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XPRIMM News No. 113, July - 31st, 2008

No. 113, July 31st, 2008
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You have to buy, before you sell!

Is there a real crisis in human resources in the insurance business? Or is it just a general crisis of highly qualified employees? Or just a lack of average qualified employees... or both?

The demand? Employers aim for faithful and highly trained people, with low salary expectations.
The offer? Young graduates looking for fields that do not require practical experience, where there is no great effort involved and, last but not least, with high salaries. But what do high salaries mean? All in all, such demands may be considered overrated only if they are not present in any employers' offers.

What are the factors that determine a graduate to turn their attention towards insurance? Past the financial reasons, debatable in comparison to other fields, another factor acts upon the common conscience: attitude towards insurance.

It is hard to turn towards a business to buy or to sell a service that you or the ones that you lived do not use. First of all, you have to be a client accommodated with the product to have a natural motivation to work in that field and to understand what you have to sell.

Before you sell insurance, you have to buy insurance.

P.S. About 250,000 graduated this year and will assault the doors of employers.

How many will knock on the doors of insurance companies? How many are the companies prepared to accept? And, more than anything else, how many are prepared to be accepted by insurance companies?


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BCR Asigurari de Viata




Interview with Mr. Denis ROUSSET
General Manager
BT Asigurari

XPRIMM: Taking into consideration the fact that this is one of the first interviews granted by you since taking over the management of BT Asigurari, we ask you to make a short presentation of yourself for the readers of PRIMM Insurance & Pensions Magazine.
Since March 2008 I have been the General Manager of BT Asigurari, as I have been officially invested with the approval of the Committee of Insurance Supervisory Commission. Therefore, I came to Romania a few months ago. But my experience in the insurance field has begun more than 15 years ago, in France. After a few years of activity in consultancy, in 1993, I have started working for the public company GAN that was one of the first three public companies in France at the time. In the end of the 90's I became the coordinator of the GAN privatization process, as it was being taken over by GROUPAMA. The next years were dedicated to the re-organization of the networks of agents, brokers, bank networks. I am certain that the experience of collaborating with various distribution channels will be extremely useful in the development and optimization of the GROUPAMA activities in Romania.

XPRIMM: What are the objectives you have set, as General Manager of BT Asigurari?
Our objectives for the on-going period of time imply the development of ten strategic projects, meant to contribute to obtaining the performances we want. Mainly, these are related to the basic areas of business development. I am talking about the projects of releasing a new category of products, in collaboration with Banca TRANSILVANIA, of creating a new visual identity for the company under the GROUPAMA brand, of implementing a modern, competitive and unique informational system for all the activities of GROUPAMA in Romania. We are also looking to strengthen the sales force, by offering new career and development opportunities; to renew the range of products by launching a new RCA product, a new residence product, a complete product for the SMEs and a new agricultural insurance product. Last, but not least, we are working on conceiving a new claims management system following the French model and bringing the new accounting procedures up to the international standards.

XPRIMM: For the moment, the Romanian insurance market has one of the fastest growing rates in Europe. Do you estimate that the same rate will be maintained in the future?
If in 2007 the Romanian insurance market registered total results of EUR 2.2 billion, I estimate an over EUR 10 billion growth before 2020. Taking into consideration the medium yearly economical growth in Romania, that I believe to remain under 5% for the next 10 years, the insurance market should grow at least 3 times more compared to the rest of the economy. For now, the share the insurances have in the Romanian economy is pretty low. I can say that the Romanian insurance market is going through atypical times, with consistent losses - at national level - of over EUR 75 million, in 2007, that leads us to believe that only the strong competitors will remain on the market, thus there will be a greater concentration that will continue in the next years.

XPRIMM: What do you consider to be the main threat for the Romanian insurance market?
D. R.:
In my opinion, the main threat affecting the insurance market in the present consists of the lack of an adequate road infrastructure and of a drivers' discipline, the main causes for the accidents that subsequently affect the insurers. Under these circumstances, the auto insurances, both mandatory and voluntary ones, will become more and more expensive, and the number of the CASCO insured cars will diminish significantly. The less insured persons there will be the higher will the insurances prices grow.

