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1 Insurance Business in the growth market from the Adriatic to the Black Sea Vienna Economic Forum 6 November 2006 Karl Stoss CEO Generali Holding Vienna Slide 2 2 Insurance business in the growth market from the Adriatic to the Black Sea The Generali Group: 175 Years of Tradition 1831 Foundation of Assicurazioni Generali Austro-Italiche in Trieste 1832 Opening of the first agencies abroad (Vienna, Prague, Budapest...) 1882 Foundation of Erste Allgemeine in Austria. Around the turn of the century, a number of insurance companies were also set up or acquired in Italy, France, Hungary and Romania. Slide 3 3 Insurance business in the growth market from the Adriatic to the Black Sea Prague, Brno, Vienna, Ljubljana, Agram, Tirana, Budapest, Belgrade, Krakow, Warszaw, Lemberg, Bucarest, Sofia, Constantinopel Generali in CEE before 1914 Slide 4 4 Insurance business in the growth market from the Adriatic to the Black Sea The Generali Group worldwide The Generali Group comprises 107 insurance companies 119 financial and real estate companies Generali is one of the three largest insurance groups in Europe. Slide 5 5 Insurance business in the growth market from the Adriatic to the Black Sea Life 72,8 % Non-Life 27,2 % Generali Group Key Data 2005 Gross premium income: 62.83bn Investments: 307.42bn Staff: 61,561 Central headquarters: Trieste (Italy) Slide 6 6 Insurance business in the growth market from the Adriatic to the Black Sea Number 3 in Europe Quelle: Generali Triest Axa (F) Allianz (D) Generali Aviva (GB) ING (NL) Munich Re (D) Zurich F.S. (CH) Prudential (GB) Cnp (F) Aegon (NL) Europes leading insurance groups based on premium income in 2005 Premiums in bn Slide 7 7 Insurance business in the growth market from the Adriatic to the Black Sea New geographies Market entry via green field operation Joint venture agreement signed in May 2006 Composite approach Positioning among top foreign JVs and growth of Agency force ( >10,000 individuals) P&C license already granted Access to 6 new cities by 2008 Established bancassurance agreements with major domestic banks Organic growth: Greater than 20% growth per annum in markets with relative low penetration (Slovakia, Slovenia, Romania and Croatia) Pursuit of M&A based growth: acquisiton of companies in Serbia, Bulgaria and Ukraine CEE and Former Soviet Union China India Slide 8 8 Insurance business in the growth market from the Adriatic to the Black Sea The Generali Vienna Group A major Central European insurance group has evolved under the umbrella of Generali Holding Vienna AG. It is made up of companies in Austria, Hungary, the Czech Republic, Slovenia, Slovakia, Poland, Romania, Croatia and since 2006 Serbia, Bulgaria and Ukraine. The Generali Vienna Group comprises: 23 insurance companies (including Serbia, Ukraine, Bulgaria and Libertas in Croatia) and 38 holding, financial, real-estate and service companies (including pension fund Serbia) Slide 9 9 Insurance business in the growth market from the Adriatic to the Black Sea Generali A Powerful Partner in C & E Europe Entry intoPremiumsMarketPopulation Market(mn)share (%)(mn) Austria18322,07313.28.1 Hungary198943016.210.1 Romania1993362.821.6 Czech Republic19931824.810.3 Slovenia1996282.32.0 Slovakia1996453.65.4 Poland19991002.238.6 Croatia**2002191.94.4 Serbia*20064010.07.5 Bulgaria***2006285.87.8 Ukraine***200648 1.6 ->10%+ 47.3 * Generali Group acquired majority shareholding in Delta Osiguranje, Serbias largest private insurance company and in Delta Re ** Generali acquired 100% of Libertas Osiguranje d.d. in 2006 *** Acquisition currently in process + The Ukrainian insurance market is seriously distorted by the insurance of financial risks Slide 10 10 Insurance business in the growth market from the Adriatic to the Black Sea Macroeconomic Overview Source: IMF Slide 11 11 Insurance business in the growth market from the Adriatic to the Black Sea CEE economic growth outpacing Europe Strong economic conditions Higher GDP growth rates than that of Western Europe EU enlargement leads to increased macro- economic stability Real GDP growth (%) +3.2 pp Source: IMF CAGR 2006-2010 +4.2% CEE is expected to continue to grow faster than Western Europe leading to higher per capita income Medium-term real GDP growth of emerging markets, 2006-2010 (%) Source: Swiss Re Slide 12 12 Insurance business in the growth market from the Adriatic to the Black Sea Outstanding Growth Prospects for the insurance business Markets development pattern China Japan World USA Euro Area UK India IT H CZ CEE PL SK PH TH Per capita GDP (logarithmic scale) Insurance penetration (premium on GDP) As seen in recent years: Strong economic conditions, rising disposable income and favourable demographic factors are expected to increase life and non life penetration rates Source: Swiss Re Slide 13 13 Insurance business in the growth market from the Adriatic to the Black Sea Non-life insurance: on a growth track Non-life premiums constant 2004 prices Stable economic growth Infrastructure investments Increasing household assets Development of compulsory insurance Fiscal incentives to invest in property Leasing schemes development Real premium growth, 2004-2010 (in USD bln)Key drivers of future developments Source: Swiss Re Slide 14 14 Insurance business in the growth market from the Adriatic to the Black Sea Outstanding growth prospects for life insurance Real growth rates per region 1993-2004 Real premium growth, 2004-2010 (USD bln) Key drivers of future developments Source: Swiss Re constant 2004 prices CAGR in USD 93-04 CAGR00-04 CAGR Savings accumulation Private Pension market development Increasing risk awareness Markets opening Life Savings Pensions Slide 15 15 Insurance business in the growth market from the Adriatic to the Black Sea +25% +22% +30% +40% Hungary Fast pace of growth for Financial Savings Economic growth Increasing n of people with financial surplus Better financial system reputation Increasing awareness of savings need Source: BCE, National Statistical Centers Slovakia Czech Republic CAGR: Financial assets ( bln) Poland Slide 16 16 Insurance business in the growth market from the Adriatic to the Black Sea Savings and pensions trends pushing Life insurance growth Slide 17 17 Insurance business in the growth market from the Adriatic to the Black Sea Generali strategic view in CEE High growth markets Market dimension Development stage PL CZ HU HRSK Early stage Strategic view Relatively mature market SI Hold on with focus on quality We aim at realizing early movers advantage Strong organic growth and selection of opportunities RUS UKR SCG RO BG Slide 18 18 Insurance business in the growth market from the Adriatic to the Black Sea Experience from the expansion to CEE No 2 countries are the same the methods in developing market presence in a country can be duplicated, but the solutions are always different due to various factors The strategy had to be changed repeatedly throughout the years since 1989 from green field to merger and acquisition There is a need for an actively supported exchange between the countries in order to optimise know-how Best practice - exchange targeted use of group knowledge Mobility-management Slide 19 19 Insurance business in the growth market from the Adriatic to the Black Sea Acquisition expansion changes to earlier strategies of green field - professional M&A-Management - professional Post-Merger-Integration Ensure exploit of Group Synergies - espacially within the company Development of the necessary growth related products in the life insurance field High Management Attention is necessary if this is not available, acquisitions and integration will not succeed What do we have to do, to ensure continuous successful development in the CEE in the future ? Slide 20 20 Insurance business in the growth market from the Adriatic to the Black Sea Success factors of Generali in CEE Generali has always been international since set up and understands the long- term management of a very diverse Group this is part of our business culture Adequate financial means Adequate international management know- how and management-ressources also across continents Ability to maintain consistent development and expansion Well known and traditional Brand embodies long term stability and strength Lettland Litauen Weirussland Ukraine Moldawien Bulgarien Mazedonien Serbien- Montenegro Albanien Bosnien sterreich Polen Tschechien Slowakei Ungarn Rumnien Kroatien Slowenien Slide 21 21 Insurance Business in the growth market from the Adriatic to the Black Sea Vienna Economic Forum 6 November 2006 Karl Stoss CEO Generali Holding Vienna