Hungary's CIG Pannonia Life Insurance (CIG Pannonia Eletbiztosito) said it will continue its Romanian operations as a cross-border service rather than as a branch as at present under a decision taken by the board of directors on Monday.
The decision is part of a series of recently approved measures aimed at reducing operating expenditures, and is expected to cut administrative costs by more than HUF 500m annually.
The insurer will sell its policies in Romania in the future solely through brokers, mainly through a company which is part of the Hungarian Brokernet group that entered the Romanian insurance-mediating market this summer.
The restructuring of the Romanian operations and steps already taken at the insurer's Hungarian operations will bring savings to almost HUF 1 billion, the statement said.
CIG Pannonia Life Insurance said it expected the restructuring of the Romanian operations and other measures taken to improve cost-efficiency parallel with raising sales, and significantly improve operating results as a result.
The company announced cost-cutting measures after the publication of its consolidated H1 IFRS report, which showed after-tax losses of HUF 1.58 billion in the first half of 2011. The measures include integration of CIG Pannonia Life Insurance's corporate and non-corporate sales channels as well as a postponement of the company's planned expansion into Serbia and Bulgaria.
CIG Pannonia Life Insurance started to operate in Hungary in May 2008, and launched its operations in Romania in May 2009 and those in Slovakia in September 2010. The Romanian division operated through a branch in Bucharest with distribution of policies through an own network as well as through brokers. In Slovakia the insurer was launched as a cross-border business.
Life policies sold abroad generated 7.8% of annual revenue from newly sold life-insurance policies in the first half of 2011.