Republish from the special edition of Nextdeal (Issue 560)

By our Correspondent in Cyprus, GIANNIS SEITANIDIS

The insurance industry in Cyprus confirms every quarter, with the publication of premium production, that it is a dynamic and growing sector of the economy, presenting a steady increase in activities and a trend of concentration through acquisitions, as well as an integration strategy with the banking sector.

The country’s two major banks, Bank of Cyprus and Hellenic Bank (which is a member of the Eurobank Group and is set to merge with the Cypriot subsidiary of Eurobank), are investing dynamically in the industry, seeking to expand their non-interest income. Neither bank is ruling out new acquisitions. The general non-life sector in particular, with its large number of companies, is offered for concentration. With the steps that have already been taken, the two banks now control almost 60% of the market in the Life sector (Bank of Cyprus: 30,6% Hellenic Bank: 28,1%) and 41% of the general sector (Bank of Cyprus: 17,9% and Hellenic Bank: 22,9%).

The two Bank’s CEOs are in agreement, when commenting on the first quarter results:

“As part of our strategy to expand our insurance activities and further improve our diversified business model, in April 2025 we signed a binding agreement to acquire 100% of Ethniki Insurance Cyprus Ltd, for a total price of 29,5 million Euros. This acquisition further consolidates our strong position in the insurance business in Cyprus, both in the life and general sectors, and will enhance the contribution of non-interest income to the Group’s profitability”, says Mr. Panikos Nikolaou, CEO of Bank of Cyprus. Bank of Cyprus owns the insurance companies Eurolife in the Life sector and General Insurance Cyprus in the General sector. Ethniki Insurance (Cyprus) has a 2,3% share in the Life Sector and a 4,3% share in the General Sector.

This acquisition further consolidates our strong position within the industry. Bank of Cyprus’s net result from insurance operations amounted to 12 million Euros for Q1 2025 (compared to 11 million Euros for Q4 2024 and 10 million Euros for Q1 2024, increased by 5% quarter-on-quarter and by 19% year-on-year). The quarterly increase mainly reflects lower claims in the general insurance sector. The annual increase is due to the increase in life insurance operations and the positive claims experience in the general insurance sector, due to the severe weather events that occurred in Q1 2024.

“The acquisition of CNP Cyprus Insurance Holdings has been completed. These developments constitute important milestones in our pursuit of becoming one of the leading financial services providers in Cyprus”, Mr. Michalis Louis, CEO of the Hellenic Bank said. Hellenic Bank owns Hellenic Life in the life sector and Pancyprian Insurance in the general sector, while the acquisition of CNP Cyprus significantly strengthens its presence in the Cypriot insurance market.

Hellenic Bank's net income from insurance operations during the first quarter, amounted to 4 million Euros, compared to 2,5 million Euros in the corresponding quarter of 2024, increased by 60%, mainly due to the increase in the net result of insurance services. The result is mainly due to higher income at the same time and lower expenses from insurance services, which were partially offset by the higher allocation to reinsurance expenses. There is also a decrease in net insurance financing expenses, mainly from the Life insurance sector, due to the lower return on assets covering insurance liabilities.

The strategic focus of the banks on insurance is linked to the need to expand their non-interest income. Investments in insurance companies offer:

• Stable Income: Insurance offers recurring, predictable income, less sensitive to interest rate fluctuations.
• Cross-Selling Potential: Banks leverage their customer base to distribute insurance products through physical and digital channels.
• Risk Diversification: Insurance activities balance the challenges of the traditional banking sector.
• Alignment with European Trends: The European model for the development of bancassurance groups is being adopted.

Banking integration offers mutual benefits, providing banks with diversified revenues and insurers with capital, expertise and distribution networks. Further concentration is expected to increase efficiency, but this may raise serious concerns in terms of competition.

Growth Path

The data confirms that the Cypriot insurance industry has a strong growth dynamics and positive future prospects.

The Cypriot insurance market maintains a relatively balanced distribution between life and general insurance, with a slight predominance of the former.

In particular, in 2024 production amounted to 1,3 billion Euros, from 1,2 billion Euros in 2023, increased by 7m6% and the outlook remains positive. The life sector (including production in the Health and Accident sectors) had the best performance, with a production of 800,082 million Euros in 2024, compared to 729,4 million Euros in 2023, increased by 9,7% which follows the increase of 17% in 2023, in comparison to 2022.

In the general sector (excluding the production of life companies in the Health and Accident sector) production in 2024 amounted to 503,554 million Euros, from 474,426 million Euros in 2023, increased by 6.1%. In 2023, compared to 2022, production had recorded an increase of 10,4%.

This upward trend continues, while Statista has made the impressive estimation that the market will reach 3,14 billion USD (gross written premium) in 2025. According to Global Data, the industry is expected to maintain a compound annual growth rate (CAGR) of over 6% for the period 2024-2028.

Despite the positive trend, insurance awareness in Cyprus remains lower than the European average, with per capita spending limited to 1.000 Euros per year, indicating significant margin for further growth.

Main Players

The Cypriot insurance market has traditionally been fragmented, but is currently being consolidated through acquisitions, mainly by banking groups, as already mentioned.

In the life sector, the first place is held by Eurolife, subsidiary of the Bank of Cyprus (28,3%), followed by CNP with a share of 22,67%. In third place we find Universal with a share of 15,1% and the top five are completed by Ancoria with 10,3% and Metlife with 8,3%.

In the general sector, the first place is held by CNP with a share of 14,3%, followed by: General Insurance of Cyprus (13,6%), Trust Insurance (10,7%), Pancyprian (8,6%), AIG (6,6%) and Atlantic (5%).

Growth Drivers and Challenges

The perspectives for the industry remain positive, with key drivers:

• Economic Recovery and Investment: Increased real estate investment is boosting demand for property and business insurance.
• Increased Health Awareness: The pandemic has increased interest in private health insurance, despite the introduction of the General Health System which offers universal coverage.
• Digital Transformation: Introduction of AI technologies, automated contract and claims management.

Among the various challenges, the main one remains the strengthening of supervision, as the position of Insurance Commissioner has been vacant for over five years. At the same time, insurance awareness remains low, requiring educational initiatives.

As Cyprus continues to grow in terms of economy, the insurance sector will play an increasingly important role in the financial security of citizens and businesses, while also acting as a strategic pillar of growth for the country's largest financial groups. The evolution of the bancassurance model will be a defining feature of the Cypriot financial market in the coming years.

Read below the article from the special edition of Nextdeal (Issue 560) in electronic form page 94-95 (click right below to magnify)