XPRIMM: One of the most debated issues is the lack of profit in the Romanian insurance market. In this perspective, what is the strategic orientation of the company you represent: profitability or market share?
D. R.:
The strategic orientation will aim both the consolidation of the market share and obtaining a profit; we will not make an exclusive choice between the two. We consider that, for the time being, there is enough potential for the insurance activities to allow the intelligent usage of our experience for the services offer and broader risks coverage.

XPRIMM: What determined GROUPAMA to take the decision of entering the Romanian insurance market?
D. R.:
Romania was chosen as an international development target by GROUPAMA about 3 years ago, after a careful analysis of the local insurance market. We have negotiated during this time with many important market players, especially with BRD Societe Generale, a close partner of GROUPAMA, and with Banca TRANSILVANIA. We have entered the Romanian market by taking over BT Asigurari, last October; then OTP Garancia followed, in February 2008, and most recently ASIBAN, in March. The speeding rate of the economical development in Romania proves that the insurance market has a real potential. This explains the very high price we were willing to pay to be present on this market and to have our contribution in its education, so that it will become in time more and more alike the Western markets.

XPRIMM: GROUPAMA has taken over ASIBAN after a fight in which important names of the world insurances took part, and has reached, very rapidly, the third place in the Romanian insurance market. Does the French group plan to take over other Romanian companies?
D. R.:
At this moment we consider to hold all the cards in order to make ourselves noticed on the insurances stage, as we are the third big player on the market, with a total market share of 12%. We are not interested in other Romanian acquisitions anymore. We shall focus on an organic development of the pre-existent structures and we shall stake on our sales force, which we shall continue to strengthen on a national level.

XPRIMM: What is the strategy that GROUPAMA has planned for Romania? Will the three companies you own for now merge?
D. R.:
The strategy we shall adopt in Romania consists in concentrating all the operations in one brand, GROUPAMA. This way, we shall increase the effectiveness and we shall decrease the costs of the support functions, dedicating specialists for each field of activity, who will come to meet the needs of our clients, with professional insurance solutions. We shall keep two strategic locations, in Cluj-Napoca and in Bucharest, and we shall manage the strongest commercial network, on a national level, including 500 agencies, 1,400 employees and 9,000 agents. The bancassurance partnerships with Banca TRANSILVANIA, OTP Bank, BRD Groupe Societe Generale, CEC Bank, as well as the agreements with the insurance brokers subscribe to the established medium and long term strategy. We are also working on reconstructing an offer of products for all types of clients, individuals, SMEs, agricultural communities.

XPRIMM: Taking into consideration the gradual reorientation of the large companies from the market share towards profitability, in the same time with the finalization of the acquisitions and with the pressure from the share holders, when do you expect to obtain a profit on the Romanian insurance market?
D. R.:
We have just overcome 2007, a year with important losses. But, in my opinion, 2008 will mark historical losses on the Romanian insurance market. Under the circumstances of these repeated losses, the insurers will begin to redirect themselves towards obtaining a profit in 2009, but taking into consideration the fact that the process of the insurance activities is complex and long lasting, we shall have to wait quite a long time until the Romanian insurance market registers a profit.

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General Manager
BT Asigurari


PRIMM received the BRAT audit
The most important Romanian publications have one thing in common: the audit from the Romanian Bureau of Circulation Audit - BRAT. Starting July the 15th, 2008, PRIMM - Insurance & Pensions Magazine, edited by Media XPRIMM, has received the BRAT audit; this comes to reinforce its value on the Romanian publications market.
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by, 18.07.2008

Agricultural insurance cover only 17% of the market
Only 1.8 million ha were covered by insurance between the years 2006 and 2007, from a total of 10.5 million ha that could have been insured. As a result, the coverage was only 17%.
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by, 21.07.2008

Bad weather conditions push claims ratio over 90% in the agricultural insurance segment
The effect of worsening weather conditions in 2007 produced considerable damage in the agricultural sector, reaching RON 48.3 million, while revenues in the same period reached RON 53.7 million.
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by, 24.07.2008

