RUSSIAN REINSURANCE MARKET DEVELOPMENT

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RUSSIAN REINSURANCEMARKET DEVELOPMENT
Dmitry GARMASHDeputy CEOUnity Re Ltd.
FIAR, Sinaia, 2012
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Market dynamics (FSIS), billion RUR

• 2011
• Non-life insurance GPW 23 bln USD.
• Non-life paid claims 10,6 bln USD
• Inward reinsurance GPW 1,2 bln USD
• Inward reinsurance paid claims 0,4 bln USD

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Inward reinsurance
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Inward reinsurance market, 2011

• Inward R/I 2010 1,2 bln 1st year of
  stabilization.
• Classic risk business share about 50, i.e.
  roughly 0,6 bln
• Specialist reinsurers up to 20-25 of total
  inward R/I GWP
• Total number of reinsurance players in 2011?.
  133 (2010 152 2009 176 2008 - 196)
• Total number of specialist reinsurers - 18 (2010
  23 2009 25)
• Oligopolistic structure quality!
• Outward reinsurance stability since 2010 3
  bln USD

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Factors of trending

• Stability of genuine risky reinsurance volume
  absolute amount of claims paid.
• Dumping and overall rates softening
• Rise of retentions reinsurance protections

VS

• Market consolidation ? better quality of services
• R/I business from overseas seeking alternative
  capacities
• Adaptation and correction of actual strategies
• Shifting retentions and capacities of R/I players

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Market players
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Market players Top-15 reinsurers
Rank Company GWP, 000 RUR
1 Ingosstrakh 3 301 962
2 Sogaz 2 712 672
3 Unity Re 1 281 649
4 Kapital insurance 1 229 881
5 Moscow Re 1 196 494
6 Allianz 958 706
7 VTB Insurance 914 943
8 Kapital Re 790 004
9 Soglasie 778 666
10 Transsib Re 739 997
11 Rosgosstrakh 685 730
12 SCOR Perestrakhovanie 601 657
13 Alfastrakhovanie 583 386
14 Russian Re 541 818
15 Military IC 496 373
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Business from overseas
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Business from overseas
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Grounds for growth

• Strengthening financial and technical
  capabilities of the players!
• Rise of capacities, retentions and retro-programs
• Difference in leaders of retro- and reinsurance
  programs
• Globalization and active development of emerging
  markets ? demand for alternative capacity
• Further spread of brokers activities
  geographically
• Historically active cooperation with CIS
• No binding to world (re)insurance cycle

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UNITY RE
A RUSSIAN REINSURANCE LEADER 2011
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Milestones

• In 2004, renamed into Reso Re and started its
  active development within the reinsurance market
  of Russia and CIS.
• In 2006, rebranded to Unity Re and also
  restructured to obtain more high-qualified and
  experienced team to promote further as the
  specialist reinsurance center of Group RESO and
  strategically the leading reinsurer within FSU.
• In 2007, started operations in overseas markets,
  writing property, construction and marine
  business from South America, MENA and SEA
  regions.
• In 2007, was granted with the international
  financial strength rating of BB- from Standard
  Poors. It is maintained until nowdays with the
  enhancement of the rating outlook from stable to
  positive.
• In 2010, Unity Re finally conquered the top
  position in the market, ranked the first among
  the specialist reinsurers in Russia (over 1 bln
  RUR of GPW)
• In 2011, A.M.Best assigned a secure B rating,
  outlook stable, to Unity Re.

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Vision mission
Vision
Developing to maintain the position of the regional reinsurance market leader with Russia and FSU, providing the widest available scope of the first class reinsurance cover and confident linked services from a position of the absolute leading, financially stable, fast and attentive national reinsurer, and gradually promoting overseas as the reasonable medium-size capacity market player highly committed as a supporting reinsurer for the traditional lines of business.
Mission
To provide a very fast response to cedants demands for a wide range of non-life reinsurance lines of business with the first class growing capacity and additional services to support the clients with underwriting expertise, confident and prompt claims settlement and relevant advisory to rely upon a stable, integral and solid team of professionals fully committed to companys performance and clients needs to promote the status of a leading Russian/FSU specialist reinsurer well known worldwide.
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Highlights competences
Market Leading Company Leading specialist Ranked 1st by reinsurance GPW among specialist reinsurers in Russia CIS in 2010 and 2011
Market Leading Company Established team Highly regarded solid management team, stable since 2006
Market Leading Company Strong financial performance Consistently profitable with strong underlying growth. Results of 2011 (IFRS) net profit 7m US LR 53.6 combined ratio 78.4 ROE 27
Market Leading Company Strong capitalisation Exceptionally capitalised with a very strong solvency margin
Market Leading Company Rated Financial Strength Rating from a leading international agency
Market Leading Company Regional distribution Distribution across the whole of Russia and the former USSR territories and overseas
Market Leading Company Corporate governance IFRS audited accounts since year-end 2006. Experienced Supervisory Board. Operating to international standards
Market Leading Company Excellent operational performance 2011 GPW growth 25 market share 6 Renewal ratio 87,7 GPW per capita 51,1 mln RUR
Market Leading Company Largest and most stable clients base 370 companies from Russia, CIS and overseas
Market Leading Company Brand A recognizable brand with Russia/FSU London market MENA region and SEA
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Legal compliance

