Life Insurance in CEE

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Life Insurance in CEE
Recent Experience and Future TrendsBogomil
MarnSwiss Re
Life Insurance in CEE 27.11.2006
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Agenda

• Macroeconomic Situation
• Premium Volume
• Growth
• Portfolio Mix
• Major Players
• Perspective

Life Insurance in CEE 27.11.2006
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Only1 of the European Life Insurance is written
in CEE
EUR bn
Share of CEE in EuropeGDP 11NL 7L
1 2005 Figures Russia Life Insurance without
salary scheme business Source Economic Research
Consulting
Life Insurance in CEE 27.11.2006
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90 of the regional Life Premium Income is
generated in Central Europe
GDP 2005 EUR 1414 bn
Life Insurance Premium 2005 EUR 8.6 bn
Life Insurance in CEE 27.11.2006
Russia without salary scheme business Sources
WIIW, Insurance Regulator, Insurance Association,
Swiss Re Economic Research Consulting
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Less than 2 of Gross Domestic Product is spent
for Life Insurance

Life Insurance Premium/GDP (2005)
Russia Without short term salary scheme
business
Life Insurance in CEE 27.11.2006
Sources Insurance Regulator, Insurance
Association, Swiss Re Economic Research
Consulting
6
Central Europe with two digit Growth Rate
Index 1990 100
2005 1163
18

5
-18
CAGR 1991-2005
Sources Insurance Regulator, Insurance
Association, Swiss Re Economic Research
Consulting
7
Highest Growth Rates in Russia
Index 1995 100

17
14
9
CAGR 1996-2005
Life Insurance in CEE 27.11.2006
Sources Insurance Regulator, Insurance
Association, Swiss Re Economic Research
Consulting
8
Savings Investment Business dominate,
2005 Data Hungary 2004 Data
Life Insurance in CEE 27.11.2006
Sources Insurance Regulator, Insurance
Association, Swiss Re Economic Research
Consulting
9
the Share of Risk is accordingly low
EUR bn
2005 Data
Russia Without short term salary scheme
business
Life Insurance in CEE 27.11.2006
Source Swiss Re Economic Research Consulting
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Foreign Insurers dominate the Life Insurance
Business
Market share of Life Insurer with foreign
contribution of capital of 50 or higher (2004)
Life Insurance in CEE 27.11.2006
Sources Insurance Regulator, Insurance
Association, Swiss Re Economic Research
Consulting
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Top 5 Life Insurers 2005
Slovakia
Poland
Hungary
Czech Republic
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Premiums Written and Number of Insurers
PremiumsEURm
PremiumsEURm
Poland
Czech Republic
PremiumsEURm
PremiumsEURm
Hungary
Slovakia
Life Insurance in CEE 27.11.2006
Life insurance premiums
Number of insurers (rhs)
Sources Supervisory Authorities, Insurance
Associations, Swiss Re Economic Research
Consulting
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Where does the Life Insurance in CEE steer to?
Life Insurance in CEE 27.11.2006
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Robust Growth Expectations Relatively Low Volumes
CAGR 2006-2009
Life Insurance in CEE 27.11.2006
Source Swiss Re Economic Research Consulting
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What are the Challenges for the Life Insurers in
the next years?
Life Insurance in CEE 27.11.2006
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Interest Rates converge towards the EU-Level
Interest Rate of the 5-years government loan (tap)
Life Insurance in CEE 27.11.2006
Source Bloomberg, Swiss Re Economic Research
Consulting
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Protection Gap

• In most CEE countries less than 10 of regular
  income is protected by social security
• Social security benefits are not likely to
  improve
• Very small portion of this protection gap is
  covered by life insurance industry
• Huge room for risk benefits
• Who will have the courage to enter this business
  on strategic level?

Life Insurance in CEE 27.11.2006
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Protection Gap - Huge Room for Risk Benefits

• Two practical examples on the basis of young
  upper middle class family, breadwinner 35 years,
  2 kids
• Russia Annual net income 40.000
  annual widow /orphan annuity 4.000
  annual disability pension 800
• Poland Annual net income 40.000
  annual widow annuity 4.000
  annual disability pension
  600

Life Insurance in CEE 27.11.2006
Source Social Security
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Questions?

Thank you for your attention