Slovenská Poisťovňa (SP), the biggest insurance company in Slovakia, posted a loss for the first time in its 29-year history in 1998. The company lost fully 1.8 billion Slovak crowns ($41 million), which it attributed to the need to write off provisions created against risky investments in the past.
SP management said it would be able to cover the loss from its basic capital without endangering the firm's solvency. SP's capital after deducting the loss would equal 1.27 billion crowns, while its share assets would remain unchanged at 1.5 billion crowns.
SP's biggest cost item last year was the creation of 10.5 billion crowns in technical reserves and 8.5 billion crowns of indemnity. The SP had to clear provisions and reserves for financial investments totaling 3.6 billion crowns into costs in 1998 because it had in the past engaged in disadvantageous entrepreneurial activities and entered into highly disadvantageous contracts. These provisions pertained in particular to securities, provided advance payments, loans, and property.
The SP has technical reserves of nearly 25 billion crowns for its obligations stemming from its insurance contracts. Of this sum, life insurance makes up 20.3 billion crowns. Nearly half of these funds are placed as time deposits and liquid securities.
SP held a 59% share of the Slovak insurance market in 1998 with 12.5 billion crowns in collected premiums in 1998. SP's total revenues came to 29.4 billion crowns last year, up 23% from 1997.
The majority owner of the SP is the National Property Fund (FNM-national privatization agency) holding 51% of shares.