The most significant grow for VIG is in Romania
VIENNA Insurance Group registered an 89.1% grow in the first semester of this year, which was the most significant increase in the group's revenues from gross written premiums. Romania was followed by Bulgaria, Serbia, and Poland with rises of 77%, 50% and 43.3%, according to ERSTE's report on Central and Eastern Europe.
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by, 30.07.2008

Floods cost ASTRA-UNIQA over EUR 1 million
As a result of the floods in Moldova and Transilvania, ASTRA-UNIQA registered 55 cases of partially or totally destroyed homes, with a total value surpassing EUR 1 million.
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by, 29.07.2008

EUROINS wants subscriptions of EUR 1 million form agricultural insurances
The company EUROINS Romania has subscribed, in the first 6 months of the year 2008, RON 1.5 million (over EUR 410,000) on agricultural insurances.
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by, 17.07.2008

GROUPAMA's taking over of ASIBAN was authorized by the Competition's Council
The Competition's Council has authorized the taking over of the insurance company ASIAN, by GROUPAMA International.
After the analysis performed by the authority of the Competition's Council, regarding the economical concentration created by GROUPAMA INTERNATIONAL taking control over SC ASIBAN Insurance Reinsurance SA, the conclusion has been reached that it is not the case of the birth of a dominant position on the market where the above mentioned company activates.
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by, 24.07.2008

A quarter of the clients brought by ERSTE at VIG are Romanians
A quarter of the clients brought to VIENNA Insurance Group, by the purchase of the ERSTE insurance operations from Central and Eastern Europe, come from Romania.
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by, 25.07.2008

MARSH Romania revenues increased by 50%
MARSH Romania revenues increased in the first semester of 2008 by 50% compared to the first six months of 2007.
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by, 22.07.2008

Intermediate gross premiums of EUR 6 million for ASIGEST
ASIGEST has finished the first semester of this year with a volume of intermediate gross premiums of approximately EUR 6 million, which represents a 50% growth compared to the similar period of 2007.
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by, 29.07.2008

50%-60% differences among incomes of different mandatory pension funds' participants
The first three collection rounds to the mandatory pension funds (2nd pillar) brought to light significant differences, of 50%-60%, between gross incomes of different mandatory pension funds' participants, according to an exclusive analysis by At the first collection round, the difference between the average gross income of the fund with the best paid participants (BCR) and the one with the poorest paid participants (PRIMA PENSIE) was of 47%, to increase to 52% at the second collection round (between ING and PRIMA PENSIE) and to 60% at the third collection round (between BRD and PRIMA PENSIE).
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by, 24.07.2008

OANCEA: In a few years' time, the voluntary pensions system should be overhauled
The voluntary pensions system (3rd pillar) should be overhauled in a few years' time, with the direction of liberalization and to distinguish voluntary from mandatory pensions (2nd pillar), Mircea OANCEA, President of CSSPP (the Romanian pensions regulator) told
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by, 22.07.2008

AVIVA filed for a second voluntary pension fund license
AVIVA Life Insurance filed the necessary documentation to CSSPP to get it's second voluntary pension fund (3rd pillar) authorized - a higher-risk profile, growth fund, Shah ROUF, CEO of AVIVA Group in Romania, told
"We wanted to have a second fund available for out clients, this time with a more dynamic investment profile, to meet our customers' needs. We can already see the supply being diversified on the voluntary pensions market, process which includes the soon-to-come launch of our second fund", Shah ROUF said.
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by, 22.07.2008

Third collection round: Mandatory pension funds received EUR 27,2 mn. in contributions
Romanian mandatory pension funds (2nd pillar) collected contributions worth EUR 27,2 mn. at the third round of collection, that took place July the 21st. Around 3,27 million participant (out of the total 4,16) will receive contributions in their personal accounts, the rest of over 895.000 being empty accounts. The average contribution was of 8,31 EUR, as compared to 8,59 EUR in the second round of collection.
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by, 22.07.2008

