Luciano CIRINA: CEE is for sure not one single homogenous market - you cannot compare the markets e.g. of Poland and Bulgaria or of Czech Republic and Croatia. All these markets are quite different as the needs of the clients are quite different depending on the development of local economies. As a whole we are very satisfied with the development of the region which proved also in 2013 to have a positive perspective for the years ahead.
XPRIMM: Which are the most challenging aspects of doing business in the CEE markets, as seen from your perspective, as an important player in almost all the CEE markets?
L. C.: Let me say it very openly: GENERALI is interested in a long term development of the insurance business in the region. We are aware of the fact that you have to invest in the markets before you can gain profits. But the most important basis for investments is a stable legal environment. In this respect we are facing - let's say - some unpleasant developments in some of the countries. For example the legislation regarding the second pillar changes in some markets, also the changes in tax legislation do not support us in providing secure employment for thousands of people in the various countries. I also think the governments should work on a more long term perspective and recognize that the financial industry is of great value in stabilizing the local economies.
XPRIMM: The CEE markets have been seen for many years as a growth reservoir for the Western insurers, due to their high growth rates in term of GWP. However, from the profitability point of view, the CEE markets proved more challenging. How do you comment the current situation from this point of view?
L. C.: I am still convinced that the region has a big potential for further growth. This is the reason why GENERALI returned to these markets after 1989. Within these 25 years the CEE markets gained high relevance within the GENERALI Group not only in terms of gross written premiums but even more in terms of profit. The businesses in the CEE region accounts already for 10 per cent of the Group's operational profit. Comparing this figure with 14 per cent in Germany and 13 per cent in France this is quite an impressive proof of success.
XPRIMM: Which is your assessment with regard to the future development of the CEE markets, on short and middle term?
L. C.: I expect our business to grow depending on the development of the local economies. There are better perspectives in some countries than in others - for some countries it will take longer to reach a sustainable level of material prosperity. Our business depends to a large extent on how much money private consumers could invest in goods like cars and houses and how much companies could invest in their facilities. Insurance is more a mid and a long term business and in this respect the forecasts are very positive.
XPRIMM: Would you say that the promising potential shown by these markets two decades ago proved real? How far/close are the CEE markets from fulfilling their potential from the insurance business perspective?
L. C.: It's a matter of fact that twenty years ago you could read in many economic researches that the CEE markets will align very fast to Western Europe. But once again: We are aware that the potential is proven when bearing in mind that premiums per capita reached in Central and Eastern Europe just USD 223 compared to USD 2,716 in Western Europe. We as GENERALI do not enter markets squeezing them out but developing our business in line with the needs of the local consumers and economies. And this for sure will take some time.
XPRIMM: What changes do you think would be the most important for the CEE markets in order to provide a better environment for the insurance business' growth and profitability?
L. C.: An improving economic, political and legal environment would create the best climate to improve the peoples' standard of life. This would be connected directly to the demand for products and services provided by the insurance industry.
XPRIMM: What are GENERALI's development plans in the region? Would the Group be interested by further extend its activity in the former soviet countries?
L. C.: GENERALI is investing EUR 2.5 billion for PPF's 49 % share - it is the biggest deal of GENERALI in recent times: This proves that the CEE market is of strategic importance and that GENERALI has a long term interest in this market and no doubt that we will keep on developing this market. Already today it is - behind Italy, France and Germany - one of the four most important markets of the Group. The CEE business is very successful and it's a market with strong potential for further growth. Our Group CEO, Mario GRECO, has defined the goal: "We aim to further strengthen our market position and profitability of our business." In the former Soviet countries GENERALI is observing carefully recent developments.
XPRIMM: In particular, what is your opinion about the Romanian business of your Group and are your plans for the future in this country?
L. C.: The whole Romanian insurance industry faces tough challenges showing that we are in a quite lucky situation compared with other Groups. We will continue to put our focus on high quality of products and services for our customers. We will rely on individual as well as on corporate insurance. We will strengthen our presence in non-motor/non-life-line of businesses increasing our presence in small and medium enterprises which are our traditional customers. Technical and industrial insurance for commercial risks are growing since we are recognized as best insurance partners by local and foreign companies. Group life insurance such as employee benefits will further be promoted given the good reputation of GENERALI for its insurance solutions in this segment. GENERALI Romania will speed up the turnaround process in 2014 to reach a sound and sustainable profit in the years to come.