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Insurance Business in the
growth market from the
Adriatic to the Black Sea
Vienna Economic Forum
6 November 2006
Karl Stoss – CEO Generali Holding Vienna
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Insurance business in the growth market from the Adriatic to the Black Sea
The Generali Group: 175 Years of Tradition
1831
Foundation of Assicurazioni
Generali Austro-Italiche in Trieste
1832
Opening of the first agencies abroad
(Vienna, Prague, Budapest ...)
1882
Foundation of Erste Allgemeine in Austria. Around the turn of the century, a number of
insurance companies were also set up or acquired in Italy, France, Hungary and Romania.
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Insurance business in the growth market from the Adriatic to the Black Sea
Generali in CEE before 1914
Prague, Brno,
Vienna,
Ljubljana, Agram,
Tirana,
Budapest,
Belgrade,
Krakow, Warszaw,
Lemberg,
Bucarest,
Sofia,
Constantinopel …
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Insurance business in the growth market from the Adriatic to the Black Sea
The Generali Group worldwide
Generali is one of the three largest insurance groups in Europe.
The Generali Group comprises
• 107 insurance companies
• 119 financial and real estate companies
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Insurance business in the growth market from the Adriatic to the Black Sea
Generali Group Key Data 2005
27,2 %
Non-Life
72,8 %
Life
Gross premium income: €62.83bn
Investments: €307.42bn
Staff: 61,561
Central headquarters: Trieste (Italy)
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Insurance business in the growth market from the Adriatic to the Black Sea
Number 3 in Europe
Europe´s leading insurance groups based on premium income in 2005
Premiums in €bn
71,7
65,0
62,8
45,8
39,7
38,2
36,2
26,5
22,2
18,9
Axa
(F)
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Allianz
(D)
Generali
Aviva
(GB)
ING
(NL)
Munich Re Zurich F.S. Prudential
(D)
(CH)
(GB)
Cnp
(F)
Aegon
(NL)
Quelle: Generali Triest
Insurance business in the growth market from the Adriatic to the Black Sea
New geographies
CEE and Former Soviet Union
• Organic growth:
• Greater than 20% growth per annum in markets with relative low
penetration (Slovakia, Slovenia, Romania and Croatia)
• Pursuit of M&A based growth: acquisiton of companies in Serbia, Bulgaria
and Ukraine
China
• Positioning among top foreign JVs
and growth of Agency force
( >10,000 individuals)
• P&C license already granted
• Access to 6 new cities by 2008
India
• Market entry via green field operation
• Joint venture agreement signed in
May 2006
• Composite approach
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• Established bancassurance
agreements with major domestic
banks
Insurance business in the growth market from the Adriatic to the Black Sea
The Generali Vienna Group
A major Central European insurance group has evolved under the umbrella
of Generali Holding Vienna AG. It is made up of companies in Austria,
Hungary, the Czech Republic, Slovenia, Slovakia, Poland, Romania, Croatia and
since 2006 Serbia, Bulgaria and Ukraine.
The Generali Vienna Group comprises:
• 23 insurance companies (including Serbia, Ukraine, Bulgaria and Libertas
in Croatia) and
• 38 holding, financial, real-estate and service companies (including pension
fund Serbia)
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Insurance business in the growth market from the Adriatic to the Black Sea
Generali – A Powerful Partner in C & E Europe
Entry into
Market
Premiums
(€mn)
Market
share (%)
Population
(mn)
Austria
1832
2,073
13.2
8.1
Hungary
1989
430
16.2
10.1
Romania
1993
36
2.8
21.6
Czech Republic
1993
182
4.8
10.3
Slovenia
1996
28
2.3
2.0
Slovakia
1996
45
3.6
5.4
Poland
1999
100
2.2
38.6
Croatia**
2002
19
1.9
4.4
Serbia*
2006
40
10.0
7.5
Bulgaria***
2006
28
5.8
7.8
Ukraine***
2006
48
1.6 ->10%+
47.3
* Generali Group acquired majority shareholding in Delta Osiguranje, Serbia‘s largest private insurance company and in Delta Re
** Generali acquired 100% of Libertas Osiguranje d.d. in 2006
*** Acquisition currently in process
+ The Ukrainian insurance market is seriously distorted by the insurance of financial risks
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Insurance business in the growth market from the Adriatic to the Black Sea
Macroeconomic Overview
Source:10
IMF
Insurance business in the growth market from the Adriatic to the Black Sea
CEE economic growth outpacing Europe
Real GDP growth (%)
• Strong economic
conditions
7.0
• Higher GDP growth
rates than that of
Western Europe
4.0
• EU enlargement leads
to increased macroeconomic stability
6.0
5.0
+3.2 pp
3.0
2.0
1.0
0.0
1998
Source: IMF
1999
2000
2001
2002
2003
2004
2005
2006
Industrialised countries
Central and eastern Europe
United States
Euro area
Medium-term real GDP growth of emerging markets, 2006-2010 (%)
• CAGR 2006-2010 +4.2%
• CEE is expected to
continue to grow faster
than Western Europe…
• …leading to higher per
capita income
Industrialised countries
Middle East
3.9
Africa
3.9
CEE
4.2
Latin America
3.5
Asia
Source: Swiss Re
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2.5
6.3
0
1
2
3
4
5
6
