Peter Williamson Director, Insurance Strategy Oracle Asia Pacific

1. What is required to run an efficient operation? Peter Williamson Director, Insurance Strategy Oracle Asia Pacific

2. Global Key Strategic Initiatives for Insurers Grow Business& Increase Profitability Provide infrastructure to Control Costs Comply with Regulations & lower risk Optimize & Manage DistributionChannels

3. Market Drivers in Vietnam Changes in operational ‘best practice’ • Foreign companies in importing international business practices into the market, changing the way domestic insurers operate • Regulation driving governance and compliance changes to operational practices based on international best practice High Growth • High growth (projected at 15%) will continue to attract investment • Low insurance penetration of 1% makes the life insurance market attractive for investment • Planned market liberalization in the Insurance and Banking sectors forcing Insurers to look beyond the current environment Pressure on existing distribution channels • Dependence of the part-time tied agency structure restricting distribution of products and services • Alternative distribution channels such as Bancassurance and call center sales set to grow in importance

4. Insurance Industry Imperatives Distribution Management Profitable Business Corporate Governance Operational Support • Gain channelvisibility into process & financials • Streamline new business acquisition • Manage distribution data and channel quality • Efficiently and accurately manage insurance core • Implement enterprise business processes rapidly • Gain real-time insight into in-process business • Centralize compliance data for local regulatory requirements and prepare for international standards • Implement standardized, audited process and financials across the enterprise • Reduce overall enterprise cost structure • Reduce the cost and implementation time of new products and services Effectively manage the distribution process with total data transparency Manage end-to-end core business processes with real-time insight Implement process & financial controls to reduce compliance risk Streamline the enterprise to reduce cost and increase flexibility Strategic Initiatives Key Requirements

5. Corporate Governance and a Profitable Business – What’s required? Experience suggests it is important to focus on the fundamentals in emerging markets • Financial management reporting consistent with international best practice • Local and foreign GAAP • Group reporting (Insurance, Asset Management, Overseas Operations) • Preparedness for enhanced governance – Solvency II (2010), IFRS .. • Effective management information and intelligence • Integrated across all operational business units for complete company view (Tax, Assets, Operations, Investments, HR …) • On demand for operational daily decision making • Transparency and Accountability • Internationally and locally accepted reporting standards • Systemic (and systematic) controls

6. What is required of a Financial Management infrastructure Capital & Risk Management Planning & Analysis Finance Operations Financial Control & Reporting Procure-to-Pay Travel & Expense Performance Management Business Intelligence Risk & Compliance Asset Management Operational Excellence Greater Business Insight Compliance at Every Level Applications for the High-Performance Insurer Asset Management Analytics Procure to Pay Financial Control & Reporting • Automated financial processing • Account for multiple, heterogeneous source systems • Enhance internal controls and auditability • Align Operations with Corporate Strategy • Manage Risk Proactively • Collaborate Across the Enterprise • Reduce Spend on Goods and Services • Streamline Procurement Processes • Enforce Policy Compliance • Improve asset visibility, tracking, and control • Streamline and automate asset operations • Optimize asset portfolio management

7. What is required of a Financial Management infrastructure • Separation of Financial Ledger and Management Ledger to facilitate efficient closing • Accounting Hub to tie financial and operational events together • Finance specific datawarehouse • Robust allocation engine • Management dashboards Definition of the Chart of Accounts the most fundamental task

8. Allocation Engine for Profitability Analysis • Should support multiple methodologies • Proportional Costing • Activity Based Costing • Risk Based Capital Allocations • Profitability measured based on any dimension • Customer, Product, Geography, Organization, Time... • High Performance • Dual Accounting Entry / Audit Trail Oracle Proprietary and Confidential

9. Clear and unambiguous financial information to all stakeholders Executive Dashboard Customer Profitability Product Revenue Create role based dashboards to drive insight from robust detail account level data containing statistical information, revenue, expense and derived profitability calculations Account Details & Actionable insight Production Reports Transactions KPI Trends Extend the wealth of back office information to executives, managers, and front line employees

