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XPRIMM News No. 135, June 25th, 2009

No. 135, June 25th, 2009
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The amicable report - ready or not

Precisely one year ago, alongside the MTPL policy I got from my insurer, I also received a form, explaining: "This is for the amicable report. It might enter into force this year... we are ready. In case the procedure is approved, you'll be able to use this form. Do you know what it means?"

It so happened that I knew. And now, more than a year since I have received the first form, the amicable report procedure finally enters into force.

Insurers, at least in my case, proved they were ready... at least formally. I wonder, are drivers ready to use the amicable report? We shall find out after July 1st.

But how can the general public be ready for a concept it has never heard it even existed?

Given this context, Media XPRIMM started off a campaign aimed at informing the population on the procedure for the amicable report. The first component thereof is, the first dedicated web-site intended to inform the general public on the practical issues related to the implementation of the amicable report.

Next year I'll get another MTPL policy, together with the amicable report form. And, at that moment, I wish the insurer's explanation be accompanied by the following words: "You can find all the details at".

It would be much more efficient, both for the customer and for the insurer.


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Insurance PROFILE Review
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BCR Asigurari de Viata


Credit Europe Asigurari


Interview with Silviu SABIESCU,
Pricing Actuary
GenRe Life Health

XPRIMM: What expectations do you have related to the reinsurance demand of the companies in Central and Eastern Europe and what lines of business do you think will register a growth of this demand?
Reinsurance is an indispensable component of the insurance industry and it will remain so in the future. According to an incomplete perception, the only role of the reinsurers is to provide coverage for the risks that insurance companies cannot hold in their own portfolio. It is totally wrong. In order to be fully useful, this coverage must be accompanied from the reinsurer's part by a package that includes full support in: product development (conditions, price), underwriting risks and claims management. Also, through reinsurance contracts, insurance companies increase their ability to underwrite without the solvency indicators being affected. Therefore, any type of insurance that requires expertise or capital from the reinsurer's part will register increases of the reinsurance demand.
As the markets of Central and Eastern Europe align to the already developed ones, insurance products become more complex. Reinsurers that have global exposure are generally the ones who transfer the experience of the mature markets towards the developing ones.

XPRIMM: What are the main opportunities that the insurance market in Central and Eastern Europe enjoys? But the main dangers that threaten it, considering the economic realities?
S. S.:
The financial protection deficit (the difference between the financial resources of a family and those needed for maintaining the standard of life in case of the death of a person) is very high in Romania, as well as in Central and Eastern Europe, as people are not fully aware of this need for protection. So, there is still a huge growth potential for life insurance.
The dangers which threaten the insurance market are not new and they are not necessarily related to the economic crisis - on one hand, there is a psychological barrier given by the distrust of people in financial institutions and, on the other hand, the decrease of real incomes and of purchasing power.
The role of insurance industry in the economy does not change in times of crisis. People still need to insure their life, health, home, car. Also, companies continue to insure their assets or their businesses. In one way or another, there is demand for insurance. It depends on each insurance company in part how it manages to adapt its behavior in order to survive and even to benefit from the effects of the economic crisis.

XPRIMM: How would you advise insurance companies to approach their customers in this time of crisis?
S. S.:
The flexibility towards customers who have a financial situation that is temporarily more difficult can make the number of surrenders or of resiliations of insurance policies be reasonable. A life insurance is, generally, a long-term contract, and to fully benefit from it is necessary that both parties find ways to compensate for the temporary lack of liquidity.
The safety of the future from the financial point of view is the main selling argument of insurers. In the conditions of the current crisis, some people could more easily understand this argument, so that it is up to the seller to create new opportunities.

XPRIMM: What do you think about the tendency of the Romanian insurers to diminish the volume of premiums ceded in reinsurance, which decreased to 20% of the total gross written premiums of 2008?
S. S.:
I think the decrease is mainly related to general insurance, and the main cause could be a sharp decrease in credit and guarantees insurance. The descending trend of the reinsurance premiums can be determined by the fact that the exposures retained by insurers have grown or because the reinsurance prices have fallen. In the same time, the decrease of the reinsurance cedings must also be correlated to the growth of the capitalization of the profile companies.
Despite this descending trend, GenRe Life Health has increased year on year, along with the life insurance market, because the relationships with our partners are built on the long term and they are profitable for both sides. As long as insurers and reinsurers rely on long term relationships, that are fair and mutually beneficial, both parties will benefit on the long term, from the upward trend of the insurance market.

XPRIMM: Thank you!


