Gabriella Matyas-Kollar by ps94506

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									Local knowledge. Global power.




     CEE Life Insurance Strategic Opportunities

     Gabriella Mátyás-Kollár
     Head of AEGON Life Insurance Hungary and CEE Product Development




     Vienna, 11th May, 2010
CEE AEGON presence and market
AEGON strong presence in CEE

                                 1992   Hungary
                                 2003   Slovakia
                                 2005   Czech Republic
                                 2005   Poland
                                 2007   Romania
                                 2008   Turkey




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CEE Life Insurance markets - Overview


                          Poland               Hungary             Czech Rep.     Slovakia     Romania       Turkey


  Regular GWP in
                               3 405                1 026                1 579        853          387
  2009 (EUR mln)
  Single GWP                                                                                                    8501
  in 2009 (EUR                 4 164                 497                  696         209         N/A
  mln)
  Penetration
                                2,3%                1,6%                 1,7%        1,7%        < 0.5 %        0.2 %
  (GWP/GDP)
  Products
  (protection /             30% / 70%            30% / 70%            30% / 70%    30% / 70%    80% / 20%     40% / 60%
  investment)
  Concentration
  level 5 top                   65%                  60%                  68%        71%          77%           59%
  companies
  # foreign
  players in top                  8                   10                   10         10            7            10
  10
  Life insurance
  ranking by                      4                    2                   14         12        Greenfiled       18
  GWP




  1   Estimated from the GWP of the first 8 months of 2009 (EUR 574.3 million)
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Insurance penetration in CEE countries – 2008


                                                                             Size refers to preimum (€) / population
         Life insurance premiums as % of GDP




                                                                   PL




                                                    HU
                                                         SK                         CZ


                                                                                                HR

                                               RO
                                                                                                BG




                                                    Non-life premiums as % of GDP

     Relative low insurance penetration in CEE,

     for life as well as non-life business lines only 0-3% of GDP,

     while EU 15 average for written premium in 2008 stands for 8% of GDP.

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Life insurance trends
Life insurance trend indicators




                                 Economy




      Regulation                           Client




                                 Insurer


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Life insurance trend indicators


              Economy




 Regulation             Client




              Insurer


                         Regulation   Impact                    Opportunities

        o EU directives,                                        o Products matching
          supervisory                 o Transparency,
          authority                                               clients’ (invesment)
                                        MiFID, PRIPs              profile
          requirements
        o Taxation                                              o Taxation-optimised
                                      o Tax preferences           products
          background
        o Pension system              o Income gap              o Savings products,
                                                                  VA
        o Healthcare                  o Need for (additional)   o Health risk / health
          system / health
          insurance                     individual resources      insurance products

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Life insurance trend indicators


              Economy




 Regulation             Client




              Insurer


                         Economy   Impact                 Opportunities

        o Volatile                 o Lost confidence in   o Guarantee or
          investment                 investments            traditional products
          markets
        o High                     o Clients’ financial   o Flexible payment
          unemployment               shortfall              products
          rates

        o Effects of               o Negative / slowed    o Further CEE
                                                            potential is still
          financial crisis           GDP growth             attractive


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Life insurance trend indicators


              Economy




 Regulation             Client




              Insurer


                         Client   Impact                     Opportunities

                                                             o Narrower-scope
        o Lower volume of         o Less able to buy /         products: AD,
          discretionary             maintain life              lower premium,
          spendings                 insurance policy           flexibility of existing
                                                               products
        o Longer life-            o Need for
          expectancy,               accumulation and         o Savings, annuities,
          more years                risk coverage, risk of     LTC
          spent unhealthy           outliving assets
        o More need for           o Would choose             o Better client focus
          satisfacory                                          can attract
          information               provider accordingly       customers
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Life insurance trend indicators


              Economy




 Regulation             Client




              Insurer



                         Insurer   Impact                     Opportunities

        o Self-regulatory          o More favourable          o Cost-aware clients
          initiatives as             conditions to clients,     looking for lower-
          Total Cost                 highest end                cost policies
          Indicator                  disappears
                                   o Better time-to-
        o New                                                 o Quicker policy-
                                     market, more cost-
          technologies                                          issue, UW
                                     effective
        o New                                                 o „e” gets more
          communication            o More means, higher         important as sales
          patterns, wider            number and much            as well as info
          Internet usage,            faster client              channel, better
          community                  feedback                   understanding and
          pages etc.                                            serving clients
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Life insurance trends: past – present – future




