Swiss insurer operations under question

  • 2002-12-12

Switzerland's Zurich Insur-ance Company has stopped writing new insurance policies in the Baltic countries as the group has begun to consider pulling out of the region, though it was unclear whether the decision was a result of the recent fire at the picture-tube plant in Lithuania.

Andris Rozentals, director of Zurich Latvia, said that the Swiss insurance group would cease writing new policies in Latvia and Lithuania starting Jan. 1, 2003, as part of the Nordic restructuring program.

He said the restructuring would also affect Estonia but did not specify how.

Audrius Skucas, CEO of Lithuania's insurance company Zurich Draudimas, said that the company has not yet made any final decision on withdrawal from the Baltics, but acknowledged that the company's prospects in the region were unclear.

"That is why we have informed our customers that we will not write new insurance policies until there is complete clarity about Zurich Draudimas policy toward the Baltic countries," he said.

Skucas said the insurance company's possible withdrawal from the Baltic countries was not related to damages caused by a fire in Ekranas, the Lithuanian color picture-tube plant, which is considered to be the largest insurance event in Lithuania's history and one of the largest insurance claims in Europe this year.

"If it were related to Ekranas, why would we be talking about ceasing operations not only in Lithuania, but also in Latvia and Estonia?

"Zurich announced a restructuring of its Nordic operations in the spring of this year, and it was clear at that point that this would affect the company's operations in the Baltic countries as well," he said.

Total damages caused by the fire in early October are still being assessed. However, Zurich Draudimas has already provided 4.3 million litas for cleaning up the fire-damaged section of the Ekranas plant.

Skucas also said that the company would continue to service all existing policies and cover all possible claims, adding that insurance policies written by the company would expire in December 2003.

In the first 10 months of this year, Zurich Draudimas had a 0.71 percent share of the Lithuanian non-life insurance market, with 3.7 million litas (1 million euros) worth of premiums.

The company's major customers in Lithuania include Ekranas, Lifosa, Kalnapilis, Lietuvos Telekomas and Skanska.

Ekranas' assets were insured with Zurich Draudimas at replacement cost for 970 million litas. Ekranas also had a 12-month business interruption insurance policy worth 145 million litas.