Lutz BauerCEO Emerging Markets, EGI

“Russian Insurance Market Future” Forum

Russian Market holds good potential, but current Insurance Business Practices need improvement

Note: Short term assumed next 1-2 years, mid term next 3-5 years

Short Term• Government with solid majority allows

policymaking and stability• Access to technology will support open-

market policy• Mid Term • Russia is expected to become the largest

retail market in Europe• Positive economic growth and rising

middle class• Decent terms of investment for foreign

insurance companies

Short term• Steep downturn particularly vis-à-vis other

BRICs • Stimulus plan not always reaching where

needed

Mid Term • Institutional reforms necessary• Administrative burdens, rigorous execution

of anti-corruption law is key• Reliance of the economy on huge enterprises

and commodities and lack of strong SME base

MACRO ATTRACTIVENESS MACRO CONSTRAINTS

Short Term• Market consolidation • “Flight to Quality”

Mid Term• Underpenetration, new products• Direct and alternative distribution channels • Increased professionalization e.g.

certification of agents, increased efficiency

Short Term• Cash flow underwriting, irrational pricing• No central customer claims recording• Increased incidence of fraud

Mid Term• Osago regulation leads to need for cross

subsidies • Regulatory and legal changes

INSURANCE OPPORTUNITIES INSURANCE THREATS

Int’l Insurance Companies in Russia - today it is about the Short-term, Mid-term, and Long-term

PRE-CRISIS PRESENT

Russia as a hot growth market

Russia competes vs other markets for resources and investment

Insurance asset pricing based on extrapolations of permanent market growth

The “right price” is elusive

Quality and consistency of int’l brand as key selling points

Values and strength of a global insurance brand even more desirable to customers

Priorities: Growth and Profitability

Priorities: Profitability and Growth