Final results of the activity in the field of supplementary pension insurance for 2010

Social Insurance Supervision Division of FSC announced the final results of the activity in supplementary pension insurance for 2010. The information was obtained on the basis of the audited financial statements and statistics, submitted by the pension insurance companies at the Financial Supervision Commission.

As of 31 December 2010, the number of the insured persons in the four types of pension funds – universal, occupational, voluntary and voluntary under professional schemes, reached 3 882 883 persons, which represented an increase with 117 925 persons or by  3,13 percent compared to the insured in the end of 2009.

At 30 December 2010, the accumulated net assets in the system of supplementary pension insurance equaled to BGN 3 987 419 thousand and registered a growth of BGN 831 249 thousand, or 26,34 per cent in comparison with the net assets as of 31.12.2009.

The pension insurance companies closed the reporting 2010 year with total income to the amount of BGN 86 667 thousand, which represented an increase by 9,55 percent, compared to the recorded income in 2009. In 2010, the pension insurance sector realized a positive total net financial result to the amount of BGN 19 722 thousand, which represented a surge of this indicator by 18,83 in comparison with 2009.

2010 data on the insurance market

The presented individual data from the insurer’s reports for 2010 are summarized and published on the FSC’s web page – www.fsc.bg, in section E-library, Statistics, Insurance Market. In the same section, there are also data published for reinsurance company G P Reinsurance EAD.

In 2010, the gross premium income realized by insures, having a legal seat in the Republic of Bulgaria, amounted to BGN 1 630 550 thousand, where a decline of 3,0 % on a year-on-year basis was observed. The gross premium income, realized by the general insurance companies at the end of 2010, amounted to BGN 1 384 741 thousand, whereby a decrease of 5,1 % on a year-on-year basis was realized.

The gross premium income, realized by life insuring companies at the end of 2010, amounted to BGN 245 809 thousand, recording a growth of 10,5 % on an annual basis.

The occurred claims in general insurance were to the amount of BGN 749 410 thousand, declining by 1,6 % y/y.

The paid claims by life insurers were to the amount of BGN 98 633 thousand, recording a growth of 8,2 % year-on-year.

At the end of 2010, the sum of the insurers’ assets climbed by 4,9 % on an annual basis and amounted to BGN 2 922 704 thousand, including 63,8 % of the general insurance companies and 36,2 % of the life insurance companies.

In the end of 2010, the amount of the general insurance companies’ investments came to BGN 1 200 687 thousand and surged by 9,0 % year-on-year. The amount of the life insurance companies came to BGN 914 511 thousand and increased by 8,3 % year-on-year.

The assets amount of reinsurer G P Reinsurance EAD was BGN 1 609 914 thousand in the end of 2010, towards BGN 1 083 988 thousand in the end of 2009. 

The amount of the reinsurer’s investments in the end of 2010 was BGN 1 243 053 thousand, compared to BGN 975 583 thousand a year earlier.

The total amount of the insurers’ equity grew by 1,1 % on an annual basis and reached BGN 977 369 thousand, including BGN 526 261 thousand of the insurers pursing business of general insurance, and BGN 451 108 thousand of the life insurance companies.

The amount of the gross technical provisions, set aside by the general insurance companies increased by 8,1 % year-on-year and reached BGN 1 375 820 thousand.

The amount of the gross technical provisions, set aside by life insurance companies went up by 13,8 % year-on-year and reached BGN 574 750 thousand.

The companies in the general insurance sector reported a negative technical result of BGN (-43 279) thousand in 2010, compared to BGN (-7 736) thousand in 2009, respectively a negative financial result of BGN (-16 385) thousand in 2010, compared to BGN 26 689 thousand in 2009.

The reported by life insurance companies technical result of year 2010 was                 BGN 14 758 thousand, compared to BGN 11 921 thousand in 2009, and the financial result was BGN 22 702 thousand, compared to BGN 23 942 thousand in 2009.

Achieved investment results in the management of the supplementary pension funds for the period 2006 – 2010

By 31st of March every year, the pension insurance companies must announce the achieved investment results (rate of return and investment risk) of the managed by them pension funds. The content and form of this information is specified in the Requirements to the advertising and written information materials of the pension funds and of the pension insurance companies. According to Item 23 of the above stated document, the information of the achieved investment results of the pension funds covers:

  • the nominal rate of return, as a percent, from the management of the pension fund’s assets for each calendar year from the preceding five-year period;
  • the average nominal rate of return, as a percent, from the management of the pension fund’s assets for the preceding five-year period, calculated as geometric mean of the rate of returns for each ear of the period;
  • the level of investment risk in the management of the pension fund’s assets for each calendar year from the preceding five-year period, measured by the indicator standard deviation of the rate of return;
  • Sharp coefficient, in case that the achieved nominal rate of return is higher than the risk-free rate of return for the relevant year;
  • a graph about the value per one unit as at the last business day of each month for the preceding five-year period.