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Everything about FIAR 2009 is now...on-line
For all of you that have attended FIAR 2009, but also for those who have missed it and want to know everything about it, we have an important announcement:
You can find the photos of the most important moments of FIAR 2009 at the Photo Gallery section on
Click here to read more!
by, 17.06.2009

The insurance market capitalization is close to EUR 1 billion
The capitalization of the Romanian insurance market has exceeded, after the first three months of 2009, the value of EUR 900 million, in the conditions in which the addition of capital in 2008 was EUR 240 million, and in the first part of this year the capitalizations amounted to EUR 70 million.
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by, 24.06.2009

The AOL Law may suffer further modifications
Yesterday, the latest draft of amendment of the Mandatory Household Insurance Law was signed by representatives of the Ministry of Administration and Interior, and it was sent to the Insurance Supervisory Commission (ISC) for approval. However, the changes that were adopted from the set of proposals have not yet been specified.
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by, 25.06.2009

GROUPAMA Asigurari is launching at the end of September
The French group GROUPAMA, which holds, in Romania, ASIBAN, BT Asigurari and OTP Garancia, received, on June the 16th, the ISC approval for the project of creation of a new player on the local insurance market, by integrating the local operations under a single brand, GROUPAMA Asigurari.
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by, 18.06.2009

GENERALI PPF will provide RON 200 million to the capital of ARDAF
GENERALI PPF Holding, the majority shareholder of ARDAF, wants to increase the share capital of the insurer with RON 200 million, after the ending of the public takeover offer launched two weeks ago, according to a communique submitted to BSE. The operation will be debated in a General Meeting of Shareholders, convened on July the 22nd, and, if it is approved, the share capital of ARDAF will reach RON 309 million.
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by, 22.06.2009

Plus 16% on health for EUREKO
The EUREKO business, in the first five months of the year, has decreased by 14%, down to RON 31.1 million, on the background of a 41% decrease of the volume of underwritings on general insurance, along with the waiver of these operations, since May. Instead, EUREKO recorded a 16% increase on the health insurance segment, with a total of gross written premiums of RON 4.5 million, as the number of the company's clients, at the end of May, for these products, was 11,000.
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by, 19.06.2009

CERTASIG in Top 20 non-life insurance
CERTASIG underwrote, in the first quarter of the current year, gross premiums that amounted to RON 9.1 million, which represents, in European currency, EUR 2.1 million. The registered result led CERTASIG among the Top 20 insurance companies on the non-life insurance segment (the 19th place), while at the end of 2008, the company had ranked 23rd in the same hierarchy, according to the Specialty Review INSURANCE Profile.
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by, 17.06.2009

Opportunity fraud - amplified by the amicable report
In the conditions in which there are less than two weeks left until the entry in force of the amicable report procedure, concerns regarding the procedural uncertainties are growing, especially when they can materialize in attempted fraud.
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by, 18.06.2009

New leadership and new strategies for CLAL Romania
Following the recent changes of shareholders at CLAL Romania, sold by the CLAL Insurance group to a local business group for half a million euro in April, the company has a new leadership. Thus, Efraim NAIMER, former Vicepresident of OMNIASIG and Development Director of the Israeli group TBI Finacial Services (former shareholder of OMNIASIG), will be the new General Manager of the company. Also, the change of ownership has already attracted significant changes in the development strategy of the insurer, according to Valentin TUCA's statements, who announced on June 11 the ending of his mandate contract as General Manager of CLAL Romania.
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by, 16.06.2009

BT Asigurari absorbs ASIBAN
BT Asigurari will merge by absorption with ASIBAN, the first of the two following to issue a total of 742.6 million new shares, meaning 316 shares for each title of ASIBAN, with a nominal value of RON 1. Thus, ASIBAN will be dissolved without liquidation, and the assets will be sent to BT Asigurari, which will take the new name, GROUPAMA Asigurari, according to the fusion graph.
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by, 15.06.2009

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Casco Ieftin

Safety Broker

Amsterdam hosts "Claims Management and Processing in Insurance" in September

MARCUS EVANS proudly presents their next conference, the 3rd Annual Conference "Claims Management and Processing in Insurance", to take place in Amsterdam on 7th & 8th September 2009. The event will bring in discussion the means to realize bottom line savings and to effectively combat fraudulent claims. Also, the attendance would learn from Key Practical Case Studies provided by AMB GENERALI, AVIVA, AIG, ZURICH, MUNICH Re and many others.
Click here to read more!
Click here for more details!
by, 25.06.2009

TRIGLAV Q1 net profit down by 43%
ZAVAROVALNICA TRIGLAV (ZT), Slovenia's largest insurer, posted a 43% annual decline in its first-quarter net profit, to EUR 3.8 million, mainly due to lower revenues from financial investments and long-term impairment of investments, which accounted for EUR 2.2 million in the period.
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by, 25.06.2009

Turkish insurance market results
In the first quarter of 2009, Turkish insurers' underwritings dropped by 28%, to USD 1.95 billion from USD 2.7 billion in the same period of 2008.
Click here to read more!, 25.06.2009

