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XPRIMM News - THE ROMANIAN INSURANCE MARKET NEWSLETTER
No. 154, April 22nd, 2010
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EDITORIAL


Central and Eastern Europe: risky exposure or potential?

"Exposure in the region of Central and Eastern Europe of the Austrian insurance groups, such as VIENNA Insurance or UNIQA, could drag their profitability behind, amid fewer sales, increases in fraud and currency translation losses", the rating agency FITCH warns.

The above information comes almost a year after the analysts were "preaching" the apocalypse of the Austrian banking system, based on the same exposure in the CEE.

Last year's experience showed us that the financial markets in this region are more stable and stronger than those in more developed areas. Moreover, in none of these countries did the state have to intervene to save any banking institution, as it did in Britain or in Holland.

Going back to insurance, let's not forget that, about a year ago, rating agencies were extremely enthusiastic about the potential of emerging insurance markets in CEE. Moreover, these countries have produced, for more than 10 years, significant growths, double-digits ones, for the Austrian groups, otherwise "trapped" on a market evolving 2-3% per year.

Do CEE markets deserve to be blamed as if bankruptcy knocked on the door, at the first sign of decline? Have they drained the significant potential so praised less than a year ago? Would it be an inspired idea for Austrian companies to reduce their exposures on these markets?

We believe the answer to these questions is negative, and, similar to the example of the banking system, next year will prove that fears regarding the insurance field are also false...

by mihaela.circu@mxp.ro

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BCR Asigurari de Viata

Credit Europe Asigurari
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INTERVIEW


Interview with Alexandru APOSTOL
General Manager
MAXYGO Broker de Asigurare, Ploiesti, Prahova County

XPRIMM: How strong was the impact of the economic crisis upon the insurance market in 2009? How do you see the evolution of the insurance market in 2010, in the context of an extended economic crisis?
Alexandru APOSTOL:
The impact of the economic crisis has materialized in the stagnation, for the first time in many years, of the volume of written insurance premiums. For a market that is at its beginning, stagnation is not the most beneficial thing, but it seems that in 2010 the prospects are not cheerful either.

XPRIMM: Which are currently the most pressing problems of the insurance brokerage market, except the economic crisis?
A.A.:
The most pressing problems are those related to legislation, therefore related to the will of the political class on several aspects which may lead to the development of more private areas and activities related to them, and I will enumerate some here:
- Health reform;
- Continuation of pensions reform;
- Life insurance deductibility;
- Specialized training for all professional categories in the industry (insurers, brokers, supervisory committees etc.).

XPRIMM: What is your opinion regarding the electronic issuing of the MTPL and the bonus-malus system?
A.A.:
Same for the healthcare reform, for the deductibility, for professional training, these are also procedures that should have been implemented earlier. The benefits are clear and the market has pointed out long ago the necessity of their implementation, but the way it was done in this case has created difficulties for companies and for brokers.

XPRIMM: How do you assess your company's results in 2009 and what are the main objectives for this year? (Total volume of mediations, personnel structure, etc.).
A.A.:
2009 was a year of adjustment, in which those that were prepared have successfully coped. The crisis Romania has gone through was a novelty in many ways and we had to learn as we went along. We hope that in 2010, with the measures that we took, we can register growths for all indicators (premiums volume, number of active collaborators etc.).

XPRIMM: What is the structure of the mediations that you make?
A.A.:
In terms of mediations, we make no exception from the market trends, as the motor insurance owns the main share. Depending on their policies, insurance companies quite often change their insurance terms and rates, so our role is to constantly seek the most suitable products for our customer. Thus, we do not exclude any product as long as it brings benefits to our clients.

XPRIMM: How do the recruitment and retention of staff take place within the company? Is an expansion of the sales force appropriate, at this time? Do you think the economic situation brings new opportunities for finding people to work in insurance?
A.A.:
In what concerns us, recruitment is an ongoing process. Well trained people will always be found, but the labor market is determined directly by the economic environment. Regarding retention, those who manage to fit into our set of organizational values become successful partners for a long time.