10. Distribution – A challenging environment Agency force New agents 2005    Total agents 2005 Total agents 2004 Change from 2004 Approx. turnover rate Prudential 26,730 37,837 36,687 3.1% 67.6% Bao Viet 140 25,461 26,503 -3.9% 4.6% Manulife 3,863 3,722 5,070 -26.6% 140.0% AIA 24,424 18,090 19,861 -8.9% 144.8% Bao Minh CMG 7,176 6,176 7,630 -19.1% 139.7% Ace Life 651 583 0 - 11.7% Total 62,984 91,869 95,751 -4.1% 72.8% Sources: Annual Report 2005, Association of Vietnamese Insurers Compiled by Watson Wyatt Probably the biggest challenge is the high turnover in the tied agency system

11. Distribution – A challenging environment Probably the biggest challenge is the high turnover in the tied agency system • Industry average turnover of nearly 73% • Nett decrease in total agency size down by 4,000 in 2005 • Resulting in orphaned policy holders, poor customer service and high lapse rates • Credibility of the industry amongst the ‘early adopter’ policy holders jeopardized

12. Distribution – What’s required? Focus on sales management support for both agency and alternative channels • Retain good agents (profitable) by identifying them, and helping them meet their personal production targets • Professionally manage partner channels, especially bancassurance channels to plan and meet targets • Integrate call center service to assist orphaned policyholders to conserve in-force business • Use technology to proliferate sales best practice and core competencies into the agency force

13. What is required of a Distribution Management infrastructure Oracle Insurance Front-Office Incentive CompensationMarketing Analytics Comprehensive Distribution Insight and Management Analytics IntelligentMarketing IncentiveCompensation Sales/PartnerAutomation • Sales Process Mgmt • Rapid Product Rollout • Sales/Partner Credentials • Book of Business • Customer Segmentation • Program Management • Channel Marketing • Results Tracking • Commission & Bonus • Pay all Channels • Non-Cash Incentives • Channel & Product Support • Financial Integration • Customer Knowledge • Channel Profitability • Product Profitability • Market Insight • Insurance Dashboards

14. Distribution Management is closely linked to the Finance function Analytics Real TimeProducerDashboards ChannelSuccessMetrics StrategicChannelAnalysis Channel Relationship Management Demographics&Credentialing ContractsFinancingHierarchy Book of BusinessLead Management Incentive Compensation Management Modeling Quota/Territory Plan Design AdministrativeEngine ReportingDispute Resolution New BusinessSystem (1) ProducerPortal CallCenter PolicyAdministration (1) FinancialReporting PolicyAdministration (2) HR(Captives) PolicyAdministration (3) Ledger ClaimsManagement AP/AR Channel behaviour is a rich source of information relevant to financial management, including fraud, solvency, risk management

16. Operations – Challenges ahead Manual processes and lack of automation hindering ability to manage costs and create business intelligence • Average premiums may actually decrease as Insurers look to expand outside of the three major centers to grow market share • Per unit cost of processing (either claims or underwriting) difficult to manage down – more likely to increase, especially for the smaller players • Volume of errors, omissions, opportunities to defraud likely to increase • Data quality seriously at risk, making management ‘information’ difficult to trust

17. Operations – What’s required? Automation and control • Concerted effort to automate as many business processes as possible • Integrate financial and operational systems as early as possible • Enforce data quality as a deliberate business policy • Build a single IT infrastructure that supports complete customer centric case management

18. Operations – What’s required of an Operations Infrastructure Case Management Oracle Content ServicesFinancial Services Accounting HubFinancials & Performance Management Web Services Relationship Driven, Integrated Case Management Back Office Content Management Financial Hub CaseManagement • Reserve Management • Detail Transaction Data • Support Claims/NBZ Systems • Multiple Ledger Support • First Notice of Loss • Process Management • Fraud Detection • Partner Integration • Claims Resolution • Underwriting Reports • Store/Manage Docs • Account Level Retrieval • Enterprise CM Strategy • Compliance Support • Policy Administration • Claims Reserve Accting • Financial Reporting • Claims Performance • Payment & Fulfillment • Anti-Money Laundering

20. Key Strategic Initiatives for Insurers in Vietnam Grow Business& Increase Profitability Provide infrastructure to Control Costs Comply with Regulations & lower risk Optimize & Manage DistributionChannels

21. Q & A