Insurance broker aims high

The Baltic Times, TALLINN
Sep 30, 1999
By Kairi Kurm

It started Sept. 1 as a merger of two insurance brokerages, and already Aon is setting its sights high: The company’s main goal is to conquer 40 percent of the Estonian insurance market by 2003.

Aon, which grew out of a merger between Quest Insurance Brokers and Kindlustuskonsultant, currently holds about 12 percent of the insurance market.

According to Kari Aitolehti, chairman of the board of Aon Eesti, the insurance brokerage market in Estonia is very small. But it is this weakness that Aitolehti says he intends to take advantage of as he attempts to build an internationally-known company.

The biggest difference between the services of an insurance company and an insurance brokerage is that the former offers a range of  services it has, but an insurance broker can find a more diversified service package from many different companies according to the specific needs of a client. The insurance broker is an independent intermediary who carries out his functions, basing on agreements concluded with policyholders and insurers.

“A broker values a company’s risk and if none of the local insurance companies is able to offer the necessary service, then that broker finds it abroad,” said Kristjan Varton, a member of the board at Aon Eesti. The Aon corporation operates in more than 115 countries worldwide with some 40,000 employees in more than 600 offices.

In Estonia, Aon will be offering property-, life- and investment-insurance services.

Varton said there are about 25 insurance brokerage companies in Estonia, some of which are quite obscure, but the exact number will not be known as long as the Estonian Insurance Supervisory Authority does not take control over the insurance-brokerage business in Estonia.

Kaido Tropp, deputy director at the supervisory authority, said that starting in January 2000, when amendments are introduces to the insurance law, the supervisory board will start inspecting insurance brokerage companies and information about them will become more available.

“We are looking forward to the regulation of the market,” said Varton.


Proposal designed to thwart tax cheats

The Baltic Times, TALLINN
Sep 23, 1999
By Kairi Kurm

Keeping a company car will become more costly on Jan. 1 if  a bill proposed by the Finance Ministry becomes law.

The ministry wants to tax those who lease corporate cars at 18 percent. Currently, those who lease a car for a given period only pay the 18 percent tax if they opt to buy when their lease runs out. But  in this case, they pay tax on a car whose value has depreciated.

Those who buy and then finance a car pay the full 18 percent tax up front on the sticker price of the new car.

The ministry is proposing adding an 18 percent tax to each lease payment in order to level the playing field. The current system, says ministry adviser Terko Jakobson, promotes tax cheating and is depriving the state coffers of much-needed revenue.

The ministry has complained because too many Estonians who would otherwise not be able to afford a new car are going the lease route first, then buying the car. Thus, they save a considerable amount on taxes.

“We have to make a compromise between these two unfair [situations]. It is not possible to make everyone a winner,” he said.

Jakobson says it is likely the bill will be approved by the Parliament. But Reet Haal, head of the Estonian Leasing Association, said the government is either trying to make the life of entrepreneurs hard or fill the budget gap caused by the recently abolished corporate tax.

“I believe the government has not done proper analyses on how much loss it generates from cheating and how much the enterprises will lose with the new amendments,” said Haal.

Haal said almost 30 percent of the portfolio of leasing companies is related to vehicles. The size of the leasing portfolios in 1998 was 2 billion kroons ($132 million). At present, the operating lease makes about 85 percent and the finance lease about 15 percent of the portfolio. Haal did not want to predict a new share for the future because she hoped that the bill would not pass through.

“What is the entrepreneur punished for? Is he punished for the government’s inability to control cheating?” said Haal.

Mati Annus, head of the Avis rental company, said the new bill might creates two difficult situations.

“The companies may start renting cars, as VAT is recovered from rent, or establish a company of its own for maintaining its cars,” said Annus.

Although renting is usually more expensive than using an operating lease, Annus said the prices of longer renting periods are quite acceptable.

Hansa Capital told Eesti Paevaleht that Estonia should prepare for a decline in the leasing business should the proposal become law.


Baltika turns to the West

The Baltic Times, TALLINN
Sep 09, 1999
By Kairi Kurm

Baltika, an Estonian garment company, is planning a wide expansion toward Western markets after its Russian market saw another decline this year.

Baltika presented its three collections at the Polish largest fashion fair in Poznan in August and concluded a framework agreement for cooperation with the largest Polish department-store chain, Domy Towarowe Centrum.

“The Polish market gives an opportunity to everyone,” said Edward Koster, men�s wear director at Baltika. “You have to be strong to get there, and we managed to turn our strengths in our favour.”

Koster said that Poles liked the Estonian collection and, the price was acceptable. “Poland is a market with 40 million people, 20 percent of whom have purchasing power. The market is increasing tremendously and has potential,” said Koster.