XPRIMM: Thank you!

by mihai.cracea@mxp.ro

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Alexandru APOSTOL
Alexandru APOSTOL
General Manager
MAXYGO Broker de Asigurare, Ploiesti, Prahova County

MEDICOVER
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Did you book a place at FIAR 2010?
If not, we remind you that tomorrow, April 23, is the last day you can register for the participation in the biggest event of the European spring, dedicated to insurance and reinsurance markets, FIAR - the International Insurance-Reinsurance Forum.
Click here to read more!
by oana.radu@mxp.ro, 22.04.2010



The business of the major European groups on the motor insurance market fell to the threshold of EUR 1 billion
The cumulated value of gross written premiums from motor insurance, in the first half of 2009, of the companies member of the most important European insurance groups present in Romania (ALLIANZ, GENERALI PPF, GROUPAMA, VIENNA Insurance and UNIQA) fell to EUR 1 billion. The figure represents 79.1% of all businesses registered on the motor insurance market (Motor Hull, MTPL and Green Card, added-up), more than 4.5 percentage points less compared to 2008, under the circumstances that all groups except GENERALI PPF recorded market shares decreases.
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by andreea.ionete@mxp.ro, 12.04.2010



Insurers have two months to develop on-line systems for receiving complaints
Insurance companies are required to develop on-line systems to receive complaints and claims from customers, according to new prudential standards on complaints/claims solving regarding the activity of insurers, reinsurers and insurance and/or reinsurance brokers.
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by andreea.ionete@mxp.ro, 14.04.2010



18.24% decline on the Motor Hull segment in 2009
Underwritings on the voluntary motor insurance segment (Motor Hull) were situated last year at EUR 790.11 million, down 18.24% compared to 2008. Of those, 94.8% were made by the top 10 companies on the market, according to the Specialty Review INSURANCE Profile.
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by mihai.cracea@mxp.ro, 09.04.2010



Property insurance fell by 10% in 2009
Property insurance, including fire and allied perils insurance and damages to property insurance, accounted for almost 12.3% of the underwritings on the Romanian market in 2009.
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by vlad.boldijar@mxp.ro, 14.04.2010



A Romanian paid an average of EUR 97 for insurance in 2009
In 2009, a Romanian spent for insurance products, in average, the equivalent of EUR 97. Compared to previous years, the Romanians paid less to insure their risks, as in 2008 they attributed in average EUR 110 for insurance, and in 2007 - around EUR 100.
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by vlad.boldijar@mxp.ro, 12.04.2010



FITCH: CEE exposure will hit Austrian insurance groups
Exposure in the region of Central and Eastern Europe of the Austrian insurance groups, such as VIENNA Insurance or UNIQA, could drag their profitability behind, amid fewer sales, increases in fraud and currency translation losses, warns the rating agency FITCH.
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by andreea.ionete@mxp.ro, 15.04.2010



ASTRA Asigurari wants to double profit and to surpass the EUR 1 billion threshold in 2010
The company ASTRA Asigurari has set as target for this year to obtain a gross written premiums income of RON 1.16 billion, which represents a 40% increase compared to 2009, and a profit of RON 11.78 million, almost double compared to the profit recorded in the previous year.
ASTRA Asigurari made in 2009 total underwritings amounting to RON 809.5 million, up 25% compared to 2008, and a net profit of RON 6.20 million, up 68% compared to the previous year, according to final results published on the 14th of April by the company.
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by andreea.ionete@mxp.ro, 15.04.2010



A new player on the life insurance market
Insurance Supervisory Commission decided on the 8th of April the name change of AGRAS Asigurari into UNIQA Asigurari de Viata and granting its authorization on the Romanian life insurance market.
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by andreea.ionete@mxp.ro, 16.04.2010