In relation to Item 23 of the Requirements to the advertising and written information materials of the pension funds and of the pension insurance companies and in consistence with the adopted practice for enhancement of the insured persons’ knowledge, Social Insurance Supervision Division of the Financial Supervision Commission announces the investment results, achieved for the period 2006 – 2010, in the management of all supplementary pension insurance funds.

The pension insurance companies announced information on the investments in securities by issuers

As of 31 March 2011, all pension insurance companies announced on their web sites information about the volume and structure of the investments by types of assets and securities issuers for each managed supplementary pension insurance fund. The information is disclosed in accordance with Art. 180 of the Social Insurance Code and the Requirements to the advertising and written information materials of the pension funds and of the pension insurance companies under Art. 123i, para 2 and Art. 180, para 2, Item 1 and Item  2 of the Social Insurance Code.

At 31.12.2010, the investments of all pension funds in debt instruments (bonds) were in overall 11 types of debt securities and 228 different issues, evaluated at the market value of BGN 1 761 111 030. The bonds occupied a share of 45.04% of the balance sheet assets of the universal pension funds, 41.27% of the balance sheet assets of the occupational pension funds, 41.59% of the balance sheet assets of the voluntary pension funds and 47.02% of the balance sheet assets of the voluntary pension funds under occupational schemes.

As of 31 December 2010, the investments of all pension funds in shares and other equity instruments were in overall 9 types of equity securities and 344 different issues evaluated at market value of BGN 1 055 964 344. The equity financial instruments account for 25.20%  share of the balance sheet assets of the universal pension funds, 28.23% of the balance sheet assets of the occupational pension funds, 31.20% of the balance sheet assets of the voluntary pension funds and 4.25% of the balance sheet assets of the voluntary pension funds under occupational schemes.

The data on the investments in 228 issues of debt and 344 issues of equity financial instruments at the end of 2010, in comparison with 184 issues of debt and 235 issues of equity financial instruments at the end of 2009, were indicative of the running of diversification processes in the pension funds through investments in a bigger number of issues, which if  appropriately combined had to result in reduction of the risk to the individual issuers and more optimal investment of the funds as rate of return-risk ratio.

Decisions from FSC’s meeting held on 6 April, 2011

At its meeting on 6 April 2011, FSC took the following decisions:

1. Entered Bulgarian Credit Rating Agency AD as a credit rating agency in the Register under Art.30, para 1, Item 13 of the FSCA, kept by FSC.

2. Approved a prospectus for public offering of shares of HBG Investment Property Fund REIT, city of Varna.  The issue is to the amount of 32 500 common shares with a par value of BGN 1 each and issue value of BGN 17.20 each. Entered the issue of shares (in process of issuing) in the FSC’s Register.

3. Entered an issue of shares, issued by Holding Asenova Krepost AD, town of Asenovgrad, as a result of increase in the company’s capital. The issue is to the amount of BGN 4 644 201, divided into 4 644 201 common shares with right to vote, with a par value of BGN 1 each.

The second Europe-wide stress-test for the insurance sector was launched

On 23 March, 2011 the European Insurance and Occupational Pensions Authority (EIOPA) has launched the second Europe-wide stress-test for the insurance sector. The stress test is conducted in cooperation with the respective national supervisory authorities and will be concluded by the end of May, based on 2010 financial results. EIOPA will publish the aggregated results of the test in July 2011. The test is targeted towards the European insurance sector and will include a minimum of 50% of insurance companies per country measured by gross premium income. The Swiss Financial Market Authority (Finma) has decided to join the stress test in addition to member states of the European Union and European Economic Area (EEA).

To carry out this stress-test, EIOPA considered the macroeconomic assumptions that were applied to the banking stress test, in particular the assumptions underlying the macroeconomic adverse scenario provided by the European Central Bank. EIOPA further enhanced the definitions of those stress scenarios to address the actual market environment of the insurance industry.

Stress tests are a regular supervisory tool and the execution of periodic exercises is set down in EIOPA’s regulation, which defines EIOPA’s composition, powers, tasks and decision making process.

Decisions of FSC’s meeting held on 5 January, 2011

At its meeting on 5 January 2011, FSC took the following decisions:

1. Approved a prospectus for initial public offering of an issue of securities, which will be issued by Holding Asenova Krepost AD, town of Asenovgrad, as a result of increase in the company’s capital. The issue is at the amount of BGN 4 644 201, divided in 4 644 201 common shares with a par value of BGN 1 each and issue value of BGN 2.70. Entered the above issue of shares / in process of issuing/ in the Register kept by FSC.

