Insurance Market Briefing Europe

Grange St. Paul’s Hotel, London

2012 Insurance Market Briefing Europe

18 October 2012

Welcome
Dr Roger Sellek, Chief Executive Officer, A.M. Best EMEA & Asia-Pacific

2012 Insurance Market Briefing - Europe

18 October 2012

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Agenda
08:30 09:00 09:10 09:30 10:15 Registration Welcome EMEA Market Overview Key Note Speaker 10:35 11:20 12:05 12:45 13:00 European Outlook Reinsurance Panel Emerging Markets Open Q&A

2012 Insurance Market Briefing - Europe

18 October 2012

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EMEA Market Overview
Stefan Holzberger Managing Director, Analytics A.M. Best Europe – Rating Services Ltd

2012 Insurance Market Briefing - Europe

18 October 2012

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Western Europe
• Key Market Characteristics – Economic uncertainty and volatility – Heightened investment risk 36% 25% 14% 8% 2% AA+ 2% AA AA‐ A+ A A‐ BBB+ 9% 3% BBB 1% BBB‐

– Sound underwriting and reserving fundamentals – ERM advancements

Rating distribution as of 1 October, 2012
2012 Insurance Market Briefing - Europe 18 October 2012 5

Western Europe
• Review – Strong technical profits – Baseline capital strength improved – Stressed capital strength currently supports ratings Preview – Turbulent market conditions – Regulatory uncertainty – ERM focus Rating Actions

15% Affirm Downgrade Upgrade

10% 75%

•

Outlook Summary
14% 86% Positive Negative Stable
18 October 2012 6

2012 Insurance Market Briefing - Europe

Emerging Markets: Non-MENA
• • CEE Key Characteristics – Hard hit by financial crisis – Exceptions: Poland, Czech Republic and Slovakia – Influence of Western insurers 35% 19% 12% 0% A A‐ BBB+ BBB BBB‐ BB+ BB Rating distribution as of 1 October, 2012 8% 15% 8% 3% BB‐ 0% B+ 18 October 2012 7

CIS Key Characteristics – – – – Severe market contraction Banking sector crisis Consolidation Tax optimisation schemes

2012 Insurance Market Briefing - Europe

Emerging Markets: Non-MENA
•
CEE

CIS

Review – Good technical profitability – Increased retention – Increased regulatory capital requirements – Clampdown on tax avoidance Preview – Competition increasing – Feeling strain from financial crisis – Premium volumes recovering – Increase in foreign direct investment

Rating Actions
23% Affirm Downgrade Upgrade

63%

14%

•
CEE

Outlook Summary
4% 12% 84%
18 October 2012

CIS

Positive Negative Stable
8

2012 Insurance Market Briefing - Europe

Middle East & North Africa
• Key Market Characteristics – Insurance market dominated by Motor and Medical lines – Greatest threat: political instability 26% 26%

– Competition heating up – ERM and regulatory environment considered weak 22% 17%

9% 0% A+ A A‐ BBB+ BBB BBB‐ 0% BB+

Rating distribution as of 1 October, 2012
2012 Insurance Market Briefing - Europe 18 October 2012 9

Middle East & North Africa
• Review – Country Risk issues – Low retention – High investment risk – Strong technical performance Preview – Profits squeezed – New entrants – Sound balance sheets – Takaful market growing Rating Actions

4% Affirm Downgrade Upgrade

96%

•

Outlook Summary
3% 17% 80%
18 October 2012

Positive Negative Stable
10

2012 Insurance Market Briefing - Europe

Innovation in Insurance – Can Europe Compete?
David Law Global Insurance Leader PricewaterhouseCoopers LLP

2012 Insurance Market Briefing - Europe

18 October 2012

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www.pwc.co.uk/insurance

Innovation in insurance – Can Europe compete?
David Law, PwC Global Insurance leader
October 2012

Transformation of Mature Industries: Kodak
Market Performance
Film sales worldwide significantly drop with the increasing penetration of digital photography devices Cellphones and tablets displace digital cameras as the preferred Kodak ranks means of No. 7 in US digital photography digital camera sales Kodak resorts to patent litigation and patent licensing to generate revenue

Kodak is founded by George Eastman

Start of erosion of Kodak’s US photography...