CERTASIG shareholders decided to increase the capital by EUR 5 million
The General Meeting of Shareholders of CERTASIG insurance company has decided, on the 8th of March, to adopt a program to increase the insurer's share capital by EUR 5 million, by issuing new shares, over a five years period. The decision of the General Meeting of Shareholders was published in the Official Gazette, Part IV, no. 1518, on April 9.
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by andreea.ionete@mxp.ro, 13.04.2010



RAI Asigurari - leader on the travel segment in 2009, too
The business of RAI Asigurari, company member of the GENERALI PPF Group, came in 2009 in a proportion of 93% (RON 11 million) from travel insurance, a market segment where the insurer has maintained last year its leader position, with a market share exceeding 25%.
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by vlad.boldijar@mxp.ro, 09.04.2010

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ASTRA ASIGURARI
EASTERN Re

MILLENIUM INSURANCE BROKER

MILLI Re


Safety Broker

FADATA
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250 insurers may leave Russian insurance market in the next 2 years
Approximately 250 insurance companies may leave local insurance market in the next 2 years, according to Lyudmila SENYKINA, Vicepresident of the Federal Supervisory Commission.
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by oleg.doronceanu@mxp.ro, 14.04.2010



PZU starts the biggest IPO in Poland
PZU SA, Poland's largest insurer, started an initial public offering that may top USD 2.7 billion in the country's biggest sale on record, according to Andrzej KLESYK, CEO, PZU, quoted by BLOOMBERG.
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by mihai.cracea@mxp.ro, 18.04.2010



Russian insurer ROSGOSTRAKH intends to extend in Turkey
ROSGOSTRAKH, the biggest insurance player on the Russian market, is planning to acquire an insurance company in Turkey, according to Russian mass media. "We are looking for a life insurer in Turkey, a market with an important growth potential, considering the population of 75 million people", stated Daniyl KHACHATUROV, the businessman that controls ROSGOSTRAKH.
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by oleg.doronceanu@mxp.ro, 19.04.2010



Motor third-party liability insurance grows more expensive in Bulgaria
Several Bulgarian insurers updated the prices of their motor third-party liability policy in April. ALLIANZ Bulgaria cut the prices, whereas BULSTRAD and BULINS moved in the opposite direction. Gergana IVANOVA, manager of brokerage FIN Sales, said companies have also changed payment mechanisms, with BULSTRAD, for instance, requiring one or two installments.
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by dnevnik, 16.04.2010



UNIQA implemented COMARCH sales platform
COMARCH has completed a major phase in the implementation of a sales platform for UNIQA Insurance Group. The COMARCH platform (CAFE for Insurance) is a modern front-office solution, which ensures maximum simplicity and automation of the insurance agent's daily activities. The solution provides UNIQA with a more effective and optimal use of new distribution channels.
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by mihai.cracea@mxp.ro, 18.04.2010



Russian Insurance Summit 2010
On May 20-23, 2010, the Russian Association of Insurers holds the VIIIth Annual International Insurance Summit in the city of Vladimir, club VELES. Within the framework of the Summit there will be discussions on the present situation and on problems of the national insurance market in the context of international insurance development. The main theme of the Summit will be "Insurance into the Second Decade of the XXIst Century".
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by oleg.doronceanu@mxp.ro, 25.02.2010

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FINANCIAL NEWS


IMF: Romania will have highest economic growth in EU, next year
The IMF announced it revised downwards its estimation of Romania's economic growth this year, from 1.3 percent to 0.8 percent, but for 2011 it anticipates a 5.1 percent increase of the GDP, the highest in the European Union, reads the World Economic Outlook report, quoted by MEDIAFAX. Romanian authorities will discuss the new forecast with an IMF mission that will visit Bucharest at the end of April.
According to the same report, the Fund also revised up by 0.4 percent points, to 4%, the estimation of average annual increase of consumer prices in Romania during 2010. For 2011, the International Monetary Fund forecasts a price hike of 3.1%. Across the emerging Europe - the region that includes Romania - economic growth prospects are very different from one country to another. Some countries, like Poland, were successful in withstanding the global economic downturn, while others, though hard hit, will be fast to recover. Such an example is Turkey, where market confidence picked up fast after the initial shock coming from abroad. On the other hand, economies that experienced unsustainable growth rates and a high current account deficit, will take longer to recover. This is the case with Bulgaria, Latvia and Lithuania, but the countries with vulnerable public and private financial sectors - Romania, Hungary and the Baltic States - will also pick up slower.
by nineoclock.ro, 22.04.2010