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ERGO extends in Belarus

The German group ERGO acquired 60% of the shares from the Belarusian insurance company BASCO, according to The acquisition was carried out through ERGO Lietuva (Lithuania), ERGO Kindlustuse (Estonia) and ERGO International (Germany), with equal participation of 20% of the shares. The remaining 40% share of the company will belong to local investors.
As a result of this transaction, BASCO representatives expect an increase in the company's capital over the next two years, reaching EUR 1 million, to match the new rules from the local Supervisory Commission until 2011.
They also count on extending their collaboration with the new investors from the Baltic region who are becoming more interested in that market.
94.7% of ERGO Group belongs to MUNCH Re, one of the biggest reinsurance companies from the European market. MUNICH Re is present in 26 countries in Europe and Asia, with gross written premiums of EUR 17 billion in 2007 and having 34 million clients.
The company recently entered the Romanian market, by opening ERGO Asigurari de Viata, and through a partnership with the Italian group UNICREDIT.
by, 30.07.2008

The need for private pensions in the Republic of Moldova
The decrease of the rate of birth and the increase of life expectancy are two new issues that draw the attention of the Moldavian Government upon the reform of the pension system.
In an interview given to, Viorica PETROV, General Manager of IBP Delta Asigurari, said that private pensions may be the only valid solution for this problem.
"This issue is already under analysis by the Government. Last year, the President mentioned the need for the National Commission for Financial Markets to conceive a legal frame for this matter", Viorica PETROV declared.
Regarding the results that the reform might have, she added: "The efficiency of the system will only be visible in time. Still, just like the case of insurance, private pensions will require the previous education of the customers".
At this time, in Moldova there is a public pensions system and a law regarding pension funds, dating from 1999, which has not contributed to the development of the 3 pillar concept.
Presently, pensions in this country are the lowest in Eastern Europe and even in the CSI. Although they are increased on an annual basis by 15-20%, the minimum pension is approximately 25 EUR, and the medium pension is 35 EUR.
by, 30.07.2008

The Cartel for Establishing the MTPL Price - fined in Bulgaria
The Bulgarian anti-monopoly authority granted a fine of EUR 1.25 million to 14 general insurance companies that created a cartel for establishing a minimum price for the motor third party liability insurances, according to
The Competition Council in Bulgaria claims that the memorandum signed in December 2007 by the fined companies had the objective of establishing a minimum premium, in the profile industry, for the MTPL insurances, and also a maximum limit for the commissions paid to the insurance brokers.
The fines granted by the anti-monopoly authority vary from EUR 51,130 to EUR 128,000. Most of the companies declared they would dispute the issue in instance, what most probabily would lead to a MTPL increase up to EUR 256.
DZI General Insurance and UNIQA were the only insurers that didn't sign this agreement.
The President of the Bulgarian Insurers' Association, Orlin PENEV, stated that the purpose of the memorandum was to establish a uniformity of the prices, that would had consolidated the MTPL market, and not at all to establish a minimum price for this type of insurances.
The Bulgarian insurance societies have reported quarterly subscriptions of EUR 216.9 million, out of which EUR 184.5 million go to the general insurances segment, 18.1% more than in the similar period of time of 2007.
The market was dominated by the motor area, which generated 42% out of the total volume of the subscribed gross premiums.
by, 18.07.2008

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Central Bank increases key interest rate 7th time in a row
The board of the Romanian Central Bank (BNR) decided on Thursday to increase the key interest rate by 0.25%, starting on August 1st, from 10% to 10.25%, a BNR press release informs. This is the highest level since August 2007, when it reached 12.5%.
Also, BNR is decided to continue to pursue a firm management of money market liquidity via open-market operations and to preserve the current level for minimum obligatory reserves for banks.
The Central bank increased the key interest rate for the seventh time in a row, in every board session that took place since October 2007, when the rate was 7%. The last increase took place in June 2008.
The decision comes against all expectation expressed by financial analysts, who believed that the Central Bank will stop at the 10% level established in June, since the inflation was expected to peak in July and then enter a descending trend.
by, 31.07.2008

