Andreas GROSSE, Market Coordinator Romania, MUNICH Re

XPRIMM: Do you think the reinsurance market is going to turn soft as estimations for 2008 indicate a drop in reinsurance rates?
Andreas GROSSE: In the past renewal season we have seen a slight drop in reinsurance prices in the Romanian market, especially in some property reinsurance treaties. This can partially be explained by the fact that reinsurers increasingly seek to find an entry into the Romanian insurance market. We at MUNICH Re are only prepared to accept business at risk adequate terms and conditions. We focus on profitable business across all lines and are prepared to give up market share if necessary.

XPRIMM: How do see the major development of the re/-insurance markets in CEE and CIS region?
A.G.: Whereas in motor business we have seen double-digit growth in the last three years, we consider that the Romanian market's future growth perspectives will come from property and engineering lines of business. If and when the NAT CAT Pool actually becomes a reality, this will certainly have a positive impact on insurance penetration in property, and also to some extent on reinsurance demand. As to the planned infrastructure projects, in part financed by the European Union, this is where the tremendous future potential lies.

XPRIMM: Taking into consideration the opportunities, what are the plans MUNICH Re made for this region in 2008?
A.G.: The recent takeovers by large insurance groups / companies mean that a large part of the Romanian non-life market is now in the hands of foreign players. These players have a much lower need for reinsurance coverage than smaller local companies, mainly centered on property cat covers and accumulation XL covers in motor business.

XPRIMM: What are the major opportunities and threats of the Romanian insurance market, one year after joining EU?
A.G.: The above-mentioned changes in market structure will in our view accelerate much-needed developments in the Romanian insurance market regarding the introduction of deductibles for motor hull business. There may also be necessary progress in relation to the bonus-malus system. It works on the basis that all companies in the insurance market exchange information on any insured's historical loss experience when the policyholder is looking for alternative quotations in the marketplace. In this way, fairer pricing can be achieved. Ultimately, technical risk analysis will become standard market practice in motor underwriting.

XPRIMM: What is the MUNICH Re's strategy in Romania in 2008?
A.G.: We support the creation of a NAT CAT Pool in the Romanian insurance market since it represents a state-of-the-art insurance solution to protect Romania and its insurance industry against the risks of earthquake and flooding. It is also a major business opportunity for MUNICH Re. After final approval from the legislature, we are looking forward to in-depth talks with all parties involved in respect of all pool aspects.

XPRIMM: What are your expectations regarding the reinsurance demand in Romania for this year and for which lines of business do you think this demand would increase?
A.G.: At Munich Re, we see an increasing demand for risk management services due to the upcoming new Solvency II regime in the European Union. MUNICH Re offers a variety of services - from pure and plain analysis of consequences for the market to coaching and software solutions, i.e. www.pillarone.org. This is an open-source initiative sponsored by Munich Re to provide all participating clients with the required modeling tools to develop their own internal models.

XPRIMM: Thank you!