No. 95, October 25th, 2007

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Understanding Eastern Europe

I think we can all agree on two things - the future of the European insurance market is in the Central and Eastern part of the continent and the first step in order to enter this new market is to know it and understand it.

I was frequently asked why more and more companies from Central and Eastern Europe and especially from the former Soviet Union (Ukraine, Russia, Belarus, Kazakhstan, Republic of Moldavia etc.) annually participate at FIAR - The International Insurance - Reinsurance Forum in Sinaia, Romania.

The answer is rather simple - because Romania was, is and will be the best communication and understanding bridge between the West and the East of the old continent.
Thereby it is perfectly explicable that our strategy of promoting Eastern European companies can now be translated into know-how of their realities, development and potential.

What better proof could we present you in order to sustain our arguments but the recent Memorandum for good cooperation and mutual promotion recently signed in Yalta between The League of Insurance Organizations of Ukraine and Media XPRIMM.

So, if you want to connect yourselves to the activities within these areas, which will prove to be vital for the future of the European insurance market, we will be happy to have you as guests between the 19th and the 23rd of May at the 11th edition of FIAR.

by sergiu.costache@mxp.ro

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BCR Asigurari de Viata


OMNIASIG Asigurari de Viata


Interview with Mr. Peter KRISTOFOVIC,

XPRIMM: What are your plans for the Romanian financial markets?
Our plan is to become, in due time, the largest, the most important independent financial advisor on the Romanian market. The arguments upon which this statement is based lies in the brand new model of financial advisory that will set a new benchmark for the market. This model is already very popular in the United States, where the financial intermediation market is a lot more developed than the European one.
I have been in this business for over 15 years and the way we do business is not based on multilevel marketing, we have a hierarchy similar to general insurance companies. In order to be more specific I can tell you that in Romania we will have over 30 branches where all the employees are working full-time.
Our group's business has evolved during time and now we cover financial segments like life and non-life insurance, investment funds or pension schemes. Our goal is to become a sole financial advisor for each of our clients and develop a custom made personal financial plan for each individual or each company that we work for.
One of our main goals at this present stage is to have notebooks with specially designed software for our staff. This special software has already been tested in the Czech Republic. Technology is very important for our business and that is why we will have an internet portal for our activities in Romania. This portal will serve both clients and employees as it will be used both for sales purposes and for training and e-learning activities for our personnel.
At SALVE Group we are trying to be as innovative as possible. During my activity I have noticed that the American market has served as a source of inspiration for the European one. I am not waiting for the American trends to cross the ocean; I am observing them and implementing the most appropriate ones in our business. That is why I have spent two months in the US in order to get acquainted with the latest trends on the intermediation market. I would like to give you another example of ideas that we have implemented in our activity is that we have a database with all our clients and their accounts and we are managing each client's needs, using the database to expand the services provided to them. I feel that people are getting needier, needy for financial advice in many sectors. People will need an advisor for every area of their personal finances, from mortgages to savings, to insurances, to investments.

XPRIMM: What are the strategies upon which your activity in Romania will be based on?
P. K.:
Human resources are a very important chapter in the history of our business and we are glad that valuable people from insurance companies are migrating to intermediation companies. Thus, during time, we gathered in our company a valuable group of specialists. The specialists that I am talking about are ready to bring their know-how to Romania. Their experience and spirit of innovation will bring Romanians a new distribution channel for financial products: the internet portal. People will be able to buy financial products or seek advice about financial products through our portal. This portal has to be user-friendly first of all and second of all it must serve as a communication bridge between clients and our advisors. I don't think that an all automated portal would be better, as human interaction is not to be forgotten.
The SALVE Group believes in technology and internet. I personally think that technology will help us reach new heights in our business. That is why we are pioneers in Central and Eastern Europe in terms of introducing internet as a distribution channel and call-centers for advisory purposes.
In what concerns our strategies for the Romanian market one must know that information doesn't mean knowledge. And what I mean by that is even that most of our competitors have gather enough information on the pension system we still keep a competitive edge as we have experienced the same process in Slovakia. As I have mentioned earlier we have always looked for the best specialist everywhere we went: Slovakia, Czech Republic, and Ukraine. Romania makes no exception as we have managed to put together a group of Romanian and Slovak specialists amongst which Romeo JANTEA and Mihai SEITAN. Both of them are leading specialists in pensions and insurances.
I like to thing about my teams as people on a bus going on a trip. If the people are nice and pleasant the trip will be pleasant as well, but if they aren't than you have a problem. The symbiosis between the Slovak experienced specialists and the Romanian ones is, in my opinion, one that will bring us success.
The service team for the Romanian market has already been tested on other markets, like the Czech one. On the other hand I would like to mention that we are currently undergoing the training process. The trainings are held by our Slovak specialists who are now helping our Romanian personnel to understand the system and to benefit from their experience.
Our preparations are heavily underway as we have covered most of the territory and we are also proud to say that we already have 10,000 people ready and in training for our future operations in Romania. We will share with our new staff our know-how and they will be focused on Pillar II pensions.
In what concerns Pillar III I can tell you that we will focus on this type of pensions after the Pillar II pensions' first subscription period is over. I feel that we must focus on these four months of subscription as it is one of the main financial events in Romania.

