CEE, CIS and SEE

insurance markets

in 2011

XPRIMM Insurance Report FY2011

• 32 countries: CEE, SEE, CIS• Full length statistics in EUR and national currency

on www.xprimm.com

Macroeconomic view

• CEE - 5.3% GDP growth in 2011 according IMF• Diverging results across the region:

• Turkey and Baltics : >5% - 7%• Bulgaria, Hungary, Czech Rep. : 1.5 – 2%• Croatia – flat

• Common characteristics in most countries:• Economic slowdown in Q4• Reasonable inflation rates• Rather high unemployment rates• Weak purchasing power of the population• Low crediting activity

Macroeconomic view

• CIS - 4.5% GDP growth in 2011 according Eurasian Development Bank (except Georgia).

• Diverging results across the region:• Turkmenistan : 9.3%• Russia, Ukraine, Moldova and Azerbaijan : 4 – 4.5%

• Common characteristics in most countries:• Raising inflation rates• High unemployment rates• Weak purchasing power of the population

• Turkey - 7.6% GDP growth in 2011• Greece - 4.5% GDP fall in 2011

CEE insurance market

Romania

Estonia

Hungary

Croatia

Bulgaria

Czech Republic

Slove

niaSe

rbia

Albania

Bosnia & Herze

govin

a

Slovak

ia

Macedonia (

FYROM)

MontenegroPolan

d

Lithuan

iaLat

via

-10.00

-5.00

-

5.00

10.00

15.00

20.00

GWP and GDP y-o-y growth rates in 2011, %

GWP growth rate GDP growth rate

HU 12% HUF

-13.3% GWP nominal change in EUR

PL12% PLN -5.4% GWP

nominal change in EUR

GWP evolution depends on the GDP growth model

CEE Consolidated indicators

• GWP: EUR 31.97 billion <-> -4% nominal change• Weighted growth rate (local currencies): +2.11%

• Paid claims: EUR 18.6 billion (Slovakia excepted)• Insurance density: EUR 253/capita (~4% down)

Slove

nia

Czech Republic

Slovak

ia

Poland

Estonia

Croatia

Hungary

Latvia

Lithuan

ia

Bulgaria

Montenegro

Romania

Serbia

Bosnia & Herze

govin

a

Macedonia (

FYROM)

Kosovo Te

rritory

Albania

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00 Insurance density 2011 (EUR/capita)

CEE AVERAGEEUR 253/capita

CEE Market shares

• Almost unchanged market shares

Romania6%

Croatia4%

Bulgaria3%

Serbia2%

Lithuania2%

Estonia1%

Latvia, Bosnia and

Herzegovina, Macedonia (FY-ROM), Kosovo,

Montenegro and Albania

3%Poland

40%

Czech Republic19%

Hungary8%

Slovakia7%

Slovenia7%

1. Poland 41.06 40.472. Czech Rep. 3. Hungary 9.08 8.204. Slovakia 6.056.605. Slovenia 6.29 6.546. Romania 5.92 5.74

CEE Market portfolio

• Life insurance: 45.6%• Non-life insurance : 54.5%

Unit-linked; 18.4%

Other life ins.; 27.2%

Motor hull; 11.9%

MTPL; 16.9%

Property; 12.0%

GTPL; 3.6%

Other non-life ins.; 10.0%

Macedonia (FYROM)

Latvia

Albania

Montenegro

Bulgaria

Bosnia and Herzegovina

Serbia

Romania

Croatia

Slovenia

Lithuania

Estonia

Czech Republic

Slovakia

Hungary

0% 20% 40% 60% 80% 100%

Life insurance Non-life insurance

CEE Life insurance• 45.6% of CEE portfolio (-1pp y-o-y)• GWP: EUR 14.58 billion -> 6% y-o-y decrease

• Best dynamic: Albania (25%), Macedonia (40%)• Worst dynamic: Latvia (-24%), Estonia (-13.8%) and Hungary

(-11%)• Insurance lines:

• Traditional life insurance – negative trend• Unit-Linked – positive evolution in most countries (+1.6pp

weight in CEE portfolio; +4.3pp weight in life insurance GWP)• Perspectives: almost no chances for reinstating or

adopting fiscal incentives

CEE Life insurance

Poland

Czech Rep

ublic

Hungary

Slova

kia

Slove

nia

Romania

Croati

a

Lithuan

ia

Estonia

Bulgaria

Serbia

Bosnia an

d Herzeg

ovina

Latvia

Montenegr

o

Macedonia (

FYROM)