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Insurance business in the growth market from the Adriatic to the Black Sea
Outstanding Growth Prospects for the insurance business
Markets development pattern
As seen in recent years:
Insurance penetration
(premium on GDP)
UK
Japan
World
China
India
PH
SK
TH
USA
Euro
Area
CEE Industrialised
countries
GDP
5.3%
2.2%
Life
Premiums
17.4%
2.6%
P&C
Premiums
11.4%
4.7%
CZ
CEE
PL
IT
Real Growth
1998 – 2003
Source: Swiss Re
H
Per capita GDP
(logarithmic scale)
…Strong economic conditions, rising disposable income and favourable
demographic factors are expected to increase life and non life penetration rates
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Insurance business in the growth market from the Adriatic to the Black Sea
Non-life insurance: on a growth track
Real premium growth, 2004-2010 (in USD bln)
Non-life premiums
Key drivers of future developments
• Stable economic growth
• Infrastructure investments
Middle East
• Increasing household assets
• Development of compulsory
insurance
Africa
CEE
• Fiscal incentives to invest in property
• Leasing schemes development
Latin America
Asia
0
25
2004
constant 2004 prices
Source:13
Swiss Re
50
75
100
125
150
Addition 2005-2010 (estimate)
Insurance business in the growth market from the Adriatic to the Black Sea
Outstanding growth prospects for life insurance
Real growth rates per region 1993-2004
Key drivers of future developments
CAGR in USD
• Savings accumulation
30%
25%
• Private Pension market development
20%
15%
• Increasing risk awareness
10%
5%
0%
China, India
CEE
Asia
93-04 CAGR
Latin
America
EU 15
00-04 CAGR
Source: Swiss Re
Real premium growth, 2004-2010 (USD bln)
Middle East
Africa
CEE
Latin America
Asia
0
50
2004
constant 2004 prices
Source:14
Swiss Re
100
150
200
250
Addition 2005-2010 (estimate)
300
Insurance business in the growth market from the Adriatic to the Black Sea
Fast pace of growth
Increasing
awareness of
savings need
for Financial Savings
Better financial
system
reputation
Financial assets (€ bln)
Increasing n° of
people with
financial
surplus
Economic
growth
+30%
36,8
40
35
CAGR:
30
28,5
+25%
20
15
10
12,2
14,0
14,4
+22%
10,3
9,0
7,3
4,3
2,9 3,4
5
+40%
21,7
25
0
2003 2004 2005
2003 2004 2005
2003 2004 2005
2003 2004 2005
Hungary
Slovakia
Poland
Czech
Republic
Source: BCE, National Statistical Centers
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Insurance business in the growth market from the Adriatic to the Black Sea
Savings and pensions trends pushing Life insurance growth
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Insurance business in the growth market from the Adriatic to the Black Sea
Generali strategic view in CEE
Market dimension
RUS
UKR
Development stage
Early stage
• We aim at realizing early
mover’s advantage
SCG
RO
BG
PL
High growth markets
CZ
• Strong organic growth and
selection of opportunities
HU
HR
SK
Relatively mature market
SI
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Strategic view
• Hold on with focus on
quality
Insurance business in the growth market from the Adriatic to the Black Sea
Experience from the expansion to CEE
•
No 2 countries are the same – the methods in developing market presence in a
country can be duplicated, but the solutions are always different due to various factors
•
The strategy had to be changed repeatedly throughout the years since 1989 –
from green field to merger and acquisition
•
There is a need for an actively supported exchange between the countries in order to
optimise know-how
 Best practice - exchange – targeted use of group knowledge
 Mobility-management
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Insurance business in the growth market from the Adriatic to the Black Sea
What do we have to do, to ensure continuous successful
development in the CEE in the future ?
•
Acquisition expansion – changes to earlier strategies of green field
- professional M&A-Management
- professional Post-Merger-Integration
•
Ensure exploit of Group Synergies
- espacially within the company
•
Development of the necessary growth related products in the life insurance field
•
High Management Attention is necessary – if this is not available, acquisitions and
integration will not succeed
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Insurance business in the growth market from the Adriatic to the Black Sea
Success factors of Generali in CEE
Lettland
•
•
•
•
•
Generali has always been international –
since set up – and understands the longterm management of a very diverse Group –
this is part of our business culture
Adequate financial means
Adequate international management knowhow and management-ressources – also
across continents
Ability to maintain consistent development
and expansion
Well known and traditional Brand –
embodies long term stability and strength
Litauen
Weißrussland
Polen
Ukraine
Tschechien
Slowakei
Moldawien
Österreich
Ungarn
Slowenien
Rumänien
Kroatien
Bosnien
SerbienMontenegro
Mazedonien
Albanien
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Bulgarien
Insurance Business in the
growth market from the
Adriatic to the Black Sea
Vienna Economic Forum
6 November 2006
Karl Stoss – CEO Generali Holding Vienna
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