XPRIMM: What could you tell us about the SALVE Group's history?
P. K.:
This is one my favorite topics as it means talking about my company's success. I have started when I was 20 years old, in 1992 and I have entered this adventure, of having my own company, in 1996. The company grew, but I needed an investor, which came from the US and has helped me expand the business.
From 2006 we are totally independent and we are now perfectly capable of financing our activities and plans, like our expansion in Ukraine or Romania.
Our development strategy includes countries from the Eastern block as I feel we have a competitive advantage over western companies as we can fully understand the mentality in former socialist countries.
During the company's history I was lucky enough to meet the right people along the way, people that have been very important assets to the company's growth. I can give some examples like the CEO of ALLIANZ Slovakia or the CEO of ALLIANZ Pensions Slovakia whom have joined the ranks of our top management and have helped us develop the business.

XPRIMM: Could you compare the two private pension systems, in Romania and Slovakia?
P. K.:
First of all, this reform is a historical event and I am giving it its worthy importance as I am currently dedicating 50% of my time to this emerging market.
I know this process is hard, because in Slovakia it was as it generates huge political debate and it was quickly turned into a political weapon by both left and right wing parties. As it was set up the private pension system meant a big threat for the state budget.
I feel that the Romanian model is the wiser one as the percentage, at first, that is going to be allocated to private pension funds is lower and it is set-up to grow constantly over a certain period of time. This approach is wiser as it has a good psychological effect on the potential contributors.
Even if I started this comparison with a difference between the two systems I do feel that the Slovakian model was one of the models taken under consideration by the Romanian legislators.
There are things I admire in the Romanian private pension system, one of which is the licensing process which I consider to be better and even more fair than the Slovak one. Unfortunately, in Slovakia, the state turned the licensing process into a very profitable business. Even the tests that a marketing agent had to pass were really missing the important aspects of an agent's activity. I have, personally, passed this test I can honestly tell you that most of the aspects included in the test were of no use in my activity as a marketing agent for private pension funds.
In Romania brokers can be independent as they can sell products from different companies, which in Slovakia didn't happen. There was this big anomaly with the system as pension brokers could only sell products of one single company. Of course, most of the market participants established more companies in order to fulfill their role as consultants.
But there are aspects of the Romanian private pension system that I feel could be improved. For example, for each subscription one needs a copy of the ID, which could prove to be very hard in a remote village in the mountains. Also, the registration process with the National Pension House is one of the biggest challenges the system has to offer as it can prove to be very long and complicated at the same time.

XPRIMM: Thank you!

by liviu.huluta@mxp.ro

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A EUR 90 million transaction
On 17th of October, Banca TRANSILVANIA and GROUPAMA signed the contract through which the French company becomes the unique shareholder of BT Asigurari.
Aside from the transaction, the parties established an exclusive bancassurance accord for non life products. The terms and conditions of the contract are confidential, some of them following to have effects in the future too.
The transaction's initial value of the 90% bank' shares has been established at EUR 90 million being possible the final price to grow considering the financial results of BT Asigurari in 2007. The estimated date for the closed transaction is the 31st of December 2007.
BT Asigurari holds the 9th position in the non life Top and 12th position in the Top of life companies, with a 4% market share. In the first semester of 2007, BT Asigurari registered a EUR 40 million business figure, upper with 40% than the similar period of the previous year. Between 2004 and 2006, the company has registered a 162% growth, while the profile market has had an evolution of 54%. BT Asigurari has the second large distribution network, with more than 270 agencies and work places, covering the entire country.
GROUPAMA is the third French profile company. Present on the market since the 19 century, it started its activity as insurance mutual company and developed as modern company offering a large range of insurance products in France. The company is already present in Central Europe through is branch in Hungary. It also has agencies in Greece, Italy, Great Britain, Portugal, Spain, Turkey, China and Vietnam. The Group's income from insurance premiums reached EUR 14.2 billion in 2006.
The acquisition of BT Asigurari is part of the development strategic plan of GROUPAMA, which tends to become one of the European insurance leaders, especially concentrating on dynamic external increase politic in Central, East and South of Europe.
Banca TRANSILVANIA is adviced in this transaction by CAPITAL Partners, DELOITTE (Greece) and MUSAT&Asociatii, while GROUPAMA is assisted by RAIFFEISEN Capital Investment and GIDE Loyrette Novel.
by mihaela.circu@mxp.ro, 19.10.2007

