Eric CLURFAIN, Head of Central Europe and EMEA at MetLife

13 September 2012 —
eric_clurfainXPRIMM: What does CE mean for the MetLife group? Which are your plans regarding the CE operations in the next 3-5 years?
CE has a strategic importance for MetLife and we want to continue to grow in this region. The transaction with AVIVA creates an excellent opportunity to reach more customers with a wider offering of products and services, and further build scale in our existing operations in these countries. Moreover, the transaction allows MetLife to accelerate development in the emerging European markets.

Our current priority in CE is to effectively integrate MetLife and AVIVA. Both MetLife and AVIVA employees will work together to integrate the two companies, in order to ensure continuous business development. In the future, we are committed to continuing development in the CE region both by implementing an organic growth strategy and by keeping a close eye on acquisition opportunities.

XPRIMM: Which are the CE markets with the greatest revenues from underwritten premiums? Which are the markets with the highest growth potential in the next years?
MetLife does not disclose revenues on a country basis. Regarding the growth potential in CE countries, we believe that the entire region offers excellent opportunities for growth, and we, as a company, are committed to and invested in every market in which we are present.

XPRIMM: Is Romania a strategic market for the MetLife group? Which are the main opportunities and challenges for growing the local business, in your opinion?
As I mentioned before, MetLife's principal objective is to invest in growing operations in emerging markets with the highest potential - and Romania is a strategic country for us in this regard. We count on the great potential of this market, the second largest in the emerging Europe in terms of size, but with the lowest insurance market penetration in the EU. What others may see as a disadvantage, we consider an opportunity. We are committed to investing in education and to position ourselves, through our subsidiary ALICO, as the life insurance market expert and one of the market leaders. The Romanian market has attributes conducive to it developing into a success story: important international groups invest here and bring significant know-how, and the local regulatory environment is in compliance with the European standards, offering predictability helpful to business planning. Moreover, Romania is expected to implement a fundamental healthcare reform that will give a significant boost to the overall insurance market, and, potentially, triggering an increased receptivity to insurance products.

Generally low financial literacy and the lack of fiscal incentives applicable to our products are the biggest challenges for us at the moment, but we are convinced that the apparent progress in these areas will ultimately support our businesses moving forward.

XPRIMM: What are MetLife's targets for its Romanian operations in terms of market share and positioning in the life insurance market in the next 3-5 years?
MetLife sees Romania as a high potential market and has a long-term plan to develop locally.

Our objective is, of course, to continue growing our business, preferably at a faster pace than the rest of the market, while remaining the most profitable life insurance company in the market. This will allow us to achieve our strategic objective to become the life insurance market leader within the next five years, already announced in 2011.

For 2012, our priority is to further serve our clients by extending and diversifying our distribution channels, launching new products and creating a strong network of professional agents in order to best address our clients' needs. We will also focus on growing our Employee Benefits (Group) business and leverage MetLife's worldwide best practices and leadership in this area.

XPRIMM: How do you plan to continue the development of the life insurance and pension businesses in Romania (organic growth or acquisitions)?
As mentioned above, Romania is a strategic market for MetLife - the parent group of ALICO. We have just announced the completion of the acquisition of AVIVA's Romanian life insurance operations, while the acquisition of AVIVA's local pensions businesses is still pending approval from the pension market regulator, after already receiving the clearance from the Competition Council for the transaction.

At the same time, we continue to develop through organic growth and the deployment of distribution structures from the three main financial industries: banking, leasing and insurance. Under the current difficult economic circumstances, it seems the banking sector will regroup and the insurance market expects significant moves. One of the reasons for changes in the insurance industry is the implementation of the European standards that harmonize the insurance regulations. That is to say that we have the financial resources and stability which has helped us to report excellent results and continuous growth.

XPRIMM: Are you discussing further potential acquisitions in CE at the moment? How about in Romania?
MetLife objective is to become the leading global provider of life, accidents and health insurance, annuities and employee benefit programs. MetLife has a very active team responsible for mergers and acquisitions, which is constantly keeping a vigilant eye on the inorganic growth opportunities.

As far as Romania is concerned, we aim to become the life insurance market leader within the next five years and in order to answer this objective we are vigilant and assess all the market opportunities. We are ready to invest to grow both organic and inorganic, respectively through the development of new distribution network and, potentially, acquisitions.

XPRIMM: What does MetLife expect to gain from acquiring Aviva's CE operations?
This transaction allows MetLife to consolidate its position in Romania, Hungary and Czech Republic markets, which are strategic to MetLife's plans. We view the CE countries as long-term strategic growth markets - where we will continue to strengthen and increase our already existing strong positions.

The transaction with AVIVA brings MetLife a diversified and extended distribution network, including direct sales, brokers and bancassurance partnerships, a mix between unit-linked, traditional life insurance products, and private pensions.

XPRIMM: Which is the expected impact on ALICO Romania of acquiring AVIVA Romania's operations? Will this transaction help ALICO become the second largest company in the market in the near term?
The key driver for this acquisition is growth. We are adding AVIVA's capabilities in terms of products and distribution to solidify our market position and further expand in the region.

XPRIMM: What are the main reasons for the under-development of the Romanian life insurance market, in your opinion?
I believe that the low financial literacy and lack of fiscal incentives are the key drivers of the law penetration level of insurance in Romania. And I am talking here also about the people's perception seeing insurance as complicated, intimidating, and our vision and objective is to simplify it and make it easier for everyone to achieve financial security. Moreover, life insurance products were launched in Romania later compared to other countries (1997-1998) and have not carried the advantage of fiscal benefits. Countries like Hungary and Poland introduced from the outset total deductibility of premium payments, which led to double-digit annual sales growth

Creating tax advantages for the life insurance premiums could be the key external growth engine for the market and, incidentally, significantly contribute to the Romanians' insurance products education and development of the insurance industry.

XPRIMM: What should insurers, regulators and the Government do in order to accelerate the growth of the market?
MetLife works closely with regulators and legislators in markets around the world with a tremendous variety of regulations and policies. We share our experience and expertise and actively engage in dialogues about the best approach to serving customers. MetLife operates effectively in many different markets, economic and regulatory environments by focusing on our customers first. This keeps us aligned with the aims of different governments and regulators. We are effective because protecting consumers - both with our products and with our business practices - this is ultimately what our business is all about.

In Romania, the life insurance market needs first of all a better fiscal framework, similar to the ones implemented by other CE governments at the beginning of their respective market development.

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