The number of authorizations for residential constructions up 12.9 pc
Around 30,000 authorizations for the construction of residential buildings were issued in the first six months of the year, according to the last report of the National Institute of Statistics (INS). This means a growth of 12.9% compared to the same period of 2007.
The most important growths were registered in the development regions Sud-Muntenia, with an advance of 965 authorizations, Bucharest-Ilfov (plus 815 authorizations), Centre (576 authorizations) and Nord-Vest (550 authorizations). The useful surface for which the authorizations were issued increased in June to 1.64 million sq m, compared to 1.1 million sq m in June 2007.
Six% more authorizations were issued last June than in the same month of the past year. But compared to May, a fall of 2.4 per cent was registered last June.
The weight of the authorizations issued for the rural area was in June more important than that for the urban environment. Thus, 59.9% of the total number of authorizations was issued for the rural area. In three of the eight development regions there was a slight decrease of the number of authorizations issued for residential buildings. This tendency was obvious also in the development regions South-East, South-Muntenia, South-West Oltenia. On another hand, in the regions West, Bucharest-Ilfov County, North-West, Centre and North-East the number of authorizations issued for the construction of residential buildings decreased.
by, 29.07.2008

Retailers invest EUR 156 million in expansion
Large retailers operating in Romania opened more than 25 stores in the first quarter of 2008, in which they invested some EUR 156.5 million, according to calculations made by NewsIn news agency.
The most aggressive expansion was made by French CARREFOUR retailer, which inaugurated as much as four hypermarkets in the first six months of 2008. The hypermarket chain currently has 15 units in, with investments worth EUR 80 million. Furthermore, the company refurbished nine of the 21 Artima supermarkets it took over last year. The nine units were rebranded as CARREFOUR Express.
On the supermarket segment, MEGA IMAGE was the most active chain, with two units opened in Bucharest and 14 La FOURMI supermarkets acquired for EUR 18.6 million.
On the discount retail segment, the strongest expansion was registered by PLUS Discount, with five new stores by the end of June and a further three inaugurated in July. The company invested a total EUR 87.5 mln in H1.
by, 28.07.2008

Foreign investments to reach EUR 8-10 billion this year
Romania could consolidate the growth trend of foreign direct investments (FDI) this year, given several competitive advantages, such as the ratio between wages and labor productivity, attractiveness of certain sectors, and economic growth.
A rise in foreign investments was registered in each of the five months of 2008. In January, the annual increase was 75 percent (EUR 0.69 billion), in February, 40 percent (EUR 1.2 billion), the March year-on-year increase was 27 percent (EUR 1.7 billion), while the growth for April and May was double (at EUR 3.2 billion and EUR 4.1 billion, respectively).
According a recent estimate by Banca Comerciala Romana (BCR), owned by Austrian Erste Bank, foreign investments could amount to EUR 7.8 billion by the end of the year, 10 percent higher than in 2007.
Finance Minister Varujan VOSGANIAN said on Friday that FDI could reach as much as EUR 10 billion. "In the first five months of the year, we had EUR 4.2 billion in foreign direct investments, with only a single notable privatization, that of [electricity provider] Electrica Muntenia Sud. If things continue this way, we could exceed the psychological threshold of EUR 10 billion in foreign investments this year", VOSGANIAN added.
The forecast is confirmed by analysts. "Although we are dealing with a worsening business environment, we must not forget that investments such as those by NOKIA or FORD are long-term. It is likely that other big names will come to, as we still have competitive advantages. We must keep the macroeconomic situation under control", Professor of Economics and former Minister of Finance Daniel DAIANU told Business Standard.
by, 28.07.2008

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XPRIMM Newsletters


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
Private Pensions Coordinator: Mihai BOBOCEA
Senior Editors: Vlad PANCIU, Oleg DORONCEANU
Editors: Vlad BOLDIJAR, Oana NECULA, Mihai CRACEA
Web Responsible: Costi BORODA

General Secretary: Lidia POP

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

Edition Responsible: Costi BORODA


Reproduction or use without permission of editorial or graphic content, in any manner, is prohibited. The Editorial Staff is not responsible for the truthfulness or the accuracy of the presented data. The Editorial Staff has the right to present the data in it's own manner. In what concerns the use, in any manner, of the information contained in this e-mail, Romanian laws apply.

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