Slight decrease for the Croatian insurance market
In the first five months of the year, Croatian insurance market amounted a combined gross premium of HRK 4.29 billion (EUR 590 million), the Croatian Financial Services Supervisory Agency (HANFA) reports.
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by, 23.06.2009

Kazakhstan insurance market slows down 12% in the first 5 months
Kazakhstan insurance companies reported a decrease of 11.9 percent in gross written premiums in the first five months of 2009, as compared to same period of 2008.
Insurance market continues to be highly concentrated. So, for now, top five of Kazakhstan insurance market has a 57.7 percent market share.
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by, 25.06.2009

Ukraine: 30% up for motor hull fraud
Ukrainian companies specialized on motor insurance reported a significant increase of fraud cases. Most often traced ways of fraud were: up thieve, vehicle arson, up accidents etc. Also, more often are the cases of insuring cars that are already damaged, and then staging of the accident, in order to benefit from compensation.
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by, 22.06.2009

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Banks allocate EUR 25-200 million for the "First Home" program
Banks are willing to allocate ceilings of EUR 25-200 million for loans granted as part of the "First Home" program, according to representatives of financial institutions interviewed yesterday by Business Standard.
BANCA COMERCIALA ROMANA (BCR), the largest lender in terms of assets in the local banking system, is also the bank that allocated the highest ceiling for this program, of some EUR 200 million, sources said. BCR officials had not confirmed this information by the closing of this edition.
Furthermore, sources say that PIRAEUS Bank and ALPHA Bank have each approved a ceiling of EUR 50 million for this program. The General Manager of PIRAEUS Bank Romania, Catalin PARVU, said yesterday that lenders expect to register market share for loans granted through the "First Home" program similar to those they already have on the loan segment.
The Vice President of RAIFFEISEN Bank Romania, responsible for the lender's retail division, Razvan MUNTEANU, said yesterday in a conference that banks approved a ceiling of EUR 50 million for loans granted through the "First Home" program, a level which can be supplemented, depending on market conditions.
Prime Minister Emil BOC said in the 14 June government session that lenders that grant mortgages through the "First Home" program are allowed to impose an annual margin of up to four percent above the EURIBOR 3M rate in the case of euro-denominated loans and a high of 2.5 percent above the ROBOR 3M rate on loans in lei.
Moreover, the President of BANCA TRANSILVANIA, Horia CIORCILA, said that the ceiling approved by the lender for this program is EUR 25 million, in an initial stage, which will be supplemented depending on the program's success. CIORCILA added that the bank's profit margin in this program is close to zero.
by, 25.06.2009

BNR plans to relax the provision policy
For the second time this year, the NATIONAL BANK OF ROMANIA (BNR) is preparing to relax its provision policy, so that, most likely as of next month, banks could lower the value of collaterals by up to 50 percent when setting up provisions for loans with arrears of more than 90 days. Thus, bankers would pump less money into provisions but will also end up with less cash, because this goes into profit and then taxes.
"We are now analyzing the possibility of adding something to the 25 percent. The second step could go into effect in July, and the maximum threshold will be 50 percent. By releasing so many provisions simultaneously, you create some revenues and force the bank to pay taxes. You give the impression that the bank has created that liquidity. But this is financial revenue rather than liquidity, but by paying taxes the liquidity is taken out of the system. You can create problems for banks," Nicolae CINTEZA, Head of BNR's Supervisory Directorate, told Business Standard.
If the money goes into taxes, the disadvantage is that liquidity is absorbed, but, on the other hand, the good side is that lenders are improving their indicators. Moreover, the first step taken by BNR, enabling banks to cut 25 percent of the value of collaterals when setting up provisions, helped the banking system in April to cover the losses registered in the first quarter and to report an EUR 20 million profit.
Bankers are now awaiting the approval of the central bank of this measure, although they say it would have been better if the measure had gone into effect as of this month. "Banks will have less money, because they will make higher profits and will have to pay higher taxes. However, the money that will remain in the banks will contribute to improving the indicators. It would be fine if this went into effect as of June, because this is a moment of reference", said Radu GRATIAN GHETEA, President of the ROMANIAN BANKING ASSOCIATION.
by, 23.06.2009