Albania

-30.00

-20.00

-10.00

-

10.00

20.00

30.00

40.00

50.00

PL CZ HU SK SL RO HR LT EE BG LV

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

UL weight in life insurance UL change

+73%

Life insurance dynamic 2011

UL insurance weight in life segment and dynamic 2011

+102%+92%

+56%

+2%Paid claims growth rate

CEE Property insurance

• 12% of CEE portfolio (< +1pp y-o-y)• GWP: EUR 3.83 billion -> 2.6% y-o-y increase• Paid claims: EUR 1.6 billion -> -28% y-o-y decrease

• Latvia and Lithuania - the only CEE countries recording much higher property claims than in 2010

Albania

Bosnia & Herze

govin

a

Bulgaria

Croatia

Czech Republic

Estonia

Hungary

Latvia

Macedonia (

FYROM)

Montenegro

Poland

Romania

Serbia

Slove

nia0%

10%20%30%40%50%60%70%80%90%

100%

Damages to property Fire and allied perils

Weight of “fire and allied perils in line” in property segment

CEE Motor insurance

• 29% of CEE portfolio (< -1pp y-o-y)• GWP: EUR 9.2 billion -> 5.77% y-o-y decrease• Paid claims: EUR 5.5 billion -> ~8% y-o-y decrease• Trends:

• Price war – “to the limit of economic acceptability”• Increasing bodily claims• Insurance fraud • high acquisitions costs

CEE Motor insurance

Poland

Czech Rep

ublic

Romania

Slova

kia

Slove

nia

Hungary

Croati

a

Bulgaria

Serbia

Lithuan

ia

Bosnia a

nd Herzeg

ovina

Estonia

Latvia

Macedonia (

FYROM)

Montenegr

o

Albania

-

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

3,500.00

MTPL

Motor Hull

Motor Hull: Lithuania , Latvia, Albania and Bosnia – positive dynamicMTPL: 10 out of 17 countries, positive dynamic; Hungary, Romania, Albania and Czech Rep. – double digit negative dynamic

CIS Consolidated indicators

• GWP: EUR 33.67 billion -> 17.5% nominal change• Paid claims: ~EUR 22.5 billion -> 11.8% increase• Insurance density: EUR 122/capita (~17% up)

CIS AVERAGEEUR 122/capita

Armenia

Azerbaijan

Belarus

Georgia

Kazakh

stan

Kyrgyzs

tan

MoldovaRussi

a

Tajikis

tan (e

)

Turkm

enistan

Ukraine

Uzbekistan

0.00

50.00

100.00

150.00

200.00

250.00

CIS Market shares

• Russia: > 90% share; EUR 30.4 billion GWP• Ukraine: 4.03% share; EUR 1.4 billion GWP• Kazakhstan: 3.07% share; EUR 1.03 billion GWP

0.65 3.07

4.13

90.34Kyrgyzstan Tajikistan Armenia Turkmenistan Moldova Uzbekistan Georgia AzerbaijanBelarus Kazakhstan Ukraine Russia

CIS Specificities

• Extreme diversity hardly comparable markets• Complexity• Portfolio• Legislation• Ease of access for foreign undertakers• Affordability• Etc.

SEE: Turkey, Greece, Cyprus• Different development stages of the insurance market• Very different dimensions• Currently, very different economic trends• Turkey:

• GWP: EUR 6.9 billion – 1.9% y-o-y increase• Life insurance – cvasi underdeveloped (15.6% weight in portfolio)• Motor insurance – almost 40% weight in portfolio• Property insurance – 22% weight in portfolio

» 3.72 million mandatory policies sold by TCIP in 2011» Less than 23% coverage of 16 million housing units

• a hot spot on the acquisitions map

A changing landscape• PZU - preparing geographical expansion – first step, the Baltics• TRIGLAV and SAVA Re - interested to enter new markets or

strengthen their presence in the current ones• Vienna Insurance Group - new acquisitions in Poland and

Bosnia & Herzegovina and also intends further acquisitions in Hungary and Moldova,

• different insurers and banks are targeting the Russian market• big Russian players (ROSGOSSTRAKH) - expanding in the

neighboring countries• important legislative adjustments in the young markets• Solvency II regime – important challenge for the EU members

We wish you successful business in FIAR !

daniela.ghetu@mxp.rovlad.boldijar@mxp.ro