Development process in Baltic countries

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Development process in Baltic countries
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Agenda

• Baltic countries, overview
• If as a company
• If, PC insurance company presence in Baltic
  markets
• Development process in Baltic
• History
• Present
• Future
• Experiences

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Baltic countries, economical development now
Source Eurostat, mainly Q2/2007, tages on
year-to-year bases
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Baltic countries, economical development, labour
costs
Finland
Sweden
Baltic countries
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Maybe best known IT product development done in
Baltics so far is Skype
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Today If is the leading Nordic PC insurer -
full service offering, strong European presence
Geographical presence in Europe
Brief facts about If 2006

• Gross written premiums SEK 37bn
• SP rating A Moody's rating A2
• 6 600 employees
• Customers
• - Private 3 million
• - Corporate 300 000
• - Baltic region 300 000

Business segments and share of GWP ()
PrivateCommercialIndustrialBaltic countries
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If is part of Sampo, leading Nordic financial
services group, listed Helsinki stock exchange
Sampo plc Björn Wahlroos, CEO
PC Insurance Torbjörn Magnusson, CEO
Life insurance
In July 2007 Sampo's market cap amounted to
approximately Euro 12,2 billion
Based on closing price on July 2nd 2007
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If premium growth
H1 2007 vs. H1 2006
If Group
Private
Commercial
Industrial
Baltics Russia
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If in Europe
If personnel in main market areas Finland
1869 Sweden 1821 Norway 1656 Denmark
400 Estonia 392 Lithuania 193 Latvia
146 Russia 30
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If in Baltic PC Insurance Market

• ESTONIA
• Representative office in 1992
• Licence for a PC company AS Sampo Kindlustus in
  1995
• Acquisition of the biggest PC insurer AS Eesti
  Kindlustus
• in 1999
• Acquisition of the portfolio of the PC
  insurance company
• AS PolarisVara
• Starting from 1999 AS Sampo Eesti Varakindlustus
  has been
• the biggest PC insurance company in Estonia
  with the
• market share of appr.36
• Adapting new name AS If Eesti Kindlustus in 2002

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If in Baltic PC Insurance Market

• LATVIA
• Establishment of a PC company AAS Sampo Latvija
  
• in 1998
• Operations started with service provided to the
• own group clients as well as to the local
  industrial clients
• Entrance to the SME in 2000 and private segment
  in 2001
• Concentration mainly on MA possibilities in
  2000
• Building up own nation wide sales network
• starting in 2001
• Changing the company name to AAS If Latvia in
  2002

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If in Baltic PC Insurance Market

• LITHUANIA
• Operations started with seeking MA targets in
  1999
• Establishment of a PC insurance company
• UAB Sampo Lietuva in Dec 1999
• Brach offices to five major cities in 2000
• Concentration on industrial and commercial
  clients
• Entrance to private segment in 2001
• Branch network in 12 biggest cities
• Changing the company name to UAB If draudimas in
  2002

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If in Baltic PC Insurance Market
AS If Eesti Kindlustus 2007 6m
2006 Market Share 34,6
36,1Market Position 1
1Number of 210
000 200 000Customers
AAS If Latvia 2007 6m
2006Market Share 9,2
8,8 Market Position 4
5Number of 36 000
29 000Customers
UAB If Draudimas 2007 6m
2006 Market Share 9,7
9,8 Market Position 5
4Number of 62 300
66 700Customers
Source Insurance supervision authorities of
Baltic countries
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Development process in Baltic / past

• Nothing to inherit when it comes to systems only
  souls/people no main frames
• Only one common language poor English
• Manual processes pen paper
• State owned almost everything
• Change started in the beginning of 1990
• To look alternative solution cost was key driver
  ? inhouse development dominated
• Open source products were chosen
• Very human/key resource dependant

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Development process in Baltic / past

• NB! Hansabank is todays biggest IT company
• in Baltic (inhouse development)
• Next flow came in early 2000
• Middle range sw companies were established
• Booming market
• Young, educated and ambitious drivers vs leakage
  
• of brain to abroad
• Average price/hour was 10-15

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Development process in Baltic / today

• IT investment are playing significant role in
  many companies
• Insource vs outsource question is almost on
  every serious companies agenda
• Salary inflation round 20 yearly
• Key persons problem small countries, emigration
• Transparency is a challenge
• Baltic supplier are using already sub-contractors
  from e.g. Russia, Ukraine

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Development process in Baltic / today

• Microsoft in SME, Unix in small companies and
  Oracle in Telecommunication Banking
• Added value issues i.e. automated testing,
  monitoring are still quite exclusive compared to
  human expenses
• SW companies average hour rates are app. 50
• Banks Telecom companies with their money are
  main drivers when it comes sw development
• SW houses are serving full menu first signal of
  specialization

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Development process in Baltic / future

• Prices are going up (50 from 2001 to 2007) and
  it is predictable to reach 100 level in
  2010-2011!
• Lack of competent resources in Baltic (they know
  they are good and irreplaceable)
• Monthly salary is reaching Nordic (today top
  specialist and manager are almost on the same
  level)
• Specialization will continue
• Outsourcing of non core operation
• Post Soviet countries are playing significant
  role in resource pool
• From country level to Baltic and to Europe

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• Comments Questions?

• Relax, we'll help you.

Kimi Salokangas Head of Baltic Russia
IT kimi.salokangas_at_if.fi Janis Kesteris Head of
Baltic Russia IT Development janis.kesteris_at_if.l
v