Baltika is planning to sell its products for at least 6 million kroons ($404,000) in Poland next year and for 15 million kroons in the year 2001.

“This is a minimum of what we predict. I believe we are taking faster steps there,” said Koster.

Baltika also established its subsidiary Baltika Poland to develop sales on the new Polish market.

The subsidiary of Baltika in Sweden is developing sales in Norway at the same time. “We are doing research on the market, and we have also completed some transactions. It is not easy to enter the Norwegian market , but you have to do a lot of preparation for it,” said Koster.

Baltika is also doing well in Sweden. Baltika�s collections are sold by famous Scandinavian department stores such as Stockmann and Nordiska Kompaniet.

Baltika together with several other Estonian clothing companies participated at the Stockholm Fashion Show in August this year, thanks to the help of the Estonian Export Agency. “Baltika is one of the most experienced exporters in this field,” said Aali Lilleorg from EEA.

“The Estonian, production has a good quality and design, but the trademark is unknown abroad. The problem is that the price seems to be high compared to the awareness of the trademark,” said Lilleorg.

The Russian market disappointed Baltika this year, and the company is planning to be more conservative with it in the future. The company took big losses in sales compared to last year�s figures.

In Moscow, Baltika owns a shop in the distinguished department store GUM since 1996.

Baltika exports almost two-thirds of its total production. The biggest share of exports (64 million kroons in 1998) go to Latvia and Lithuania, where Baltika owns five shops. Sweden and Finland together represent about one-fourth of the sales, while Russia and the Ukraine generate a slightly smaller turnover.

Not only does Baltika produce its own collections, it is also a manufacturer for several well-known brands such as Burton and Next in England, and Sunde and Pret-a-Porte in Sweden. Subcontracting gives the company 23 percent of its sales – its biggest subcontracting markets are Scandinavia, Germany and Great Britain.

In Estonia Baltika has 12 stores called Christine, Baltman and Evermen. This fall all stores will be renamed Baltman, which will become the biggest retail clothing chain in the Baltics. Baltika has developed five trademarks : Baltman, Evermen, PlusB, Christine Collection and Respect.

Production capacity at Baltika is over 1 million pieces of clothing per year.

Last year the company made a 2 million kroon net profit on a 280 million kroon turnover. The company�s turnover reached 140 million kroons for the first half of this year.

According to the Estonian Export Agency, Baltika, Klementi and Sangar are the market leaders in the garment business in Estonia.


Taking the tricolor around the world

The Baltic Times, TALLINN
Sep 09, 1999
By Kairi Kurm

Six men are planning to be the first Estonians to travel around the world aboard a yacht. The black, blue and white flag will be raised on their vessel Oct. 2, the day the adventurers set off.

The most well-known Estonian to have made a round-the-world trip before is Adam Johann Krusen-stern, who led the first Russian round-the-world trip from 1803 to 1806.

“The idea came to our mind in the autumn of 1996, when we escaped a storm in Paldiski,” said Tiit Riisalo, a member of the crew.

“We drank tea and thought, why not try a trip somewhere further? When you have reached some other countries, why come back the same way. Better to sail around the world. That was the conclusion. But the idea did not seem that good in the morning, when we started thinking about the necessary resources for the trip.”

Indeed, funding has been the number one problem, Riisalo said. Sponsors have supported one-third of the project. He has invested about 350,000 kroons ($23,600), while some have had better possibilities and others worse. The crew has calculated the potential expenses to be about 6.5 million kroons.

“Nowadays, container boats make several trips round the world, but this way with a yacht is a real undertaking,” said Jaak Sammet, deputy manager of the Estonian Maritime Museum.

The crew members promised to provide the museum with special souvenirs and photos from the trip. The courier company TNT, which has branches in more than 200 countries, is going to support the crew throughout the trip with the necessary transport.

The planned voyage would be carried out on a 44-foot-long yacht, built in Finland and Estonia, called Lennuk. The yacht cost about 4.8 million kroons.

The voyage will, according to preliminary calculations, be about 35,000 miles long, and the crew will visit 37 ports in 25 countries.

“Indonesia has the most strange visiting policies. You must tell them beforehand when you are coming, for what reason you are coming and for how long,” Riisalo said.

The members of the crew are planning to sail through natural waters only and thus avoid the channel of Panama and pass Cape Horn instead.

The schedule of the voyage has been made so that the favorable winds and currents should support the yacht most of the time. The yacht will sail in the most dangerous regions of the Pacific and the Indian Ocean at the time when the tropical storms occur least often.

The crew actually consists of seven members, the seventh member being changed 15 times in different ports. Seven members allow three shifts in navigating the yacht. The yacht has three double cabins for the crew.

The crew was completed according to the different skills of the members. Some have sailing skills or sea experience, while others are skilled in first aid, engineering and languages.