Good week for Pillar III
According to the public release of the Private Pensions System Supervisory Commission, between 8th and 14th of October the facultative pension funds registered good results.
These had a weekly average evolution of the net assets of 9.17%, the best performance being reported by AZT Vivace with 18.08%. The previous week repoted volume of assets under management had been around 6.17%.
The number of participants grew for each fund, the total number of contributors on facultative pension market being 16,712 at 12th of October 2007. At the same time the increase of participants led to the enhance of the funds' total assets at RON 2,154,743.
As concern the number of participants, AZT Moderato continues to dominate the market with 6,934 contributors, followed by ING Clasic with 3,961 contributors and AZT Vivace with 2,161 contributors. The order is the same as regards the assets, the only exception being Pensia Mea from AVIVA which holds the third position.
In this context, Media XPRIMM organized on 24th of October another event from the cycle of Regional Forums of Private Pension with the support of the Private Pension System Supervisory Commission. The manifestation, which continues the series of success registered by the events organized in Cluj Napoca (28th of June), Sibiu (2nd of August), Iasi (13th of September) and Timisoara (10th of October), took place at Grand Hotel Rex 5 * Constanta. Among the theme discussed we mention the impact of the pension reform on the local market and the benefits of the employers and employees.
by liviu.huluta@mxp.ro, 19.10.2007

AZT Moderato, the first millionaire pension fund in Romania
AZT Moderato is the first Romanian pension fund that has reached RON 1 million net assets under management (AUM). In fact, the volume of net assets managed by ALLIANZ - TIRIAC Pensii Private is RON 1.2 million according to the company's officials.
"Surely, we're glad to register this premier. In the same time, it's obvious that the hard time just begins from the administration point of view", Dorin BOBOC, Investments Director of the company has stated.
According to the Commission's norms, within 90 days since the net AUM volume reaches one million, the fund's administrator must organize its investments portfolio as to correspond to that contained in the fund's prospect. "For the moment it will neither easy nor cheap. However large the RON 1 million sum may look for a pension market at the beginning of its existence, this sum is more than modest to make advantaged transactions on the capital market. Moreover, since the law prohibits investing more than 5% of the assets in the bonds issued by one remittent, we will be obliged to adopt many positions of small dimensions which lead to transaction expenses costs relative high", Dorin BOBOC mentions.
The rigorous conditions as regards the diversification of the investments will determine at first high administration costs for the pension funds that reach this development stage. No doubt, these high costs will reflect in the evolution of the funds' unit value which will register for short time recoil.
AZT Moderato is a pension fund on Pillar II with a medium financial risk degree.
The fund's prospects contains a portfolio formed from 10% instruments of the monetary market, 25% instruments with variable income and 65% instruments with fixed income.
Though it may seem that the latest are the key of less difficult investments, things are not like this in reality. It is known that the Romanian Government securities remittance is rare and not enough for the market demands.
"That's why we count on the support of ALLIANZ group in general, and on the parent company ALLIANZ - TIRIAC, especially. This company administrates assets of EUR 150 million and has established good relations with the treasuries of the main banks in the system. Taking advantage of these relations, we hope to have access to an adequate state bonds volume as to aim the investment goals", the quoted official of ALLIANZ - TIRIAC Pensii Private has emphasized.
by daniela.ghetu@mxp.ro, 24.10.2007

The Insurance Supervisory Commission does not establish the MTPL premiums
In response to some recent articles appeared in newspapers, the Insurance Supervisory Commission (ISC) informs that the Romanian insurance market is a free and competitive market and its attribution doesn't consist in the establishment of price for MTPL, according to the provisions of Law no. 32/2000.
Also, the ISC emphasizes that only insurance companies exclusively establish the premium tariff for MTPL, being capable of increasing or decreasing it corresponding to the own results registered for this type the insurance and taking into account the average damage, the frequency of damages, acquisition expenses and so on.
Thus, each insurer must permanently guarantee the fulfillment of the obligations born from the MTPL insurance contract signing according to art. 21 of the Order no. 11/2007 for the application of Norm regarding the compulsory liability insurance for road accidents' damages.
The ISC makes the effort to continue the harmonization process of the domestic legislation in the field with the European Directives, making use of its attained quality of member of European Union as to insure compatibility with the peculiar of the local market and with the domestic interests.
by mihaela.circu@mxp.ro, 18.10.2007

