Employee Benefits as a means of Attracting

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• Employee Benefits as a means of Attracting
  Retaining Talent
• Insurance related Employee Benefits
• Practices Trends in Central Eastern Europe
• HR Conference
• Bratislava, October 20th , 2005
• MR. NIKOS GOVATSOS
• Regional Sales Manager,
• Employee Benefits Corporate Pensions
• Central and Eastern Europe
• Alico AIG Life
• Email ngovatsos_at_attglobal.net
• Phone [phone] ext. 383

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OUTLINE

• The Environment Trends in Employment in Social
  Security
• Employee Benefits a means for meeting HR and
  Business objectives
• Integral part of total compensation
• Factors affecting EB plan design
• Prevailing Employee Benefit plan designs
• Anticipated evolution in Employee Benefits
• Typical Employee Benefit Plans in CE Europe

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Employment trends in CE Europe

• Still, low average salaries (15-40 of EU) but
  highly skilled labor force
• Accelerating pace of salary increases in the
  developing markets / industries
• Unemployment rate varies within and between
  countries
• Competition exists for highly skilled Executives
  Management executives shortage in certain
  countries / industries / professions
• High potential individuals willing to change
  employers multiple times to advance

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Trends in Social Security Benefits

• Governments limiting public provision of social
  insurance due to budget concerns will be
  exacerbated if countries wish to join Euro Zone
• Ongoing shift of responsibility to employers and
  employees/individuals
• 2nd and 3rd Pillar pension reform in place in
  almost all countries in Central Eastern Europe
• Health care reform started in Slovakia, planned
  in Poland, Czech Rep., Hungary

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Slovak Market Data

• Fast changing economy
• NATO and EU member
• Social Security Highlights
• Average old Age Pension 44 of average
  monthly earnings (1Q/2005)
• Medical - free in and outpatient treatment
  changing (initial fees introduced)
• Multinationals expansion into this new
  economy
• Executive compensation levels being restored

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Responsibility shifting

• The government provides limited benefits to the
  entire population
• Higher income employees have a need for
  additional Coverage
• Increasing costs of healthcare -
  unsustainable existing systems
• Aging Populations - DEMOGRAPHIC TIME BOMB
  set to go off
• Pension and healthcare reforms

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HR challenges in Compensation Benefits

• Attracting retaining talent
• Linking rewards strategy with business strategy
• Communicating the value of compensation and
  primarily that of Rewards Benefits
• Setting Compensation and Benefits costs that are
  sustainable over time

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Employee Benefits

• Include health, life accident insurance,
  retirement, wellness benefits
• Account for an increasing part of the total
  compensation package
• Point toward their perceived value for the
  employees
• Contribute to employees engagement with employer
• Link to business results

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Macro-level factors in designing Employee
Benefit Plans

• Recruitment and retention needs are key
• Employee surveys
• Best practices / Benchmarking studies
• Corporate guidelines for Multinationals
• Local regulations and existing social benefits
• Historical and cultural role of insurance and
  benefits
• Corporate Personal Income Tax treatment

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Micro-level factors in designing Employee
Benefit plans

• Plan design completeness
• Structure in core additional benefits
• Addition benefits options for Members
• Type of Plan
• Actual Group Plan or sum of Individual Plans
• Sponsored - co-sponsored - voluntary
• Administration Plan Supporting services
• Communication capabilities to the Employees
• Accounts Benefits Administration System
• Consulting Services
• Financial Terms
• Cost containment parameters
• Fees Expenses

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Insured Employee Benefits in Czech Rep Slovak
Rep.

• For Managers Professionals within
  Multinationals
• Group life insurance 12 to 36 monthly salaries
  average 24 months
• Disability benefit 100 of life benefit if
  totally disabled, in installments
• Accident benefits equal to Life Insurance
• Hospital/surgical indemnity
• Private out of hospital check-up package is
  increasing
• Supplementary Savings provision is increasing

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Insured Employee benefitsin Czech Rep.

• For staff within multinationals, local companies
  in selective industries
• Co-sponsored savings plans
• Accidental Death and/or Group Life insurance
  linked to the saving plans and stand alone
• Disability benefit equal to the stand-alone
  accident/life benefit
• Hospital/surgical indemnity
• On site, basic medical exams

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Insured Employee benefitsin Slovak Rep.

