CKB Group Asset Management, the company in charge of the financial assets of diversified holding Chimimport, is the latest entity to show interest in Bulgaria’s insurance sector.

On October 31, the Financial Supervision Commission (FSC) issued operating licences to CKB Life Insurance and and CKB Health Insurance companies.

The move by CKB Group Asset Management comes amid a buzz expected to bring more players and growth to the market. Two parallel trends are navigating this development. A plethora of EU-based insurance companies are preparing to set foot in Bulgaria. At the same time, local big names are heading for expansion to the Balkans.

Since the start of the year, when Bulgaria joined the European Union (EU), and companies registered in the EU were authorised to use the single passport mechanism to begin operations in Bulgaria in exchange for a notification with the relevant oversight authority, a total of 149 insurers filed notifications with the FSC. Between August 15 and September 30 alone, two UK, two Spanish, and one from each of Ireland, the Czech Republic, Romania, Luxembourg, Norway and Denmark submitted notifications.

At the same time, insurance company DZI, since recently in ownership of Belgium’s second-largest financial group KBC and as of recently ceding the top placement on the market, unveiled plans to shortly offer both insurance and life insurance products in Romania.

EuroIns Insurance Group, the company to come out from the merger between EuroIns insurer, the St. Nikolay Chudotvorets health insurance company and the Romanian-based peer Asitrans Asigurari, announced plans to develop its Balkan presence and grab a market share of four to five per cent in the medium run.

The two developments are logical in view of the changes underway in both sectors. According to an index compiled by Herfindahl-Hirschmann, as cited by the FSC, the concentration in both the life insurance and health insurance sectors have been on the decline. The collective share of the top four players in both segments has been decreasing. Within the past year, the respective top four companies have seen market share in the two sectors eroding below 70 per cent and 90 per cent, respectively.

Experts argue the olygopoly model will continue to disintegrate with aggressive foreign players lining up for a market share with competitive offers. The trend is set to persist in the medium run, experts added.

Against this background, the entry of Chimimport through CKB Group Asset Management into these two segments seems logical and timely.

CKB Group Asset Management is to be the full owner of both CKB Life and Health Insurance Company CKB.

CKB Life, yet to be incorporated, is set to offer a full range of life insurance products once fully operational. Among packages in the start-up product list are: Life and Rent, Marriage and Child Insurance, Additional Insurance and Accident Insurance.

Its paid-in capital will total 6.4 million leva, distributed into 6.4 million ordinary voting shares at a par value of one lev.

CKB Health Insurance Company will be offering the following packages: Health Improvement and Disease Prevention, Out-of-Hospital Treatment, Hospital Treatment, Additional Health Services and Goods, Expense Reimbursement health insurance products.

The company will have a smaller paid-in capital than the other spin-off, of one million leva divided into one million shares with face value of one lev each.

CKB Group Asset Management is 100 per cent owned by Chimimport and has 150 million leva in capital. Among the core assets of the company is the Central Co-operative Bank (CCB), which staged one of this year’s landmark IPOs on the Bulgarian Stock Exchange. CKB Group Asset Management is owner of 68.02 per cent of CCB shares.

The bank is currently performing a capital increase transaction and is awaiting approval from the Macedonian National Bank to buy the local Post Bank.