Deductibility for dwellings insurance?
Starting with 2008 the dwellings insurance may be deductible.
"In consider that the Romania of the year 2008 would be able to reintroduce the fiscal deductibility of insurances for real estates owned by natural persons", Aurel GUBANDRU, President of the Committee on Budget, Finance, Banks and Stock Market from the Deputy Chamber has stated.
This fiscal deductibility was in 2004 too, being withdrawn when the unique tax rate was introduced.
"Taking into account that people with low incomes hardly support a household insurance, we agree that the fiscal deductibility for this policy as in 2004 can be a solution for this segment", Aurel GUBANDRU has mentioned.
At the same time the president of the Budget Committee appreciates that for the moment Romania is not prepared from the financial resources point of view to create fiscal facilities in the life insurance field.
"These policies are more a saving instrument and the possibility of subsidize such a product is reduced", the quoted official has added.
Until now, health insurances are the only insurances with a deductibility of EUR 200/year.
by mihaela.circu@mxp.ro, 23.10.2007

Partnership ARDAF - GENERALI Pensions
The insurance company ARDAF, member of PPF Investments Group announces the launch of its partnership with GENERALI Fond de Pensii. According to this partnership the employees and agents of the 200 ARDAF territory units become marketing agents for GENERALI Fond de Pensii.
"On the background of this partnership, GENERALI Fond de Pensii benefits from the powerful distribution network of ARDAF as to sell the private pensions (GENERALI Aripi): one of the expanded territory networks of domestic insurers (over 200 agencies and offices, organized in 35 branches) and a powerful sale network represented by employees and agents", Daniel TUDOR, President and General Director of ARDAF, has declared.
This partnership is part of the strategy of PPF Investments Group, shareholder of ARDAF, for the consolidation of its position on the market." The opportunity of offering to the clients of ARDAF services complementary to general insurances express our powerful orientation towards the quality and value which we want to offer, inclusive by diversifying the offer. The pension offer of GENERALI Fund owned by GENERALI Group, one of the most important and experienced financial and insurance company in Europe surely represents an investment in this direction", Daniel TUDOR has added.
At the end of the structural reorganization process, started in the same time with the change of the shareholders I February, ARDAF is on offensive strategy for reentering among the leaders of the profile operators, at present being one of the most capitalized insurance companies from Romania with a RON 162,588,888.1 shared capital (EUR 48.7 million).
PPF Investments, member of PPF Group, is one of the leaders on the financial and insurance market from Central and East Europe and Asia. In Romania, PPF Investments owns RAI, company specialized on health and travel insurances and ARDAF. In its position, as a strategic investor, the Czech group is focused on the relaunch of ARDAF and on the development of insurances on the Romanian market.
by mihaela.circu@mxp.ro, 22.10.2007

ING Pensions has 500,000 clients on Pillar II
Within the first three weeks since the start of the adhesion campaign to the compulsory pension funds, ING Pensions has registered 501,407 clients. The company's goal is to reach a 30% market share, respectively 1 million contributors.
"We are half way to our objective of 1 million participants on Pillar II", Bram BOON, President of the Board of Directors of ING Fond de Pensii, has declared.
Radu VASILESCU, General Manager of ING Pensions, has mentioned that sales exceed the initial estimations of the companies and anticipates that the overall number of participants in the market may reach 4 million clients. The official estimates that by next month 60%- 70% clients will already have signed for a pension fund.
The Fund managed by ING is of medium investment risk. The amounts collected from clients will be invested 70% in fixed income financial instruments and the rest of 30% in financial instruments of the capital market.
The company's network is represented by 42,834 authorized marketing agents. Private pensions of ING are available also through 20 authorized brokers and ING Bank.
The shared capital registered by ING Pensions is more than EUR 42 million. BRD-Groupe Societe Generale is the depositary bank and the financial audit is provided by ERNST & YOUNG Assurance Services.
At global level, ING is one of the most important providers of pensions, with 150 years of international experience and 75 million clients in 50 countries. The total value of assets administrated by ING through the pension funds was EUR 223 billion at the end of 2006.
by mihaela.circu@mxp.ro, 12.10.2007

