The Croatian Insurance MarketMTPL and claims

Supervisory Institutions in the Financial Sector:

o Croatian National Banko Croatian Financial Services Supervisory Agencyo State Agency for Deposit Insurance and Bank Rehabilitation

Financial InstitutionsAssets in 2011

in mil. EUR %

Commercial banks 54.802 76,9Mandatory pension funds 5.524 7,8Insurance companies 4.304 6,0Leasing companies 3.482 4,9Open-end investment funds 1.605 2,3Housing savings banks 1.054 1,5Voluntary pension funds 265 0,4Closed-end investment funds 225 0,3

TOTAL 71.261 100,0

Financial Institutions in the Croatian Financial Market

Share of Financial Institutions in the Total Assets of the Financial Sector in 2011

Insurance Industry

o 27 Insurance Companieso 1 Reinsurance Companyo 35 Brokerso 371 Agencieso 25 Banks authorised to conduct insurance representation

activities

per 30.01.2013

Insurance Density & Insurance Penetration - Europe

Source: Insurance Europe, European Insurance in Figures, 2012

Source: HUO

2003 2004 2005 2006 2007 2008 2009 2010 20110

50

100

150

200

250

300

350

184201

223248

275294 286 281 279

143153

165182

200217 210 206 205

41 48 57 66 75 77 76 75 74

Insurance Density(Premium per capita in €)

Total Non-Life Life

2003 2004 2005 2006 2007 2008 2009 2010 20110.00

0.50

1.00

1.50

2.00

2.50

3.00

0.59 0.63 0.71 0.74 0.78 0.74 0.74 0.73 0.71

2.06 2.04 2.05 2.07 2.07 2.07 2.07 2.03 1.97

2.65 2.68 2.76 2.81 2.85 2.81 2.81 2.76 2.68

Insurance Penetration(Premium in % of GDP)

Life Non-Life Total

Insurance Density & Insurance Penetration - Croatia

Insurance and Reinsurance Companies as at 31/12/2012

28 Total

1 Reinsurance

7 Life

10 Non-Life

10 Life and Non-Life

Croatian Insurance Bureau 20 Members 15 Motor Insurers

2011 Domestic Foreign Total

Composite 1 9 10

Non-Life 8 2 10

Life 2 5 7

Reinsurance 1 0 1

Total 12 16 28

Insurance Companies by Ownership and Insurance Business Written

generate98,00% of Total GWP

obligatory membership

Premium Breakdown by Company Ownership – 31/12/2012

Domestic Majority Ownership

11

56,23 % of premium

26,85 % of premium

68,51% of premium

Foreign Majority Ownership

43,77 % of premium

77,15 % of premium

31,49 % of premium

Total

Life

Non-Life

16

Total

Euroherc

1. Allianz 15,4 16,7

2. Croatia 14,1 14,8

3. Merkur 10,5 10,4

4. Grawe 10,1 10,2

5. Agram životno 8,3 8,3

2011 2012

58,3 60,2

1. Croatia 36,5 35,6

2. Euroherc 14,9 14,9

3. Allianz 9,7 10,3

4. Jadransko 9,5 9,5

5. Triglav 4,8 4,2

2011 2012

75,5 74,6

1. Croatia 30,5 30,0

2. Allianz 11,2 12,1

3. 10,9 10,8

4. Jadransko 7,0 6,9

5. Kvarner VIG 4,9 4,6

2011 2012

64,6 64,3

Non-Life Life

Market Concentration

Top 10 84,4 83,9 90,7 90,1 88,8 89,5

Top 5

Source: HUO

27 Croatian insurance companies generated HRK 9.038mn (€ 1.198mn) in Gross Written Premiums.

Non-Life market - the GWP amounted to HRK 6.577mn (€ 872mn), accounting for 72,8% of the total premium income of the Croatian Insurance Market.

The largest class of Non-Life business is Motor Third Party Liability Insurance with a gross written premium of HRK 2.915mn (€ 386mn) and a Non-Life premium share of 44,3% and 32,3% of the total Croatian Market.

The Croatian Insurance Bureau has 20 Members, of which 15 are active in Motor Insurance.

The 15 Motor Insurers issued 1.928.201 MTPL Insurance policies at an average premium of 200 €.

