance Reports are based on an extensive network of multilateral organisations, government departments, insurance industry associations, chambers of commerce and company reports. Information sources include:

Read about our other Insurance Reports