Romanian-Italian relations in the view of Romanian Motor Insurers' Bureau
Recent statistics show that economic relation between Romania and Italy has intensified and it indirectly led to the growth of road accidents caused by Romanian and Italian drivers on the territory of both countries.
On the 11th of October 2007, Romanian Motor Insurers' Bureau organized a conference called "Motor Third Party Liability in Italy", with the purpose of informing over the legislation and practices in Italy as concern the MTPL sector.
At the event participated the President of the Italian Bureau, R. PELLINO, the Director of the Bureau, S. LOVETTI and President of INTERFIDES Assicurazioni, L. GITTO, besides other important persons with experience in the field. Among the subjects tackled we mention the Italian Insurance Code, claims, the vehicle's distrain after the road accident, correspondents' nominalization and the structure and organization of Italian Bureau.
by mihaela.circu@mxp.ro, 16.10.2007

The insurance company ASITRANS will change its name in EUROINS. The decision will be made during the Shareholders' General Meeting, convoked for the end of November. In the same time will be discussed the decrease of the members in the Board of Directors from 7 to 5, according to insurance.bg.
Thus, the president will be Kiril BOSHOV, while Asen CHRISTOV, Christo TSENEV, Bogdan STAN and Cristina BASGAN will be members in the Board of Directors. On this occasion, Bogdan STAN will be reconfirmed as CEO of ASITRANS Group.
During the summer of 2007, EUROHOLD purchased the majority share package of ASITRANS. After that the Bulgarian group contributed with EUR 4 million to the increase of the share capital of ASITRANS, growing its participation to 70%.
by mihaela.circu@mxp.ro, 17.10.2007

INTERAMERICAN exceeds 100,000
After 5 weeks from the start of the compulsory private pensions, INTERAMERICAN Fond de Pensii registered over 100,000 participants.
After 2 weeks, it reported 28,132 contributors.
INTERAMERICAN intends to reach a 10% - 15% market share of the compulsory pension market. The company, member of the EUREKO Group, administrates a pension fund with medium risk and doesn't charge any administration tax of the assets for 2008 - 2009.
The adhesion process to a pension fund on Pillar II started on 17th of September 2007 and it ends after 4 months. After these 4 months, those who haven't opted for a pension fund will be distributed randomly to authorized funds.
According to the law, each potential client of the system (compulsory for those under 35 and facultative for those between the ages of 35 and 45) must sign only one adhesion to a fund.
After one month, 1,167,000 Romanians have opted for one of the 17 funds authorized by the Supervisory Commission of Private Pension System.
by mihaela.circu@mxp.ro, 24.10.2007

MKB ROMEXTERRA takes over a part of DELTA Asigurari
MKB ROMEXTERRA Bank has taken over 35% of DELTA Asigurari' shares.
The operations took place through the RON 7 million increase of shared capital.
Thus, PETROMSERVICE has reduced its participation to 64.9%.
In the first semester of 2007, DELTA Asigurari wrote RON 9.5 million gross premiums, with 33% more than the previous year.
The volume of gross premiums in 2006 reached RON 7.14 million, while the same indicator registered RON 9.5 million in the first semester of the current year.
According to the General Manager of DELTA Asigurari, Maria PASA, this growth is due mainly to the company's operations of diversifying the products' portfolio.
For 2007, besides the continuous improvement of financial indicators, DELTA Asigurari intends to purchase an insurance company in the Republic of Moldavia meaning the first expansion of the insurer's activity abroad.
Also, in 2007 the company wants to extend its sale network in order to pay more attention to the retail segment.
by mihaela.circu@mxp.ro, 18.10.2007

