DEVELOPMENT OF RUSSIAN INWARD REINSURANCE CAPACITY FOR OVERSEAS BUSINESS

Dmitry Garmash

Director, Ph.D. International Business Dept.Unity Re Ltd.

30th March, 2007г.President-Hotel, Moscow

For 2006 г. in Russia:

• Gross premium written in non-life insurance – $22,29 billion

• Gross premium written in inward R/I – $3,05 billion

• Inward R/I / direct insurance – 13,7%

23,1%

20,2%

• Overseas inward R/I share = 6,4% - about $196 million.

• 20-25% annual increase in inward R/I from overseas for last 2 years

160

198185

196

6.4

5.35.9

5.3

0

50

100

150

200

250

2003 2004 2005 2006

Mill

ion

US

$

0

2

4

6

8

10

12

14

16

18

20

(%)

GPW - inwardoverseasreinsurance

Share in overallGPW inwardresinsurance

Basic factors of inward R/I increase for today and for next 1-2 years:

• (re)insurers’ capital raise and enhancement + treaty coverage widening

• domestic market strength & narrowness search for new business sources

• expand of brokers’ geographical scope since 2004

• insurance cycle phaze demand for alternative markets

• stable demand for R/I coverage from emerging markets – Asia, Africa, Central & South America

Direction of inward R/I from overseas (cedants, GPW):

• close markets (CIS, Baltia, CEE)

• markets of stable cooperation (S.-E. Asia, Arabian region)

• markets of growing cooperation (America, Africa)

10%

75%

11%

3%1%

Quantitative aspects of inward R/I from overseas to Russia:

• regional difference in class structure

• basic classes: Property, Energy, Marine hull

• main channels: broker-reinsurer; broker-broker-reinsurer

• support for large global placements (>1 brokers, relatively small participation shares)

• “low-liquidity” risks placement (old brown-water fleets; risky single vessels, dangerous productions, under-market terms&conditions, dangerous territories)

Main market players dealing with R/I from overseas (professional reinsurers, insurers and brokers):

• Ingosstrakh

• Unity Re

• Kapital Re

• Moscow Re

• Moscow IC

• SOGAZ

• Rossiya

• Transsib Re

• Malakut

• Rifams

• Scanmarine

• Benfield

• PWS

• AFM

• Oakeshott

Estimated R/I capacity for overseas business:

Class Foreign business,

Million US$

Foreign business with Russian and former-USSR interest, Million US$

Property 25 400

Energy 15 200

CAR/EAR/MB 20 250

Marine Hull 50 120

Cargo 50 100

Aviation Hull 5 35

Development barriers:

• ratings and relative legislation

• regional borders

• available capacity

• incoming risks quality

• plecement terms & conditions

• global role of broker (documentary, payments, adjusting)

Developments aspects and perspectives:

• rating + financial strength enhancement

• regional brokers channel development

• further market M&A + foreign security for treaties demand for new sources of inward R/I

• region/class market niche stability

• more tight binding to worldwide/regional R/I market trend, environment and factors

• foreign capital in Russia and carefull U/W policy

THANKS FOR YOUR KIND ATTENTION!

For questions please contact:

Dmitry Garmash

Tel.: +7 495 203-5086, доб. 4946

Mob.: +7 926 203-7509

E-mail: re_gardv@reso.ru