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“Russian Insurance Market Future” Forum

rechter Rand right margin marge droite margine destra. “Russian Insurance Market Future” Forum. Lutz Bauer CEO Emerging Markets, EGI. Russian Market holds good potential, but current Insurance Business Practices need improvement. MACRO ATTRACTIVENESS. MACRO CONSTRAINTS. Short term

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“Russian Insurance Market Future” Forum

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  1. rechter Rand right margin marge droite margine destra “Russian Insurance Market Future” Forum Lutz Bauer CEO Emerging Markets, EGI

  2. Russian Market holds good potential, but current Insurance Business Practices need improvement MACRO ATTRACTIVENESS MACRO CONSTRAINTS • Short term • Steep downturn particularly vis-à-vis other BRICs • Stimulus plan not always reaching where needed • Mid Term • Institutional reforms necessary • Administrative burdens, rigorous execution of anti-corruption law is key • Reliance of the economy on huge enterprises and commodities and lack of strong SME base • Short Term • Government with solid majority allows policymaking and stability • Access to technology will support open-market policy • Mid Term • Russia is expected to become the largest retail market in Europe • Positive economic growth and rising middle class • Decent terms of investment for foreign insurance companies INSURANCE OPPORTUNITIES INSURANCE THREATS • Short Term • Market consolidation • “Flight to Quality” • Mid Term • Underpenetration, new products • Direct and alternative distribution channels • Increased professionalization e.g. certification of agents, increased efficiency • Short Term • Cash flow underwriting, irrational pricing • No central customer claims recording • Increased incidence of fraud • Mid Term • Osago regulation leads to need for cross subsidies • Regulatory and legal changes Note: Short term assumed next 1-2 years, mid term next 3-5 years

  3. Int’l Insurance Companies in Russia - today it is about the Short-term, Mid-term, and Long-term PRE-CRISIS PRESENT Priorities: Growth and Profitability Priorities: Profitability and Growth Quality and consistency of int’l brand as key selling points Values and strength of a global insurance brand even more desirable to customers Insurance asset pricing based on extrapolations of permanent market growth The “right price” is elusive Russia competes vs other markets for resources and investment Russia as a hot growth market

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