“None of the members was selected due to his blue eyes,” said Mart Saarso, skipper of the yacht. “We have tested them all.”

The Offshore Cruising Society Thetis, which is responsible for the organizational work of the voyage, chose Saarso as skipper of the yacht. Saarso has been sailing since 1975, and he is the youngest yacht captain ever known in Estonia.

“Our objective was not to compile an Estonian open-sea yachting team. We are not planning to race. We are compiling a crew where everybody knows his role and what others expect of him,” said Saarso. “The nerves of a member have to be strong in order to handle the inconveniences on a small yacht.”

The crew plans to provide photos and information on their Internet page at

At the same time the Esotnians head out, a group of Latvians are taking their flag around the world for the first time on a catamaran called Kaupo. Their trip should last about two years. Riisalo said he hopes to meet with them some time on the trip.


There’s always a first time

The Baltic Times, TALLINN
Sep 02, 1999
By Kairi Kurm

Kairi Kurm talked with a few people shortly after they bounced back from their first bungee jump.

The municipal fathers of Tallinn, along with Estonia’s defense union, heralded last weekend’s festivities at the beach with promises of a rock concert, games and competitions. Oh, and free bungee jumping.

Sure enough, it was the chance to climb great heights and plummet toward earth with wild abandon that brought in the crowds. But once there, getting anyone to take the plunge took some doing. Tallinn Mayor Toomas Lepp, slated to be the first to jump, backed out at the last minute. Another brave soul quickly stepped in. But she stood for a long time, contemplating the jump, before finally changing her mind and slinking quietly off the platform.

Finally, 25-year-old Zlata, determination sparkling in her eyes, went through with the jump. She landed happily, with a smile on her face.

“I’d rather come down jumping with fear than let myself be brought down with shame. The shame is bigger than the fear,” said Zlata, a mother of one. Her husband, who had jumped before, convinced her to just do it.

“My girlfriend jumped a year ago. Am I worse than she is,” Zlata asked. “Besides, the moms on the beach also relied upon me.”

Bungee jumping is relatively new to Estonians – but once the initial anxiety subsided, they were just as willing to taste some adventure as their counterparts in other countries.

The organizers of the event, a Finnish company that usually charges about 500 kroons ($33) per jump, told Zlata while hoisting her into the sky, 50 meters above the ground, that the crane used for jumpers in Finland is three times higher.

But just before Zlata jumped, the Finnish man who helped strap her into her harness, calmed her fears. Even though he had taken the plunge 11 times, he admitted there’s always a tinge of fear just before the jump.

“Just don’t look down,” he told her. “Look at the beautiful sky.”

Zlata appreciated all the support. “A man flying past with a parachute waved to me and that was very kind,” she recalled.

Vladislav, 20, a member of the anti-aircraft defense union, was also brave enough to jump, though he says he doesn’t remember the first moments of descent.

“But I enjoyed hanging on the rubber rope after that and felt as though I’d like to be hanging for longer,” said Vladislav, who made his first jump that day.

He said that he was not very brave either. “I shook the supporters hand and said �Good bye’. But I could not jump. So I repeated the procedure and did it the second time,” said Vladislav.

Almost everyone who summoned the courage to jump was happy to have done it.

“First it felt as if I were going to jump and die. But it did not hurt to jump,” said Zlata. “It just felt as though I was going to drown, with my nose full of water.”

As yet, Estonia has no peramanent place to take the plunge, but considering the enthusiasm shown here, that could change next summer


Promoting computer literacy

The Baltic Times, TALLINN
Sep 02, 1999
By Kairi Kurm

Microlink and Eesti Telefon organized an eight day Tiger Leap road show last week in eight different Estonian cities to introduce computers and Internet to a wide range of people.

The tour was opened with the speech of Estonia’s President Lennart Meri through a video conference on August 22.

The event organizers are satisfied with the tour, which attracted more than 20,000 people. “Last year we had even more visitors, about 25,000, because we visited larger cities,” said Mart Sepp, marketing specialist at Microlink.

“Microlink, as the leader in computer business, is interested in the development of the market, the expansion of Internet and the wider use of computers,” said Sepp. The Tiger Leap tour introduced Internet possibilities from three aspects: work, home and studies.

The tour was started in 1997 as a one-day event, taking place in the Old Town Square in Tallinn when 100 PCs connected to Internet were set up for public use and complemented with a full day of lectures by top IT specialists in Estonia.

On June 9 1999 the Tiger Leap tour won the first prize in Sweden in the international Global Bange-mann Challenge contest in the equal-access-to-networking category .

Major sponsors of the non-profit event were Eesti Uhispank, the United Nations Development Program, Intel and several local and international companies.

All local TV channels, radio stations and newspapers were active media partners, covering the tour and advertising the event.