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ALLIANZ will spend several USD Million on Brand Promoting in CIS
Germany-based ALLIANZ Group will launch on December 1st, 2007 its international advertising campaign in the CIS states. The group plans to spend several million dollars on promoting its brand in Russia, Ukraine, and Kazakhstan, where it has branch offices.
ALLIANZ did not disclose the total sum to spend on the advertising campaign in CIS but renaming ROSNO Ukraine in ALLIANZ and the respective campaign were already by estimate USD 1.5 million worth. ROSNO Ukraine was renamed into ALLIANZ Ukraine on October 1.
The development strategy of the companies will be based on the umbrella brand of ALLIANZ and most of them will keep their current names, Mikhail SAFRAN, member of the board of ROSNO, responsible for marketing policy, said. The group decided to re-brand only ROSNO Ukraine. In the coming years, ROSNO will be renamed as well. "Along with the re-branding of our branch companies we had to inform our clients and partners that these companies were the part of ALLIANZ Group. ROSNO brand has strong positions in the Russian market while our business in the Ukraine and Kazakhstan is relatively young. We believe that it is high time these companies were re-branded", Hannes CHOPRA, CEO of ALLIANZ CIS (ALLIANZ Eurasia) and CEO of ROSNO, said.
Currently, ALLIANZ Group comprises ROSNO, ALLIANZ ROSNO Asset Management, ALLIANZ ROSNO Life, ROSNO-MS, ROSNO-Center, MEDEXPRESS, ALLIANZ and Progress-Garant in CIS, ALLIANZ Ukraine in the Ukraine and Polis in Kazakhstan.
Consolidated premiums written by ALLIANZ Group in CIS-countries in 2006 came to EUR 664 million. Premiums in Russia amounted to EUR 655 million, and in the Ukraine to EUR 9 million. The consolidated ALLIANZ premiums in 2006 were EUR 101.129 billion.
The group intends to keep investing massive assets primarily in fast growing markets of Russia, China, India, and Brazil. In these regions, premiums of ALLIANZ posted the highest growth in 2004-2006. In particular, the growth rate of property risks insurance (P&C) in Russia came to 46.0% and life and health insurance to 157.0%. In India, these rates were 64.0% and 289.0% respectively, in Brazil 35.0% and 56.0% respectively. In China, P&C growth rate totaled 148.0%. In the USA this indicator decreased by 12.0% to 5.0%. In Western Europe the growth rate dropped by 3.0% (P&C growth rate declined by 4.0%). ALLIANZ intends to expand its business in CIS in the future. "We have been considering several companies in CIS but it is too early to speak about acquiring specific insurers", Hannes CHOPRA told.
Set up in 1890 in Berlin, ALLIANZ Group is now headquartered in Munich. 600 companies in 77 countries operate in insurance, asset management and banking segments under the ALLIANZ brand.
In January-June 2007, ALLIANZ Group wrote EUR 53.7 billion in premiums. Its operating income amounted to EUR 6.158 billion and net income to EUR 5.38 billion. ALLIANZ brand is EUR 23.921 billion worth, according to Germany-based BBDO communication group report.
by RP Newsline, 22.10.2007

Ministry of Finance will establish commission for settling insurance problems
The Ministry of Finance of the Russian Federation has proposed creating a new executive body - a commission for settling disputes in the insurance area. It presented the draft bill at a meeting of the presidium of the All-Russian Insurance Association (ARIA) on October 11 and came in for criticism from insurance professionals, ARIA reported on October 12.
As Deputy Head of the Ministry of Finance's Financial Policy Department Vera BALAKIREVA told KOMMERSANT, the Ministry will give special consideration to the need for improving procedures to settle disputes within the insurance industry in a report on "The strategy for development of the RF insurance sector, 2008-2012" which is going to be issued in November 2007.
"We believe there is a need to create a special commission responsible for resolving insurance disputes," Vera BALAKIREVA added.
According to the draft bill "On a Russian commission to settle insurance disputes," this body has the right to examine contentious situations, to make decisions on the applications of insurance consumers and to render them assistance in legal proceedings. The Ministry of Finance holds up some foreign bodies as an example for the commission, such as the institutions of insurance ombudsmen in Great Britain (established in 1981, financed by 200 insurers but headed by a state official), or a similar authority in Switzerland (established by the government and headed by the chairpersons of the Higher or Constitutional Court).
It is suggested that the Russian commission will consist of 15 permanent assessors who will be paid RUR 1,000 per capita for a session, as well as some invited specialists who are paid a fee of RUR 1,500 per session. In addition, the Ministry will allocate an additional RUR 4,000 for technical support and writing materials for the commission annually. If the Commission has two sessions a month with the assistance of 15 standing members and one guest expert, total costs for its maintenance, including expenses for writing materials and others, will amount to RUR 400,000 a year.
Answering insurers who were curious about how these expenses come into line with the already fixed three-year budget, the Head of the Ministry of Finance's Financial Policy Department, Alexei SAVATYUGIN, explained that the Ministry has put forward this initiative for further growth."
Insurers greeted the initiative of the Ministry of Finance with skepticism. As the official conclusion of ARIA's presidium states, Western insurance ombudsmen do not amount to the creation of an executive body, and "the proposal of the legislators will only result in an increase in the number of officials and additional expenses for the state budget." In this connection, "it seems more advisable to create legal mechanisms of tax and other privileges to consumer protection associations".
As ROSGOSSTRAKH First Deputy CEO Dmitriy MARKAROV told, "the initiative is too premature. Pre-trial disputes are not presently the most topical issue on the insurance market and do not happen very often." He said there are no such commissions in other financial market segments because supervisory bodies and consumer protection associations are able to cope with that task. Thus, there is no need for a new body in the insurance industry as well. "I believe that at this stage of market development we have to aspire to form insurance self-regulated organizations and to hand over problems in relations with the insured to them," Dmitriy MARKAROV added.
by RP Newsline, 19.10.2007