The Croatian Insurance Market in 2012

Gross Premiums Written from 2003 - 2012

Total GPW – drop by 1.17%

Average Growth Rate 2000-2012 – 6,08%

-

In 000 €

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

804,

048

878,

240

974,

084

1,08

4,09

3

1,20

1,35

0

1,28

3,67

1

1,24

7,25

7

1,22

5,28

5

1,21

1,99

3

1,19

7,84

3

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00% 12.50%

9.40%

8.80%

9.20%

10.90%

11.30%

10.80%

6.90%

-2,84%

-1,80%

-1,08%

-1,17%

Source: HUO 1€ = 7,545624 HRK

Premiums - Life and Non-Life % 2000 - 2012

GPW Non-Life 6.577.321.316 HRK 871.673.611€- decrease by 2,04%- in 2008 +8,50%

GPW Life 2.461.153.946 HRK 326.169.704€- increase by 1,23% - in 2008 +2,50%

-/+

Source: HUO

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

21.90%

24.60%

17.10%16.30%

20.80%

14.20% 14.70%

2.50%

-2.24% -1.20% -1.07%

1.23%

10.70%

6.10% 6.60% 7.20% 7.80%

10.30% 9.40%8.50%

-3.05%-1.90% -1.09%

-2.04%

Life Non-Life

Portfolio Breakdown - 2012

Source: HUO

32.53%

23.62%

7.97%

7.85%

6.49%

5.58%

3.19%

12.78%

Motor Vehicle Liability

Life

Motor Vehicle Casco

Other Damage to Property

Fire and Natural Disasters

Accident

Other Liability Insurance

Others

MTPL - GWPand Average Premium

HR GWP (in 000 €) HR Average Premium in €

Source: HUO

2005 2006 2007 2008 2009 2010 2011 20120

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

293,

758

320,

471

355,

745

382,

269

382,

478

379,

938

385,

784

386,

368

4.98%

8.96%

11.00%

7.50%

0.06%-0.70%

1.54%0.15%

GWP Growth Rate

2005 2006 2007 2008 2009 2010 2011 2012165

170

175

180

185

190

195

200

205

170.27 171.34

185.94

192.60195.47

197.20198.81

200.38

-Stable MTPL average premium

MTPL market-Less reported claims-Decrease in claims frequency

2003. 2004. 2005. 2006. 2007. 2008. 2009. 2010. 2011.0

5,000

10,000

15,000

1,850 1,785 1,751 1,841 1,855 1,912 1,820 1,729 1,794

6,4317,374 7,814

9,00310,174

11,899 12,14112,761

14,152

Average MTPL Claim Paid and Average Outstanding Claims Provision 2003- 2011 (In €)

Average claim paid Average Provision 2003. 2004. 2005. 2006. 2007. 2008. 2009. 2010. 2011.30.00

35.00

40.00

45.00

50.00

55.00

60.00

65.00

70.0065,58%

62,86%61,69%

65,11%

58,20%56,12%

48,68%

41.39 40.59

MTPL - Share of Claims Paid in Total Premium

Source: HUO

52,59%47,41%

Brake down of Claims Paid in 2011

damage to propertypersonal injury

MTPL – Average Premium Central European Bureaux Group of CoB

Source: HUO

MTPL – Average ClaimCentral European Bureaux Group of CoB

Source: HUO

Consumer ProtectionAlternative Dispute Resolution Mechanisms – Mediation Centre and Ombudsman

o ADR mechanisms are becoming more prominent on the Croatian market. o The Mediation Centre at the Croatian Insurance Bureau was founded by decision of the

Management Committee of the Croatian Insurance Bureau of 29th March 2007. The Members of the Croatian Insurance Bureau have thereby expressed a common position that reflects their readiness to promote and the need to support the out-of-court settlement of disputes.

o Confirmed its status as the Centre with best results compared to other mediation centres in the Republic of Croatia.

o Similar to other European countries, the Insurance Ombudsman Service was established at the Insurance Association – the Croatian Insurance Bureau as an autonomous and independent dispute resolution body to facilitate the settlement of disputes between consumers and insurance companies with a view to achieving a higher standard of consumer protection.

o As a step further towards higher consumer protection standards the Croatian Insurance Bureau launched the Project Financial Literacy in the Republic of Croatia - an initiative of the Croatian Insurance Industry – supported by the Ministry of Finance and approved by the Croatian Government.

-Current system:-Evaluation and the level of compensation is decided by the courts which use criteria established by the Supreme court

-New MTPL Law proposed by the Ministry of Finance

- contains Medical tables and Tables of indemnity in order to implement a system of evaluation and compensation of personal injury claims

Legislative Changes in Croatia