International Monetary Fund might allow higher deficit for Romania
Any discussion on raising budget deficit has to be placed in the context of Romania's continuing efforts at structural reform, the Romanian representative at the IMF, Mihai TANASESCU said quoted by Realitatea.net. The International Monetary Fund will analyze the possibility of accepting a budget deficit higher then 5.9 percent of the GDP for Romania, in the context in which the estimated economic growth ebbed from 1.3 to 0.8 percent, TANASESCU said. "It is obvious that, at the moment, a reassessment of the downward trend of Romanian economy may lead to a type of analysis meant to adapt the budget to new conditions. It is vital, though, to maintain the downward trend of the budget deficit, even if there is a slight growth, because that sends an important signal to external markets", TANASESCU claimed.
"An analysis in this respect should start from the whole picture. It is clear that the budget will have to be adapted to the new conditions, staring from an economic growth of only 0.8 percent. Things should be analyzed thoroughly: what the level of public debt, of investments and current expenses is", the IMF representative explained.
by nineoclock.ro, 22.04.2010


No major flight disruption across Romania, as traffic gets unrestricted
Romanian air traffic was fully restored yesterday, with only a small number of flights cancelled, in spite of a second ash cloud from Iceland's Eyjafjallajokull volcano reaching national territory at 9 a.m. The second cloud is smaller and flies lower than the first one, posing no problems for flights and no particular pollution risks, officials said.
The issue was also discussed in yesterday's cabinet meeting, with Environment Minister Laszlo BORBELY and Transport Minister Radu BERCEANU giving assurances that no new flight restrictions would be necessary.
BERCEANU told PM Emil BOC that air traffic was also resumed in most parts of Europe. "Last night, we checked some planes that had returned from Amsterdam and gone through part of the ash cloud. We found nothing when checking their engines", BERCEANU explained.
In turn, BOC voiced conviction that a solution would be found to allow planes to fly safely through volcanic ash, drawing a parallel with tanks in Iraq, adapted to go on sand. "I am confident we will find solutions. Just like the army did, so that tanks could go on sand, there will be solutions for planes to fly through volcanic ash particles", BOC said, quoted by AGERPRES.
But in spite of BERCEANU's assurances that flights were perfectly safe, central daily ADEVARUL reported yesterday that a Boeing 737 owned by state carrier TAROM was contaminated with volcanic ash after going through the cloud when returning from Amsterdam. The plane landed on Bucharest's OTOPENI Airport at around 6:30 p.m. on Tuesday, May 20, 2010 and a team of Transport Ministry specialists, led by State Secretary Marin ANTON started checks on the aircraft, the publication said. During checks, it was found that ash particles had reached the plane's engines. More detailed checks will follow.
The first cloud, which has caused traffic chaos in Romania and all across Europe since last Thursday, was set to completely leave national territory by 9 p.m. May 21, 2010. But even if the second cloud is smaller, it is possible to change direction and require total or partial closure of national airspace if it changes direction, meteorologists explained. The head of the National Meteorology Administration, Ion SANDU, told MEDIAFAX news agency that new air traffic restrictions would be necessary if three consecutive forecasts show flights would be dangerous. He said forecasts, coming from Britain's MET Office, are updated every six hours.
No major flight disruptions were reported yesterday across the country. A spokesperson for Henri COANDA International Airport, Valentin IORDACHE, said 40 out of 205 flights on Otopeni and four out of 75 on BANEASA were canceled yesterday. From the 40 flights called off on OTOPENI, half were heading to Germany and half to destinations such as Paris, London, Helsinki, Riga and Chisinau. On BANEASA, two flights heading to and coming from Paris and Dortmund were canceled. Sibiu and Cluj Napoca airports also canceled flights to various German destinations.
by nineoclock.ro, 22.04.2010