The Russian regulators approved the purchase of SOYUZNIK insurance company, covering risks of credit loaners of the Russian banks, owned by SG, by SOCIETE GENERALE Insurance, the insurance division of the European bank Societe Generale, the bank reported on October 5.
Earlier, a 100% stake in the authorized capital of SOYUZNIK was held by Capital Credit Company, a member of the SOCIETE GENERALE Group. Capital Credit Company sold its stake in SOYUZNIK on September 26, according to official documents of the bank.
Moreover, SOCIETE GENERALE Insurance received a license for writing life insurance through SOGECAP Life Insurance.
The acquisition of SOYUZNIK will allow the bank to complement the product line of the Russian division of the SOCIETE GENERALE Group.
SOYUZNIK was set up in 1990. In January-June 2007, the insurer wrote RUR15.097 million in premiums, according to FSIS.
SG comprises Bank SOCIETE GENERALE Vostok, DELTACREDIT, RUSFINANS Bank and Capital Credit Company Bank in Russia and plans to purchase the controlling stake in ROSBANK.
by RP Newsline, 18.10.2007

EBRD to Acquire 20% in Bosnian UNIQA Osiguranje
The European Bank for Reconstruction and Development (EBRD) announced on October 5 it is due to acquire a 20% stake in UNIQA Osiguranje, the Bosnian unit of Austrian insurer UNIQA Group.
It will do this under a project to increase an existing EUR 70 million Multi-Project Facility (MPF) with UNIQA to EUR 150 million with an investment horizon of 10 years. According to a statement made by EBRD, this investment will strengthen the capital base of the company and allow it to sustain its growth in the Bosnian insurance market. The MPF provides equity funding for co-investments with UNIQA in the EBRD's countries of operation in the context of establishment, development and acquisition of insurance companies. The project is pending final approval in November 2007.
In 2006, UNIQA Osiguranje wrote EUR 8.67 million in premiums, 23.7% up comparing to the 2005 result. The major growth was posted in the motor and life insurance segments, 33.2% and 29.3%, respectively. The company's net profit in 2006 increased by 25.1% and totaled EUR 652,500.
In H1 2007, Austria-based insurance group UNIQA wrote EUR 2.3 billion, posting a 1.9% decrease on the H1 2006 result. Non-life insurance contributed EUR1.2 billion to consolidated group premiums, 6.3% up on H1/2006. Life insurance premiums totaled EUR 718 million, increasing by 15.3% on the result reported for the same period a year earlier. Health insurance premiums rose 2.2% and amounted to EUR 461 million. UNIQA's net profit in the reporting period came to EUR 113 million, 29.8% up. UNIQA operates in the insurance markets of Germany, Liechtenstein, Switzerland, Italy, Poland, the Czech Republic, Hungary, Slovenia, Serbia and Ukraine.
by RP Newsline, 18.10.2007

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NBM Reinsurance

A new President for BCR
The new interim CEO of Romanian Commercial Bank (BCR) will be Manfred WIMMER, as President Nicolae DANILA has resigned on Tuesday, a BCR press release informs.
Nicolae DANILA will be replaced at the helm of Austrian group ERSTE's subsidiary in Romania by deputy CEO who will take over the seat for an interim period starting December 2007.
The press release quotes Nicolae DANILA as saying that he will leave the bank starting December 1, 2007. He says he trusts his successor would continue the BCR "success story".
Nicolae DANILA is one of Romania's elite bankers with the longest stay in a position, as he served as BCR head starting 2000 and through the 2005 privatization of the bank.
Manfred WIMMER, 51, led the ERSTE team in charge with the acquisition of the BCR in the privatization process that concluded two years ago. As deputy head of BCR, he is in charge with the integration of the Romanian banking group with ERSTE Group. His priorities would be to conclude the program of integration and development, improving the management system and the performance models within BCR and strengthening the BCR leadership in the sector.
by mihaela.circu@mxp.ro, 24.10.2007

