Newspaper Insurer Press Issue no 7 (15 - 29 April 2009) with an accent put on the highlights, hot topics and comments

Dear readers, in the overview of the newspaper «Insurer Press» we put an accent on the highlights and hot topics news and events. We make you acquainted with the analyses and thoughts expressed by the leading insurers and also keep you informed about all that happened within the period between the last two issues of the newspaper.

We offer our best wishes to our contributors, friends and well-wishers who celebrate their birthday in this period!

Happy new returns and all the best!

We start our overview with the news on page 2:

There are some changes in the Management Board of Generali Bulgaria Holding. Boris Chuhran will be the new CEO and Chair of the Board of the Commercial Partnership. The Supervisory Board of Generali Bulgaria Holding (GBH) made a decision for change of GBH management as 30 April 2009;

FSC granted license to Health Insurance Company UNIQUA Health Insurance AD for performance of voluntary health insurance activity;

Ralitsa Againe, Deputy Chairperson, Bulgarian Financial Supervision Commission Head of Insurance Supervision Directorate issued a decision for approval of Klaus Mьlleder for member of the Management Board and CEO of Bulstrad Life AD, city of Sofia, and Georguiev for member of the Management Board of OBB-AIG Life Insurance Company AD.

On the same page you can find more of the current news.

On page 3 Evgenia Dimova, Director, Property Insurance Directorate, DZI – General Insurance AD, is making presentation of the property insurance products and the promotional campaign of the company, which started on 19.03.2009 and will continue until 30.04.2009.

On page 4 we carry the Cover Story: Risk Management. The material is headed „Does the crisis swing the rope, walked by the insurers?” You will learn therefrom that The increased risks and dropped premiums have made their balance increasingly big challenge. The switch to the new Solvency ІІ eurostandart will cost the insurers EUR3 billion.

Under the conditions of the more and more deepening global crisis, the risks, faced by the business, have multiplied. The insurance does not make exception. Furthermore, the branch, at least in our country, has entered the crisis with the unpleasant burden of scores of BGN millions of loss from the mandatory Motor Third Party Liability Insurance of the motorists. The situation with the other mass insurance – Autocasco, is not much better. This is to say that in practice the risks, faced by our market were big enough, even without the impact of the global crisis. The crisis has just increased the challenges before the branch.

In this connection we publish some comments and interviews with leading insurers:

Plamen Yalamov, CEO, Insurance Company „Allianz Bulgaria Life”:

Increasing Fraud Exposure during the crisis

Each company must have risk management. This is a very important business line, worked both by the actuaries and the insurers. The insurers are making stipulations. They make risk estimations and further formulate conditions of the insurance policy to make the events insurable. If one event is happening very often, it would become uninsurable – the premium for such coverage cannot be calculated. The actuaries are monitoring the development of a risk.

Gernot Reiter, Life Insurance Director in the Austrian insurance company Grawe, and Nikolay Logofetov – Chair of the Board and CEO of Grawe Bulgaria Life Insurance EAD and of Grawe Bulgaria General Insurance EAD:

The decreasing prices and increased risks have made the risk management mandatory. No insurer will survive if it is offering premiums under its technical limits. Mr. Reiter shared that there are two reasons for the risk management to become in fashion nowadays. The first is that the risk management is important and necessary. It is required by the insurance supervision committees as a mandatory requirement under the new Solvency II standard for solvency limit. The second reason is that the pressure on the insurance premiums is becoming bigger and bigger. The competition in the insurance is big and is constantly decreasing the prices. However, the risks are becoming bigger meanwhile./page 6/

Ivo Gruev – Deputy Executive Director, Joint Stock Insurance Company Bulstrad:

The risk awareness is increasing, because the market is maturing. The trend is to look for all-embracing and thorough modeling. /pages 6 and 11/.

Mr. Gruev is determining the most necessary measures that must be taken under the condition of crisis: These are the prevention activities, aiming to sift out the risk portfolios. Activities for definition of new products and coverages, of marketing market behavior. For now we do not have indications that the crisis entered Bulgaria in full power. Let’s hope, that as an emerging economy, our country will be hit to a smaller degree. There is a very small part of the deposits, made by physical persons, which is concentrated on the Stock exchange or in life insurance. To this effect, the economy of the country has not big exposure to risk. That’s why we expect that the crisis will not have direct and disastrous effect.

The same hot topic is leading for the interviews, published in the column „Поглед Look back, look forth”. / pages 7 and 18/ . Petar Andasarov is talking with Dancho Danchev, Chair of the Board and CEO of Joint Stock Insurance Company VICTORIA.

I am convinced that we will get out of the crisis stronger. The big target of the product policy of VICTORIA is restructuring, as far as possible, of the portfolio of the company for profitable insurance products. All of us know which are the profitable products and which is the big looser. Furthermore Mr. Danchev shared that the global financial crisis will hit first of all the motor insurance. All of us see the colossal decrease of the sales of both new cars and used cars, which has direct impact on the Autocasco insurance. The second thing, which is producing very unpleasant impression, is the fact of even decreasing number of the available cars with concluded MTPL insurance. Mr. Danchev noted that the total coverage of this insurance on the Bulgarian market is 74% which could be considered as tragedy.