2. Reduced the scope of the license of investment intermediary T B I Invest EAD, city of Sofia from big to medium license, on request of the company itself.

3. Entered an issue of shares issued by Balkancar Zarya AD, town of Pavlikeni, with the purpose of trading on a regulated market. The issue is to the amount of 1 081 900 common shares with a par value of BGN 1 each. The issue is as a result of increase in the company’s capital from BGN 1 322 056 to BGN 2 403 956.

The European Commission published a list of the credit rating agencies in the Official Journal of the European Union and on its web page

Pursuant to Regulation (EC) № 1060/2009 of 16 September, 2009 on credit rating agencies (CRA Regulation), the credit rating agencies are legal persons whose occupation includes the issuing of credit rating on a professional basis. The credit rating agencies established in the Union must file an application for registration according to Article 14, paragraph 1, in relation to Article 2, paragraph 1
of the CRA Regulation. The competent authorities of the home Member State approve the registration when all requirements stated in the CRA Regulation have been satisfied. The registration is valid for the whole territory of the Union. In consistence with Article 18, paragraph 3 of the CRA Regulation, the Commission published in Official Journal of the European Union and on its web page a list of the registered credit rating agencies. This list is updated within 30 days after the date the Commission is notified of registration made by a competent authority of a home Member State.
The registration according to the CRA Regulation does not mean automatic recognition as an external credit rating agency (ECRA) in accordance with Part 2 of Annex VI
to Directive 2006/48/EC.

You can find the list of the agencies on the following address:

http://ec.europa.eu/internal_market/securities/docs/agencies/list_bg.pdf

The three new European Supervisory Authorities of the bank, capital, insurance and the pension insurance market have begun work since the beginning of the year

On 1 January, 2011, the three new European Supervisory Authorities – the European Banking Authority (EBA), European Securities and Markets Authority (ESMA) и European Insurance and Occupational Pensions Authority (EIOPA) officially began work.  The new Authorities are successors respectively of the Committee of European Banking Supervisors, Committee of European Securities Regulators and the European Insurance and Occupational Pensions Committee. On 10, 11 and 12 January, 2011 the first meetings were held of the three Boards of Supervisors – the main decision-making structure in the EBA, ESMA and EIOPA. As Chairpersons were elected respectively Andrea Enria (EBA), Steven Maijoor (ESMA) and Gabriel Bernardino (EIOPA). The election of the three Chairpersons has to be confirmed also by the European Parliament. The first six-person Management Boards of EBA, ESMA and EIOPA were also appointed. The task of the new Authorities is to contribute to improvement of the functioning of European financial market, coordinating the activities of the national supervisory authorities, propose standards and guidelines and monitor for their application.
Within this context, the national supervisory authorities preserve their powers and will continue to exercise daily supervision over the individual; financial institutions. In case of established inconsistencies in the European regulations, settlement of disputes between the national supervisory authorities, as well as in crisis situation at European Union level, EBA, ESMA and EIOPA will be able to issue legally binding decisions to the national supervisory authorities and individual financial institutions.
Representatives of Bulgaria in the Board Supervisors of the new Authorities are Rumen Simeonov, Deputy Governor of the Bulgarian National Bank in charge of Banking Supervision Department (EBA) and Stoyan Mavrodiev, Chairman of the Financial Supervision (ESMA and EIOPA).
At its meeting on 12 January, 2011, the Board of Supervisors of the European Banking Authority adopted a work program for conducting an EU-wide stress test of the system in the first half of 2011, and the results will be published towards the middle of the year. This activity will be carried out jointly with the national supervisory authorities, the European Systemic Risk Board, the European Central Bank and the European Commission.

Study of the state of the non-banking investment intermediaries for the period June – November, 2010

On the web site of the Financial Supervision Commission, under Statistics heading, Capital Market section for 2010, there has been posted a Study of the state of the non-banking investment intermediaries for the period June – November, 2010
The study makes a review of the basic indicators of this type of companies on an aggregate basis. The statistics show that the number of the non-banking financial intermediaries decreases, and the changes in the equity of the companies with minimum required capital of BGN 1 500 000 is considerably less than that of the other companies for the period under review. Nevertheless, there are not any non-banking investment intermediaries, which are in violation of the requirements for capital adequacy and liquidity, and the market value of the trade and non-trade book of these companies increased, except for the months of August and October. The market value of the securities, provided for fiduciary management, as well as their client assets grew for the period June – November, 2010 by respectively 3.08% and 5.63% (calculated as geometric mean for the reviewed period).