Luis Maurette presentation

7th Chief Risk Officer Assembly

Luis Maurette

Nov. 16th, 2011

12,4

10,1

8,0

5,1

4,0

3,8

3,5

3,1

2,8

2,3

1,9

United Kingdom

Japan

United States

India

Chile

PR China

Venezuela

Brazil

Argetina

Russia

Mexico 64

158

173

248

282

297

328

483

3.759

4.390

4.497

India

PR China

Mexico

Argetina

Venezuela

Russia

Brazil

Chile

United States

Japan

United Kingdom

Insurance PenetrationInsurance Penetration(% of GDP)(% of GDP)

Insurance DensityInsurance Density(Premium in US$ per Capita)(Premium in US$ per Capita)

Brazil:

•8th Largest Economy

•33rd Largest Insurance Penetration

ArgentinaArgentina

Source: Swiss Re Sigma Report - "World Insurance in 2010"

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Growth (p.y)2010 a 2013

FORECAST

1218

2228

34

4741

76

62

CAGR:25,8% a.a.

CAGR:10,8% a.a.

Health: 10%

Capitalization: 11.6%

Pension Plan: 11.4%

P&C, Life and PA: 9.5%

75

84

93

Market Size (US$ billion)

Source: Brazilian Superintendence of Private Insurance (SUSEP)

RKG COMPANY MARKET SHARE

1 BRADESCO 18,9%

2 ITAU 9,7%

3 UNIBANCO 7,9%

4 SULAMERICA 7,4%

5 PORTO SEGURO 7,1%

6 CAIXA-CNP 4,3%

7 MAPFRE 4,0%

8 ALLIANZ 3,9%

9 BCO DO BRASIL 2,9%

10 HSBC 2,6%

TOP 10 68,7%

OTHERS 31,3%

RKG COMPANY MARKET SHARE

1 PORTO+ITAU+UNIBANCO 23,3%

2 BCO DO BRASIL+MAPFRE 15,8%

3 BRADESCO 12,6%

4 SANTANDER+ZURICH 5,4%

5 SULAMERICA 3,9%

6 ALLIANZ 3,9%

7 CAIXA-CNP 3,5%

8 LIBERTY 3,4%

9 TOKIO 3,2%

10 HDI 2,7%

TOP 10 77,9%

OTHERS 22,1%

1. Porto + Axa + Itaú + Unibanco

2. Mapfre + Nossa Caixa + Bco do Brasil + Aliança do Brasil

3. Santander + Real + Zurich + Minas do Brasil

4. Liberty + Indiana

5. HDI + HSBC

6. Maritma + Yasuda

Major M&A DealsMajor M&A Deals(2002 to 2010)(2002 to 2010)GWP: US$ 6.8 biGWP: US$ 6.8 bi

20022002 20102010

GWP: US$ 32.0 biGWP: US$ 32.0 bi

CAGR: 21.3% p.y.

CAGR: 21.3% p.y.

Source: Brazilian Superintendence of Private Insurance (SUSEP)

Technology (High)

• High Internet penetration• High mobile penetration• Broadband

Regulation (Medium)• One national regulator• Regulations change

unexpectedly

• Own renewal date• Politically strong• Customers emotionally

attached to them

Intermediaries Bargaining Power

(High)

New Entrants (High)

• Brazil is the center of attention• Several companies entering

Substitute Products (High)• Anti-theft devices for auto & home• Reinsurance substitute to loss

prevention investments• Sub-standard risk quality,

especially in SME segment

• Heavily concentrated• Strong bancassurance• Unsaturated market

Competition (High)

Consumer Bargaining Power (Medium)

• Individuals: • Distant from carriers. • Growing middle class

• Corporations access to insurance: • SMEs - low• Large firms - high

Human Resource (High)

• Decreased education quality• Lack of talent in insurance

Drivers for Competitive Advantage:

•Define a unique business model

•Bring to the market a diferentiated value proposition

•Invest consistently in operational efficiency:

• Eliminate process redundancies

• Invest in automation• Build a lean organization

Technology (High)

•High Internet Penetration•High Mobile Penetration•Broad band

Regulation (Medium)•One National Regulator•Regulations change unexpectedly

•Own renewal date•Politically strong•Customers emotionally attached to them


(High)

New Entrants (High)•Brazil is the center of attentions•Several companies entering

Substitute Products (High)•Anti theft devices for auto & home•Reinsurance substitute to loss prevention investments•Sub-standard risk quality, specially in SME segment

•Heavily Concentrated•Strong Bancassurance•Unsaturated Market

Competition (High)


• Individuals: •Distant from carriers. •Growing Middle Class• Corporations access

to insurance •SMEs low•Larges high


•Decreased education quality•Lack of talent in Insurance


• Deploy technology to:• Cover the entire national

territory• Adjust processes to address

regional culture• Build mobile capabilities

• Put your organization close to the business source

Technology (High)





(High)




Competition (High)







• Create a mid-term strategy

• Review your mid-term strategy regularly

• Develop scenarios to understand the movements of entrants and incumbents

Technology (High)




Competition (High)



(High)








Technology (High)




Competition (High)





(High)







• National education with decreased quality

• Insurance closed to professionals from different industries

• Professionals trained in a market environment that is constantly changing

-


• Build strong underwriting and acceptance processes

• Surround your company with excellent underwriting and actuarial teams

• Develop a state-of-the-art sales team

Technology (High)





(High)




Competition (High)







For Corporations:• Carriers too focused on large and

specialty risk• SME segment poorly served by

insurance industry• Out of 3m corporations:

• 25% are large and represent 75% of premium

• 75% are SMEs and represent 25% of premium

• Lack of support for loss prevention initiatives and investments

• Need for tailormade productsFor Individuals:

• Build strong brand equity• Carriers heavily focused on Auto, so

expand product offering• Build channels to offer Auto and

Non-Auto Products

Technology (High)






Competition (High)








(High)


• Understand your final customers

• Tailor your offering to their needs

• Invest heavily in market research

Technology (High)






Competition (High)





(High)





• Get involved in Industry Associations

• Have a “plan B, C, and D” for any situation

• Reinsurance monopoly opened and regulated in 2008:

• Resolution 225 and 232 changed the rules

Technology (High)





Competition (High)





(High)





• Have a clear understanding of the market forces, culture and dynamics

• Build a mid-term strategy to guide trade-offs and investments

• Consistently review your strategy in light of new market events

• Invest in operational efficiency and automation

Surround yourself with a strong team that has a keen interest in EXECUTION

NWP (US$ million)

CAGR: 33% p.y.

Strategic Initiatives:

• Expanded branch network geographically

• Centralized U/W authority and back office services

• Deployed technology to automate Personal Lines processes

• Implemented SME business model with dedicated process and team

• Established Liberty University to develop internal talent

7th Chief Risk Officer Assembly

Luis Maurette

Nov. 16th, 2011

Documents

Luis Maurette presentation