CNVM gives the go-ahead for Stock Exchange takeover offers
The National Securities Commission (CNVM) approved yesterday the regulation by which shareholders who indirectly own 33 percent of a company's shares must submit a public takeover offer for the remaining shares. The decision is one that has been expected for some time by the capital market, with minority shareholders repeatedly demanding a mandatory takeover offer on the part of indirect shareholders.
Shares of companies such as ROMPETROL RAFINARE (RRC) and ROMPETROL Well Services (PTR), which will be subject to the new CNVM regulation, jumped 5-6 percent yesterday on the Bucharest Stock Exchange, following the publication of the decision. Previously, RRC and PTR shares closed up 3.8 and 8.4 percent, respectively.
However, the text of the regulation leads one to understand that the price at which the offers should be carried out will be set at the moment the documentation is submitted for the offer. According to the same text, entities that indirectly hold more than 33 percent of the voting rights of an issuer and who have not carried out a public takeover offer in conformity with the capital market regulation will be obliged to launch an offer within two months of the date this goes into effect. As concerns the price for such offers, the CNVM regulations state that the level thereof will be determined in conformity with "provisions of Article 204 of Law 297/2004 and Article 68 of CNVM Regulation 1/2006, issued in application of the aforementioned law." These two articles indicate that the price must be at least equal to the highest price paid by the bidder or persons with whom the former has acted concertedly in the 12 months preceding the offer, or more exactly, the date on which the bid for the offer was submitted to CNVM.
According to the ASSOCIATION OF CAPITAL MARKET INVESTORS (AIPC), companies for which an offer must be launched include those part of the ROMPETROL group, the ZENTIVA BUCURESTI pharmaceutical company (former SICOMED), and a number of companies controlled by Catalin CHELU and persons with whom he is presumed to be acting concertedly.
by, 23.06.2009

ING switches from RON 4.7/EUR 1 prognosis to RON 4.35/EUR 1
ING has abandoned its famous prognosis in which it predicted that the national currency would reach RON 4.7 to the euro in the third quarter of this year. In its new report regarding the evolution of currencies, published yesterday, the bank group's analysts believe that the EUR/RON rate will reach 4.35 in the July-September period.
However, their prognosis for the last three months of the year remains unchanged, as ING economists are expecting RON 4.5/EUR 1. "In the short-term, any negative news will have little effect on the local currency, considering the determination of BNR to maintain a stable exchange rate", said the quoted report.
Furthermore, ING analysts believe that BNR will reduce the key-rate by 0.5 percentage points in its next monetary policy session at the end of June, although this is expected to have little effect on the exchange rate.
Other analysts on the financial market have varying opinions. Economist Aurelian DOCHIA feels that the RON will reach some RON 4.3-4.35/EUR 1 in the coming months. "If I consider the recent declarations of the President, I think that RON 4.35 could be the high. These declarations are based on certain truths: the situation of the budget deficit, poor industrial production", said DOCHIA for Business Standard.
Other analysts believe that the RON could appreciate at the end of the year to RON 4/EUR 1, while still others consider that the RON's evolution could be quite stable. "In normal conditions, if we respect our accord with the IMF, without any political turbulence and with stability in the Central and Eastern European region, we will see the RON reach RON 4.2-4.3", said Lucian ANGHEL, Chief Economist of BANCA COMERCIALA ROMANA (BCR).
by, 16.06.2009

Romanian industry losses were lower than other EU states
Romanian industrial production dropped in April by 7.8 percent compared to the same period last year, according to data published at the end of last week by EUROSTAT, the European's Union's statistical office. This is the second-lowest decline in the entire community bloc. Furthermore, in monthly terms, the production of Romanian factories was up 0.7 percent. The monthly result places Romania in fifth place in the European Union.
Only Poland and Romania had a single-digit decline in industrial production in April, while that of all the other EU states was above 10 percent.
Data concerning Romanian industrial production was also published by the NATIONAL INSTITUTE OF STATISTICS (INS), indicating that this dropped by 9.5 percent compared to April 2008. This result was due to the sharp contraction of extraction and processing activities. However, compared to March, industrial production did gain 0.7 percent, due to a 3.2 percent advance of the processing industry.
by, 15.06.2009

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Claims Management and Processing in Insurance
September, 7th-8th, 2009
Amsterdam, The Netherlands
Organizer: Marcus Evans
Media Partner: PRIMM Magazine - Insurance & Pensions

Les Rendez-Vous de Septembere
September, 4th-10th, 2009
Monte Carlo, Monaco
Organizer: RVS
Media Partner: PRIMM Magazine - Insurance & Pensions

Health 2009
October 8th & 9th, 2009
Berlin, Germany
Organizer: UNIGLOBAL Research
Media Partner: PRIMM Magazine - Insurance & Pensions

31st Baden-Baden Meeting 2009
October 25th-29th, 2009
Baden-Baden, Germany

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XPRIMM Newsletters


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Business Development Director: Alexandru D. CIUNCAN

Editor in Chief: Mihaela CIRCU
Scientific Advisor: Daniela GHETU
International Column Coordinator: Andreea IONETE
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Junior Editor: Marian MARDARE
General Secretary: Lidia POP

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IT Department: Octavian GRIGOR, Dorin PALADE, Cosmin ARMASESCU



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