It is no coincidence that Cyprus’s two major systemic banks—Bank of Cyprus and Hellenic Bank—are aligning their investment strategies with those of major European banks by turning toward the insurance sector.

As Brief reports, this move is seen as a strategic shift that could significantly boost profits and establish a stable revenue stream—possibly beyond initial expectations. The insurance portfolio may also become a valuable asset, acting as a counterbalance to the intensifying challenges faced by financial institutions that are expected to impact their future profitability.

On Monday, Bank of Cyprus announced it had signed a binding agreement to acquire Ethniki Insurance Cyprus, enhancing its already strong insurance portfolio, which includes Eurolife and General Insurance of Cyprus.

According to 2024 data, Ethniki Insurance Cyprus holds a 3.5% market share in the general insurance sector and 2.6% in life insurance. Eurolife, a subsidiary of Bank of Cyprus, controls 28.9% of the life insurance market and 4.4% of general insurance. General Insurance of Cyprus adds a further 11.1% in general insurance.

With the addition of Ethniki Insurance, the Bank of Cyprus Group will command around 19% of the general insurance market and approximately 31.5% in life insurance—securing the top position in both sectors.

Meanwhile, Hellenic Bank—now under the Eurobank umbrella—has strengthened its insurance presence through the acquisition of two powerful players: CNP Insurance and CNP Cyprialife.

Currently, Hellenic Bank operates in general insurance through Pancyprian Insurance (7.1%) and Hellenic Life (0.1%). In life insurance, Hellenic Life holds a 6.2% share.

CNP Insurance adds 11.1% in general insurance and CNP Cyprialife another 0.1%. Combined, CNP Insurance and Cyprialife control 24.1% of the life insurance market. As a result, Hellenic Bank will hold 18.4% of the general insurance market and 30.3% in life insurance.

Other notable life insurance players include Universal Life (11.5%), Ancoria (11.9%), Metlife (5.9%), and Prime (4.7%). In general insurance, Trust leads with 8.8%, followed by Universal Life (6.8%), AIG (5.4%), Merlife (4.2%), Atlantic (4.1%), Altius (3.8%), and Cosmos (3.2%).

The golden era of rising interest rates and soaring banking profits is gradually waning. Analysts suggest the next decade will present substantial challenges for financial institutions. A large portion of current banking profitability is being channeled into technological upgrades, particularly in digitalisation, and into capital reserves to counter unforeseen risks, including geopolitical shocks.

Banks also face high and recurring labour costs. Against this backdrop, management teams are sensibly planning for the future—evaluating extreme scenarios, adjusting business models, and seeking new, dependable revenue sources.

“The insurance sector appears to be an increasingly attractive investment for banks,” says Andreas Athanasiades speaking to Brief, Director General of the Insurance Association of Cyprus (IAC).

He adds that insurance companies are a natural draw for financial institutions, particularly those with excess liquidity. “Insurance is one of the most well-regulated industries, which makes it a highly secure investment,” he explains.

According to Athanasiades, Cyprus still has significant growth potential in insurance. “The average annual insurance spending per capita in Cyprus is €1,200, compared to €1,700 in the rest of Europe,” he notes.

This suggests a non-saturated market, where insurance companies can set ambitious goals supported by solid fundamentals. “Cypriot insurance companies are relatively small and maintain a strong human-centered ethos,” he says.

He highlighted the industry’s flexibility during the pandemic, when all insurance companies offered payment facilities to clients. “That approach was appreciated and is now paying off,” Athanasiades concludes.