• For staff within multinationals,
• local companies in selective industries
• On site, basic medical exams
• Accidental Death and/or Group Life insurance in
  flat amounts, occasionally linked to the earnings
  
• Disability benefit equal to the stand-alone
  accident/life benefit
• Hospital/surgical indemnity

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Anticipated changes in Employee Benefits

• Core Employee benefit plans becoming more
  consistent across Central Eastern Europe
• Availability demand for core Insurance Benefits
  will increase primarily in Czech Rep.
• Increasing number of individual savings and
  insurance products will be offered at the
  workplace (e.g. Worksite Marketing)
• Ongoing health care reform in Slovakia creates a
  private medical market

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Typical Employee Benefits by Industry in CE
Europe
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APPENDICES
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Insurance Carrier Valuation

• Fundamental Criteria
• Financial Stability Strength
• Financial Rating
• Benefits over premium ratio
• Expenses Ratio
• Know-how
• Clientele
• Long presence in the market market share
• International presence know-how transfer
• Number of insured, Assets, Benefits
• Investment Performance
• Administration Cost
• Fees in line with Service level
• Flexibility in terms of size

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Important Factors Employers Use to Decide between
Insurance Carriers

• Carriers effectiveness in paying claims
• Cost / value for money
• Ability to provide an effective/accurate billing
  system
• Carriers service reputation
• Ease of plan installation communication to
  employees
• Carriers financial rating
• Plan Design Simplicity comprehensiveness
• Local Service / local office
• Carrier name recognition

LIMPRA (U.S.A) Survey
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Central Eastern Europe
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In-force Multinational Clients
(Not comprehensive)

• Read Rite
• RJR Nabisco
• Rockwell International
• Salomon Smith Barney
• SC International Services
• Schindler
• Schlumberger
• SGS
• Shell Petroleum
• Siebe
• Siemens
• Standard Chartered Bank
• Tektronix
• Tenneco
• Texaco
• Time Warner Inc.
• Timex
• TPG
• Total

3M Abbott Laboratories ABN Amro AC
Nielsen Advance Micro Devices American
Airlines American Express American Home
Products American Merchandising Asea Brown Boveri
(ABB) ATT Aventis Bechtel BNP BOC Boston
Consulting Group Bristol-Myers Squibb British
American Tobacco British Petroleum Caltex Cargill
Caterpillar CBI Industries Chase Manhattan Bank
Chevron Ciba Specialty Chemicals CIBA
Vision Cisco Systems Citibank Coca-Cola Colgate
Palmolive Computer Associates Continental
Airlines CSX World Terminals Delta Airlines DHL
International Dun Bradstreet Dupont Eastman
Chemical Eastman Kodak Exide Exxon Eaton
Corp ETrade Federal Express General des
Eaux/CGEA General Electric Goodyear Grundfos
Halliburton
Hilton International Hyatt International Ikea Inc
hcape Infineum ING Barings Johnson
Johnson Kongsberg Lanier Liz Claiborne LOreal Luc
ent Technologies LVMH Marriott Mattel McDonalds
Corp. Meritor Merck Co. Inc. Merrill
Lynch Microsoft Millipore Motorola NCR Novartis Or
acle Pfizer Philip Morris / Kraft Procter
Gamble
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Selective Corporate Clients of AMSLICO AIG Life
(as of July, 2005)

• Calyon Bank Slovakia IBM Slovakia
  Ernst Young
• Whirlpool
  Philip Morris Pepsi-Cola
• JohnsonJohnson Minolta Slovakia
  Philips Slovakia
• Johnson Controls Procter
  Gamble Beiersdorf
• Citibank Merck Sharp Dohme
  Eli Lilly
• DHL
  Bristol Myers Squibb Conoco
• Danzas Tetra
  Pak Telenor Telecom
• Roche Slovensko Provident
  Financial Matsushita
• Panasonic Slovakia Abbott Laboratories
  Palma-Tumys

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Added value of EB Insurance program

• Important element of the social program
• Financial security of employees and their
  families in case of unexpected life events
• Group insurance can be used as a collateral
  (loans, mortgages)
• Strong motivational factor - tool to attract,
  retain reward employees
• Stabilization of efficient working teams and
  effectiveness of work
• Boosting the competitiveness of companies

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Working together for you
Thank you