Privatisation of insurance companies is regulated by a law
The question of which Slovene insurance companies still have public capital and how much, are yet to be answered. The answer should be found in the act on the privatisation of insurance companies which took effect on 2 March 2000 together with the insurance act. The first act regulates the privatisation of insurance companies, while the second one defines insurance activities in the light of Slovenia's accession to the European Union. The laws were passed six years after Slovenia got its first law regulating the insurance sector which replaced the former Yugoslav act on the system of insuring property and people. The laws should guarantee the harmonisation of the Slovene insurance sector with the EU directives and legislation.
In July 2000 Slovenia had 17 insurance and reinsurance companies. Last year they collected SIT 171.4 billion of gross premium statements, which was an 11.3-percent increase over 1998. The share of the insurance sector in Slovenia's GDP was 4.71 percent. The biggest insurance companies are Triglav, Maribor and Adriatic, having together an 84.02-percent market share. Together with Slovenica and Tilia these five insurance companies cover as much as 93.29 percent of the insurance market.
Delays in the privatisation of insurance companies
According to the law, privatisation of insurance companies, often described as too slow by the EU, should be concluded by the end of 2000. The law does not state which insurance companies have public capital, but unofficially these are Triglav, Adriatic, Tilia, Maribor as well as Sava as a reinsurance company. According to the legislation the government would initiate the proceedings of evaluation of public capital in these insurance companies and appoint an evaluator - an internationally recognized expert organization with the knowledge of insurance and actuary - within three months after the implementation of the law. The evaluator should in the next three months assess the value of the entire capital in individual insurance companies as it stood on 31 December 1998. The government would then issue a decree on the privatisation of each individual insurance company. A fifth of the public capital in each insurance company would be allotted to the Pension Management Fund, 10 percent to the pensions fund, another 10 percent to the fund for repayment of war damages and 60 percent to the state. The state intends to use about 50 percent of the money for covering the privatisation gap, the rest should be allotted to the above mentioned funds, while 5 percent can be sold to the employees at a market value.
The state would then appoint two members in the supervisory boards of insurance companies, thus keeping its right to the administration of public capital until shares are issued. The two members represent the interests of the state and its future shareholders.
But things did not go as smoothly as planned. During the Constitutional Court examined the provisions of the privatisation act which regulate the evaluation of private capital in insurance companies, at the initiative of five Slovene companies. The court ruled that the law violates the constitution. Until a final decision is taken, the implementation of the mentioned provisions is held up, while the court initiated the proceeedings to rule whether the rest of the act is in accordance with the consitution. The mentioned companies claim that they founded the Triglav insurance company. The non-nominal capital that should be privatized to the state and funds' benefit, has never been, according to these companies, state property nor has it been public property. It was provided and managed by the companies that founded the Triglav Insurance Community (predecessor of Triglav) and were also insured in it. They furthermore claim the law is contrary to Article 14 of the consitution as it envisages different ways of privatisation for banks and insurance companies although it is as they say the same kind of property.
No strategy yet for the privatisation of banks
In the end of 1999 Slovenia had 25 banks. Five of them were totally or partly owned by non- residents, while three were owned by the state. Their total assets, amounting to SIT 2,674 billion, was ten times that of the insurance companies. There have been a number of proposals for the privatisation of banks, but the final decision has not yet been taken. It has been proposed that the privatisation of both state-owned banks - Nova Ljubljanska banka (NLB) and Nova kreditna banka Maribor (NKBM) - should be regulated by the act on the privatisation of state property, which has been waiting in the parliament for several years. Some, however, say that banks should be privatised according to a special law. The privatisation of banks, which were at that time still in the process of rehabilitation, was the subject of the bill on the privatisation of legal entities and property owned by the Republic of Slovenia prepared in January 1995. As cases concerning the state property were later dealt with individually, the bill was withdrawn from the parliament in 1997.The rehabilitation of the state-owned banks, which cost DM 1.9 billion, concluded in 1997. Thus all conditions for the beginning of bank privatisation were fulfilled.
The book value of the banks that should be privatised is estimated at SIT 87 billion, while their market share is about 40 percent. The bank privatisation is expected to be partial and gradual. In the first stage about 10 percent of the property should be earmarked for covering the privatisation gap, while 20 percent would be offered on the market. The programme of bank privatisation is to be approved by a government commission.