Cosmos Insurance “in a buying mood” in Cyprus

Cosmos Insurance Company Public Ltd (COS), the largest non-bank owned general insurance company in Cyprus, is pursuing an independent course, relying on its top quality service and innovative product range as the best shield against a takeover by any potential bidders.

Cosmos Insurance is cash-rich, has no immediate need for fresh capital, is highly profitable and has been pursuing a steady dividend paying policy. It also enjoys one of the highest growth rates in the general business industry, according to Chief Operations Manager Panos Joannou.

Joannou told the Financial Mirror in an interview that “at the right opportunity and price we would consider buying.”

“We are in a buying mood,” adds Michael Tyllis, the CEO and a principle shareholder of the company.

With CYP 16 mln (EUR 27.3 mln) in annual premium income in 2006, Cosmos is the largest non-bank owned general insurance company and follows Laiki Insurance, with CYP 31 mln in premiums, General Insurance Co. with CYP 24.4 mln premiums and Pancyprian with CYP 16 mln premiums. Atlantic Insurance ranks fifth with CYP 11.2 mln premiums in a total premium market worth CYP 198 mln (EUR 339 mln) for 2006 according to Insurance Association figures.

Cosmos is also the second largest insurer in the motor business after Laiki Insurance.

“Every single competitor is respected and we fear no one,” is the company’s motto.

According to Joannou, the non-motor business is growing rapidly, up 30% per year with fire and medical the key areas of growth.

By concentrating on the retail market instead of selling bulk at heavy discounted prices, Cosmos has racked up solid profit growth year after year. The CSE-listed company reported EUR 1.62 mln net profit for 2006.

 

— Top service

 

The main ingredient of success, according to Joannou, has been the company’s top quality service. Citing an example, he said that when a medical insurance claim is made with all the necessary documents in place, Cosmos has a policy of settling the claim within 15 working days, as opposed to some cases with other firms that may take up to six months to settle.

Cosmos is so confident of itself that it gives a guarantee that it will pay CYP 5 per day for every day it delays the settlement of a claim beyond the minimum period. Since the guarantee was introduced in February 2007, no penalties have been paid.

Joannou also said that in the motor sector, Cosmos has one of the best records of early and prompt settlement, with a maximum four weeks claims settlement policy, while in some cases, the company settles on the spot.

The top quality service is given through its 200-strong agent network and with the support of its 70-strong staff who constantly undergo training.

“On average, we organize 100 training sessions each year for our agents and staff,” said Tyllis.

 

— Bancassurance… what?

 

Cosmos Insurance has proved that in practice there are many ways an insurance company may expand in the general insurance business without the backing of a banking institution.

“Our strength is in our network, personal service and innovative product range,” said Tyllis.

Joannou is so confident of Cosmos’ ability to flourish alone that he went on record to say that, “if a number of banks worked on a commission basis instead of having their own general insurance division, they would make more money.”

The recent experience whereby Alpha Bank in Greece sold its insurance subsidiaries to Axa, the French giant is probably a good indicator that the trend may soon come to Cyprus.

Cosmos Insurance also relies on its software and internally developed IT system, which it claims is one of the best available to develop new products and service clients.

“The era of professionalism and top service is here to stay and we are determined to play a key role,” said Joannou.

 

— Solvency II

Regarding prospects for overseas expansion, both Tyllis and Joannou stress that it will depend on how the Solvency II Act is defined by the EU and then adopted in Cyprus.

The new directive, set to go into effect from 2012 will dramatically change the way insurance companies operate since it will oblige companies to allocate larger capital and reserves to carry on risk.

In anticipation of tougher capital and risk adequacy as well as reporting rules, Cosmos Insurance is in the process of employing an internal actuary in order to improve its operations but also to be in a position to meet the challenge of the implementation of the new EU directive.