 Regulation




          Past: 1990’s, early 2000’s

                                 Present: effects of financial crisis

                                                       Future: „It’ll be similar, but will never be the same”


        o We have to adapt
               – Quicly and effectively to limit losses, gain trust, and profit from
                 the new trends



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Life is never going to be the same




 Regulation




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Life insurance past – present – future trends


       Evolution of distributon channels


 Regulation
                                           Tied + brokers,                 Multichannel with
              Tied only                       bancassurance as                CC, DM, online,
                                              new development                 supermarket

                                       In Western EUR bancassurance is the main channel of
                                           life sales – IT: 91%, FR: 65% vs. PL: 21%

       Evolution of savings products


              Traditional               UL+absolute return funds,          UL + guarantees, VA,
                 savings gave              UL + guarantees as              back to traditional,
                 way to UL                 answer to crisis                more regular premium

                                                       Further separation of risk (better fit to
       Evolution of risk products                          client need, more options) and
                                                           investment products (lower cost)

              Simple or part of        Presence of pure risk term with       Term, CI, LTC,
                                           high sum assured, low-cost
                 savings                   risk as AD because of                annuity gets
                 product                   crisis impacts                       more important
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Life insurance past – present – future trends


       Main pricing & risk considerations


                                                              Solvency II., MC
 Regulation
              Profitability                 EV, VNB              pricing + cost
                                                                 level (TCI)



       Technology


              Computer             Client makes changes to    Intelligent, flexible policy –
                                                                   responds to changing
                calculation +          policy (investment,         needs based on data
                illustration tools     others)                     mining + proactivity




       Client service


          10 to 4 client service
              offices, standard               CC, e-mail,     Multichannel client
              letters, mass                    personalised     service, more „e”
              approach

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Life insurance past – present – future trends


       Marketing, policy wording



                                    Extreme length,            Balanced, compliant,
            „Bright side”              disclaimers                but understandable
                                                                  (PRIPs)


       Policy flexibility


            We’re all set for      Need for felxibility (eg.      Built-in flexibility and
              the 15 ys              premium holiday)                regular check-ups
              policy term


       Client approach


            Policy being sold      Client gets more            Client requires solutions
               to client (push         conscious                   to his needs (and
               market)                                             flexibility)

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CEE country outlooks
                                                            PL
                                                            o Largest CEE economy
        o CEE region’s potential stays                      o SP UL is very popular
                                                            o UL capital gain tax postponed till the end of
        o Diversity is beautiful –                             contract, endowment is free of capital gain tax
          different, but converging                         o Clients’ risk-taking ability
          opportunities
                                                                     SK
   CZ                                                                o Life insurance is income             tax
                                                          Poland
   o Strong broker presence                                             deductible up to a certain limit
   o Life insurance is income            tax                         o Acquisition     cost     indicator   as
      deductible up to a certain limit          Czech                   transparency initiative
                                               Republic              o Strong broker presence
                                                          Slovakia
                                                                            RO
   HU                                                  Hungary              o Life insurance free of capital
   o High share of UL within savings products                                  gain tax
                                                                    Romania
   o Total Cost Indicator as self-regulation                                o Information about benefits and
      mean introduced this year                                                charges have to be disclosed
   o Life free of capital gain tax after 10 ys                                 at application stage
                                                                            o L&H risk-oriented coverages
                        TR                                                     are not favoured by clients
                        o Large growth potential (current non-life focus)
                        o Income tax deductible up to minimum wage, free
                           of capital gain tax                                          Turkey
                        o No UL allowed
                        o Information about benefits and charges have to
                           be disclosed at application stage
                        o The policy information needs to be available to
                           policyholder through Internet
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The good news about crisis


        o It accelerates the route to maturity of our markets

 Regulation




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                  Thank you for your attention

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