April 24 (Bloomberg) -- Austria’s insurers, which generated 16.3 billion euros ($21.2 billion) in premiums last year, will continue to grow faster in eastern Europe than in their home market, Fitch Ratings said in a report.
The presence in developing markets is a “key feature” of companies like Vienna Insurance Group AG and Uniqa Versicherungen AG as they benefit from higher growth rates and lower insurance penetration in the region, Fitch said.
As a result, “the insurance sector is likely to grow faster than other sectors” in eastern Europe, analysts Stephan Kalb and Sebastian Herzog wrote in the report, adding that they see “considerable long-term opportunities.”
Austrian insurers are facing declining profit at home after the government changed tax rules and cut subsidies on life insurance policies. Premiums in the segment fell 6.7 percent in 2012, according to the Austrian Insurance Association. VIG, the nation’s biggest insurer, made more than half of its profit and revenue in eastern Europe last year.
Still, “earnings from the region are set to remain volatile” as growth drivers are developing only gradually over time, Fitch said. In addition, obstacles come in form of local regulation and underdeveloped sales channels, it said.
In total, premiums written will probably stabilize in 2013 as life insurance in Austria is likely to recover and non-life lines continue to grow, according to the report.
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