• The 100 shareholder of Unity Re is RESO Holding
  - one of the leading insurance holdings within
  Russia CIS.
• Currently, the paid-up capital of Unity Re is
  500m RUR (16.6m USD)
• The actual reinsurance license No. 1643 77 of
  04.07.2007.
• Since 2007, KPMG has been the official auditor of
  Unity Re for IFRS financials.

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International rating
Unity Re has the following actual international
ratings assigned
 Rating Outlook Status
A.M.Best B (Good) Stable Assigned Sept 2011
Standard Poor's   BB / ruAA  stable Last mod. Aug 2011

• Rating reports specially outline Unity Res
• Good capitalization
• Profitability
• Strong position in the domestic market
• Very good level of retrocession protection

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Portfolio 2011
The scope of Unity Res activities is classic
reinsurance, where the company offers coverage
for all major lines of business general
property, construction, energy and petrochemical,
cargo, marine hull, aviation, accident health,
liability.
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Portfolio 2011

• 344 (re)insurance and broking companies from
  Russia, CIS overseas
• 287 companies from Russia, inc. all players from
  Top-50 (a unique!)
• cooperation with all major brokers operating in
  Russia internationally

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Portfolio 2011
The major geographical scope of Unity Res
business is focused at Russia
CIS. Additionally, since 2006, Unity Re has
intensified its activities in overseas markets,
writing business from South-East Asia, Central
South America and Africa.
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Largest paid claims 2006-2011
Amount paid,USD Year Cedant Class Comment
2 500 000 2010 SOGAZ Property Fire at a refinery
656 000 2007 Renessans insurance Property Furnace explosion at Azovsteel plant
585 000 2010 AzRe (Azerbaijan) Marine Crash of a motor yacht
550 000 2010 ROSNO Property Explosion at Sayano-Shushenskaya HPP
465 000 2008 Spasskie vorota Property Fire at a business center
430 000 2010 MIC Property Fire at a food factory
335 000 2007 Energogarant Property Fire at Reftinskaya hydro power plant
315 000 2009 Military Insurance Co. Property Crash of a train
260 000 2007 Renaissance insurance Property Fire at a plant
230 000 2009 Spasskie vorota Marine Loss of cargo washed from deck
175 000 2009 Sogaz Aviation Crash of aircraft during lending
170 000 2008 Sogaz Property EQ at Sakhalin
155 000 2009 Soglasie Marine Damage to a vessel by grounding
128 000 2007 Standard-Reserve PA Accidental death
125 000 2010 Asuransi Jasa (Indonesia) Property EQ
116 000 2008 Ard Daatgal (Mongolia) Property Storm damage to residential property
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Capacity 2012
LOB Maximum line - Net retention,PML basis Maximum lineGross retention
Property (FAP/PAR/IAR) USD 1,000,000 USD 50,000,000 (for business from Russia/CIS XOL treaty)
CAR/EAR USD 1,000,000 USD 50,000,000 (for business from Russia/CIS XOL treaty)
Energy off-shore USD 1,000,000 -
Marine hull / PI USD 500,000 USD 7,000,000 (worldwide, XOL treaty)
Cargo USD 500,000 USD 7,000,000 (worldwide, XOL treaty)
GTPL USD 500,000 -
Aviation USD 500,000 -
Motor USD 250,000 -
Personal accident USD 200,000 USD 1,500,000
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Contacts
125047, Russian Federation, Moscow, Gasheka st.,
12 Tel. [phone]Fax [phone]
6598 E-mail re_at_unityre.ru www.unityre.com