Modern economic POTENTIAL OF UKRAINE

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Insurance

The Ukrainian market for insurance services in the non-banking financial sector grew faster than ever in 2004. The total gross insurance premiums earned by the insurers in 2004 totaled UAH 19,431.4 mn, with a net amount of insurance premiums at UAH 9,664.5 mn (Figure 1), which was almost 10 times higher than the figure registered in 1999.

Figure 1. Gross and net insurance premiums dynamics in 1999-2004

As of 1 October 2005, there were 399 insurance companies operating in Ukraine, compared to 378 as of 1 October 2004. Out of the total number of insurers, 51 render life insurance services, whereas the other 348 render other types of insurance services. The total net premiums earned by insurers from risk insurance and reinsurance in the first 9 months of 2005 totaled UAH 9,909.1 mn. The total amount of insurance premiums received in the same period from insured citizens totaled UAH 1,226.7 mn, which was UAH 474.1 mn higher than the similar figure reported in the first 9 months of 2004 – a growth rate of 1.6 times.

Figure 2. Share of insurance premiums in the GDP in 1999-2004, %

The gross insurance payments made by the insurers in the first 9 months of 2005 related to both insurance and reinsurance contracts was UAH 1,252.6 mn, with UAH 382.5 mn paid out to insured individuals and UAH 131.1 mn paid out to resident reinsured entities. In comparison with the same period of 2004, the amount of gross insurance payments went up 1.3 times to UAH 319.1 mn and gross payments to insured individuals added UAH 38.5 mn (1.1 times up). Net payments (gross payments minus payments to reinsured resident entities) totaled UAH 1,121.5 mn.

Over the past three years, insurance payments have almost tripled. Figure 3 exhibits the growth dynamics against the previous year's figures.

In general, the insurance market indicates a net payment rate at 12.6% (gross payments- to-net premiums ratio), according to the results in the first 9 months of 2005, which is 5.9% higher than the figure reported in the same period of 2004. This fact indicates the continuing tendency towards a growth of insurance premiums, which has been rather prominent since the beginning of 2005.

Structure of gross insurance payments and premiums by types of insurance

The amount of formed insurance reserves totaled UAH 5,011.6 mn as of the end of the third quarter of 2005, which was UAH 2,293.3 mln. lower than the figure registered at the end of the third quarter of 2004. Figure 4 exhibits the structure of insurance reserves.

Figure 4. Insurance reserves structure, as of 1 October 2005

Ukrainian insurers paid UAH 4.8 bn against risk reinsurance contracts in January-September 2005 (48% of the total gross insurance premiums on the market), including:

• UAH 305.8 mn to nonresident reinsurers (3% of the market's gross premiums);
• UAH 4,482.2 mn to resident reinsurers (45% of the market's gross premiums)

As of 1 October 2005, insurers' equities totaled UAH 14,164.4 mn, thus mirroring a 130% increment in comparison with the corresponding figure from 2004. The distribution of insurers according to their equity amounts is as follows: 30 insurers have equity over UAH 100 mn, 40 insurers - from UAH 50 mn to UAH 100 mn, 190 - from UAH 10 mn to UAH 50 mn; 129 - from UAH 5 mn to 10 mn, the others - less than UAH 5 mn.

The amount of the insurers' total authorized capitals totaled UAH 6,735.8 mn as of 1 October 2005, which corresponded to a 140% growth compared with the same period of 2004. Figure 5 exhibits the structure of insurers' assets as of 1 October 2005, as provided by the Law of Ukraine "On Insurance".

Figure 5. Structure of the insurers' available assets as of 1 October 2005

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