Q1 2018 overview of life insurance sector

Finantsinspektsioon has published a short review of the developments in the Estonian life insurance sector in the first quarter of 2018 and of the main risks to the sector. 

Estonian life insurers received 58.9 million euros in insurance premiums in the first quarter of 2018, which was 10% less than in the last quarter of 2017. The premiums written in the first quarter was 11% more than in the first quarter of last year, though the market data for last year covered data from four insurers not the current three. Mandatum Life Insurance Baltic SE merged at the end of last year with its Finnish parent company.

Key Indicators

Q4 2017   Q1 2018
Premiums written 65 mln € 59 mln €
Claims incurred 38 mln € 28 mln €
Total assets 1,04 bln € 1,02 bln €
Technical provisions 716 mln € 717 mln €
Expenses as a ratio to net written premiums 
15,5% 14,2%
Profit 6,3 mln € 5,4 mln €
Solvency capital requirement coverage ratio 178% 178%


Unit-linked life insurance products, insurance with profit participation and other life insurance continue to account for the largest part of life insurance premiums.

The claims incurred amounted to 28.2 million euros in the first quarter. As with premiums written, unit-linked life insurance provided the largest share of claims at 14.1 million euros, or half of all claims, followed by insurance with profit participation and medical expense insurance.

The value of the assets of life insurance companies did not change significantly, declining by 1% over the quarter to 1.02 billion euros. Neither were there any significant changes in the structure of assets and liabilities. The trend continued for the share of assets held for unit-linked life insurance contracts and unit linked technical provisions to increase and other technical provisions to decrease. The assets held for unit-linked life insurance accounted for 52% of all the assets of insurers at the end of the first quarter.

The capital requirement coverage of the life insurance sector was 178% at the end of the first quarter, and all insurers met the requirement.

Main development trends and risks

  • The tendency towards cross-border consolidation is apparent in the life insurance sector.
  • The biggest risk to life insurers by solvency capital requirement remains life insurance risk, the main component of which is mass lapse risk arising from a scenario of large-scale discontinuance of the insurance policies. The other main risks are market risk and counterparty default risk.
  • New sales of insurance products are based on risk products and unit-linked life insurance. No growth is visible for savings products.