Case study: Hellas Direct

The years of recession in Greece between 2010 and 2015 saw gross written insurance premiums (GWP) drop by around 30 per cent from €5.3 billion to €3.7 billion. Despite a gradual recovery, the Greek insurance sector still lags behind the EU average. In 2019, GWP reached €4.4 billion. However, insurance penetration remained below the EU average of 7.5 per cent, at around 2.4 per cent of GDP. At the same time, the non-life insurance segment in Greece is fragmented, with the top five companies accounting for 40 per cent of GWP.

This under-penetrated and fragmented market, coupled with a gradually improving economic environment post-Covid, provides the perfect opportunity for a market pioneer with well-positioned innovative digital products to tap the market and close penetration gaps.

Hellas Direct has a unique digital approach to insurance by way of its own in-house technology platform that handles the customer journey from start to finish. The aim is to attract a younger, generally more profitable customer base and provide lower claim processing costs, a lower expense ratio and an overall better customer experience.

The company offers innovative products, such as day-by-day motor insurance and real-time underwriting in property insurance. It aims to sustain growth through new products and services, and gradually diversify into other profitable revenue streams, such as aggregators, road assistance and lead generation services.

The EBRD’s funds will be used for capital expenditure and working capital in relation to expanding the company’s product offering and market reach. This will eventually enable the company to scale up its operations and increase its market share.

Our participation comes in the form of a junior subordinated mandatory convertible debt instrument, which qualifies as unrestricted Tier 1 capital under the European Union’s Solvency II Directive. This is a tailor-made financing instrument with limited public precedents, which was created specifically for Hellas Direct to allow it adequate solvency capital headroom to support its growth. The instrument’s structure, which features embedded downside protection and room for Tier I capital qualification, demonstrates how financial innovation can be a source of value creation.

Hellas Direct was an attractive investment for us because of the combination of untapped market potential, innovative technology and an experienced management team with a vision to digitalise the insurance value chain in Greece and potentially play a role in the consolidation of the sector.

Andreea Moraru, EBRD Head of Greece and Cyprus, said: “We are delighted to support Hellas Direct, a technology-driven insurance company offering innovative products and digitalising the insurance value chain in Greece. Accelerating digital transition, unleashing the power of technology to bring changes for the better, is among the top priorities for the EBRD. We are very proud to support the growth of an insurance market player with a unique, digital business model that is well positioned in the post-Covid-19 world to scale up its operations. We are confident that the EBRD funding, know-how and strong presence in the Greek market will help Hellas Direct to continue improving its cutting edge service and increase its market share.”