Capitalization increase for BRD?
BRD Groupe Societe Generale (BRD) could increase its market capitalization by EUR 800 million in the next six months, according to an analysis by brokerage company FORTIUS Finance. The company is basing its outlook on a RON 29.7 (EUR 8.8) per share price in six months, 16.3 percent higher than the current RON 25.6 (EUR 7.6) per share. The rise is likely to bring the bank's capitalization to some EUR 6.17 billion, from its current EUR 5.3 billion. BRD shares have also risen in the past six months, although the increase was slightly lower, at 13 percent. BRD shares have provided investors with a 38.3% yield since the beginning of the year. BRD is the second largest company listed on the Bucharest Stock Exchange (BVB), following oil giant PETROM, with EUR 8.4 bln in market capitalization.
The bank posted EUR 79.4 million in net profits in Q2 2007 (last financial results made public), 50.6% higher year-on-year, due to an increase in loan volume. BRD's financial results have improved significantly in the past three years, with an average annual increase of 24.3% in net banking income in 2004-2006. By the end of 2006, the bank claimed a 22.7 percent market share in retail banking loans and a 16.7% market share in the corporate sector.
by Business Standard, 23.10.2007

Financial intermediation - 50% of GDP in 2012
Financial intermediation will increase, in the near future, by an average of three percentage points of GDP, and is to make up 50 percent of GDP between 2012-2014, according to the Governor of the National Bank of Romania (BNR), Mugur ISARESCU.
The share of total loans granted to individuals and companies in GDP is to increase gradually by 2014 as a result of a rise in mortgages and company financing.
"This is not an optimistic scenerio. An optimistic but risky scenario which we may face, considering the aggressiveness of banks, is an excess of 50 percent of GDP by 2012," Mugur ISARESCU stated.
The central bank estimates financial intermediation to amount to 34 percent by the end of this year, from 27.1% at the end of 2006.
"I personally see a 30% year-on-year increase in loans next year and in 2009," ISARESCU added.
BNR's Governor foresees a saturation of consumer loans, whose growth rate will slow, with lender attention focussing on the short-term mortgage segment.
"I have high hopes for corporate financing. This segment will provide the substance of economic growth in the near future," ISARESCU explained.
Non-governmental loans rose 50.2% in August compared to the same period in 2006, to RON 122.09 billion (EUR 36.59 billion), with the foreign currency component exceeding that in lei for the first time since March 2006. In August 2007, lei-denominated non-governmental loans worth RON 60.25 billion (EUR 18.05 billion) were surpassed by those in foreign currency, which reached RON 61.84 billion (EUR 18.53 billion).
by Business Standard, 22.10.2007

Romania, in top 10 at greenfield projects
Romania ranks second among countries in Southeastern Europe (SEE) and the Commonwealth of Independent States (CIS) in terms of foreign direct investments (FDI) attracted in 2006, and occupies seventh place worldwide for initiated and ongoing greenfield projects in 2006, according to the World Investment Report 2007, published by the United Nations Conference on Trade and Development (UNCTAD).
Russia ranks first, with USD 29 billion (EUR 20.47 billion) worth of investments in 2006, followed by Romania, with USD 11.4 billion (EUR 8.04 billion), and Ukraine. The 19 countries of SEE and CIS attracted USD 69.3 billion (EUR 48.91 billion) up 68% in 2006. FDI inflows were concentrated in five countries: the Russian Federation, Romania, Kazakhstan, the Ukraine, and Bulgaria, together accounting for 82% of total incoming FDI to the region. Kazakhstan registered investments worth USD 6.1 billion (EUR 4.3 billion), compared to Ukraine and Bulgaria, each with USD 5.2 billion (EUR 3.67 billion).
There were 362 initiated and ongoing greenfield projects worldwide in 2006. Greenfield investments soared especially in developing countries and transition economies. Globally, FDIs surged by 38 percent year-on-year, up to USD 1,306 billion (EUR 921.87 billion), which is the largest advance registered in the past six years. This increase is partially explained by mergers and acquisitions (M&A), which continued to be the main factor for most foreign direct investments. Romania had a value of M&A amounting to some USD 5.4 billion (EUR 3.81 billion). Romania's foreign direct investments amounted to USD 41 billion (EUR 28.94 billion) by the end of 2006, which means half of that registered by Hungary and 2.5 times less than that reported by the Czech Republic. However, in terms of FDI stocks Russia attracted USD 197.7 billion (EUR 139.55 billion).
According to UNCTAD, Romania has improved the performance of foreign direct investments in 2006, climbing five positions, and ranking 21st in the top 141 countries in the world, based on the investment performance index.
by Business Standard, 21.10.2007

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