On page 8, in the column Analyses, we carry the summarized data for brokers’ activity in FY 2008. The brokers generated 40% of the total income of the Bulgarian insurers. As at the end of 2008 the number of registered insurance brokers was 275. Some of them required to be removed from the register for lack of activity. Others delivered documents, which were processed and approved. With financial crisis in the background, the market data does not look so bad.

On page 9 you can find the continuation from issue No 6 of the material for the challenges of Motor Third Party Liability (MTPL) Insurance issues. The forum with international participation, organized by the National Bureau of Bulgarian Motor Insurers (NBBMI), the Guarantee Fund (GF) and Bulgarian Insurers Association (BIA), was held in November 2008 in Plovdiv.

Traditionally, one of the most important events in the field of insurance was the bestowal of the prizes „FINANCIAL PRODUCT OF THE YEAR”

In the Life insurance branch, the prize was bestowed to a quite young company – Insurance Sole Shareholder Company CCB-Life for its product „Interest+”. On this occasion and about the establishment and the successful start of the company, we are talking with Yaroslava Krasteva, CEO, Sole Shareholder Company CCB-Life./page 10/

On pages 12 and 13 we carry the material „The companies of Vienna Insurance Group in Bulgaria reported their results for FY 2008”. At the meeting with leading financial and business media, held on 2 April this year, at Sheraton Hotel, Insurance Joint Stock Company (IJSCo) BULSTRAD, IC BULGARSKI IMOTI (Bulgarian Properties), IJSCo BULSTRAD – LIFE and Health Insurance Company BULSTRAD HEALTH, reported their preliminary financial results for the past FY 2008, as well as their plans and expectations for FY 200. The business breakfast was hosted by the executive directors of the companies - Rumen Yanchev, Chair of the Board and CEO of both IJSCo Bulstrad and of IC Bulgarski Imoti и изпълнителен директор на двете компании; D-r Klaus Mьlleder, CEO and Member of the Management Board and CEO of IJSCo Bulstrad and of IC Bulgarski Imoti; Svetla Nestorova and CEO of IC Bulgarski Imoti Life; Nikolay Mishkalov, CEO of Health Insurance Company Bulstrad Health and Todor Iliev, Financial Director of IJSCo Bulstrad.

The Total Premium Income of the companies from Vienna Insurance Group in Bulgaria (VIG) for FY 2008 is BGN302,689,344, therefrom BGN274,139,953 generated from General Insurance and BGN28,548,391 – from Life Insurance.

On page 14 in the column „Theme to be continued”: “ IS THERE A TIC-TAC MECHANISM IN THE BILATERAL FINDINGS REPORTS?”, Petrozar Petkov,

General Director and Chair of the Board, Insurance Company Bul Ins AD and и Stoyan Prodanov, CEO and Member of the Board, answer the following questions: Almost two months after the enactment of the Ordinance № 41, regarding the bilateral findings reports, what is happening in your company; are there some found irregularities; insurance frauds? Where from could arise the possible problems between the motorists-sufferers and the insurers, and how do you plan to counteract such problems and frauds? Do you consider Ordinance №41 as clear enough, are there some covered menaces and hazards, and is it well judged?

On pages 15 and 17 you can find the conversation with Nikolay Zdravkov, Manager of I & G brokers, discussing the guidelines for Consulting contracts, recently adopted by the Financial Supervision Commission. Mr. Zdravkov shared:

I & G brokers has many contracting parties, who are recommending us to their partners. It is pretty normal for these people to receive some fee for their service, as far as we live under market conditions. In this sense the border is very thin. In this part the Insurance Code is not clear enough. There is no stipulation, restricting the use of services, provided by people, bringing new clients. Furthermore, I don’t think that there is “swarming” of broker’s licenses and avoidance of broker’s liability, because the policies are executed and issued at our office, by licensed officers. But in a way or another we will follow the stipulations.

On page 16 we continue publishing (from issue 6) the materials from the Sixth Financial Exhibition "Banks, Investment, Money"”- „FINANCIAL SECTORS UNDER THE CONDITIONS OF FINANCIAL AND ECONOMIC CRISIS: SOLUTIONS FOR BULGARIA”. Bulgaria is adapting smoothly and consistently, with market approach, keeping the direction of global world balance.

On page 21 in the column Conference ( continuation from issue 6) you can read the material ‘Crisis Hieroglyph Reads also Opportunity’, under the heading ‘THE OPTIMISM OF THE GOVERNORS DOES NOT COINSIDE WITH THE ASSESSMENTS AND ESTIMATIONS, PROVIDED BY THE SCIENCE AND THE FINANCIAL EXPERTS’

Life Insurance Investment - is that the right time for? In his speech Alexander Buzhanin from KD Life emphasized the advantages of the life insurance during the financial crisis. Yes! This is the right time for Life insurance! –laconically answered Buzhanin and gave reasons for his assertion. In his opinion, the life insurance products are scarcely known in Bulgaria. The professionals in the branch consider that the present time is the right opportune moment for one to invest money in the life insurance.

In the very beginning Mr. Buzhanin presented the activity of KD GROUP.

Mr. Georguiev, Chair of the Board and CEO of UNIQUA Life AD shared that despite of the hard financial situation in the country, UNIQUA Life is one of the small number of insurance companies, reporting profit of BGN 1,737 thousand. The efforts of the company are directed to reasonable underwriting activity, which shall guarantee financial stability of the company and the secure calmness of the clients.

Selection: Vania Petrova

Translation: Albena Dimitrova