FITCH revises Bucharest outlook to stable
FITCH Ratings has revised Bucharest's outlook to stable from negative and affirmed its long-term foreign currency rating at "BB+". Bucharest's long-term foreign and local currency ratings have been affirmed at "BB+" and "BBB+" respectively.
The revision in Outlook from Negative to Stable reflects a similar rating action on Romania's Outlooks. The ratings of the city are underpinned by Bucharest's role as the economic and political capital, its still satisfactory budgetary performance and manageable debt level.
The ratings take into account the significant foreign currency debt exposure and, potentially, refinancing risks as well as economic contraction at the national and city levels.
The ratings could benefit from a positive change in the sovereign ratings as long as budgetary performance and debt remain at the current levels. A negative rating action could be triggered by deterioration in the operating performance and debt exceeding 150% of operating revenues.
FITCH estimates the city's debt have increased to 80% of current revenue in 2009, before declining by 2012. Although liquidity has been strong, this is expected to decline as the municipality undertakes new capital expenditure.
FITCH also noted that Bucharest is exposed to currency fluctuations and refinancing risks as most of the debt is contracted in euro and unhedged.
by wall-street.ro, 21.04.2010


Public-private partnerships worth EUR 3 billion in energy sector
European energy companies (RWE, ENEL, GDF SUEZ and CEZ) as well as Asian energy companies (Japan's ITOCHU and a Chinese company) are interested in being part of public-private partnerships in Romania for projects worth EUR 3 billion, Economy Minister Adriean VIDEANU told a press conference yesterday. Thus, EUR 1.7 billion will be used by ELECTRA, the future national energy company, to build two energy groups with a capacity of 500 MW each, while HIDROENERGETICA will invest EUR 133 million in hydropower plants located along Olt River, EUR 754 million in hydropower plants along Somesul Mare River, EUR 245 million in hydropower plants along Aries River and EUR 324 million in hydropower plants along Buzau River, MEDIAFAX informs. Likewise, the Economy Ministry will remain an OMV Petrom (SNP) shareholder with over 8 percent of PETROM's capital, transferring from it the part employees are lawfully entitled to, he added.
The minister added that there is a need to clarify information concerning the Romanian Investment Fund. "The idea of CEC and BNR involvement does not come from us, it's an absurdity rumored in certain circles. We want this account to be fueled with good assets and with shares owned within national companies", VIDEANU underlined. The state's new investment instrument will be dubbed the "Romanian Investment Fund" and its portfolio will include, two months after the Fund's creation, the state's minority share packages.
by nineoclock.ro, 22.04.2010

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EVENTS


Russian Insurance Summit 2010
20-23 May 2010
VELES Hotel, Vladimir, Russia
Organizer: All-Russian Insurance Association
Media Partner: XPRIMM Insurance and Pensions
Official web-page: ins-conference.org


FIAR - International Insurance-Reinsurance Forum
24-28 May 2010
Sinaia, Romania
13th Edition
Organizer: Media XPRIMM
Official web-page: www.fiar.ro

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THE EDITORIAL STAFF:

President: Sergiu COSTACHE CEO: Adriana PANCIU
Business Development Director: Alexandru D. CIUNCAN

Editor in Chief: Mihaela CIRCU
Scientific Advisor: Daniela GHETU
International Column Coordinator: Andreea IONETE
Senior Editors: Vlad PANCIU, Oleg DORONCEANU
Editors: Vlad BOLDIJAR, Oana RADU, Mihai CRACEA, Andreea STATE
General Secretary: Lidia POP

Accounts Manager: Georgiana OPREA
IT Department: Octavian GRIGOR, Dorin PALADE, Cosmin ARMASESCU

e-mail: xprimm@primm.ro

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