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Interview of the week

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Marie KOVAROVA, CEO and Chairman of the Management Board, GENERALI Asigurari


First of all, the crisis will cause increased pressure from the shareholders on the insurance companies, in order to grow profit, considering the fact that they will no longer be able to inject capital, as they have done so far, to cover the losses.

XPRIMM: In your opinion, what will be the consequences of the financial crisis on the Romanian insurance market in 2009?
Marie KOVAROVA:
To be honest, I prefer to start my answer with the positive aspects of the financial crisis on the Romanian insurance market in 2009, because there are some very important messages to be mentioned.

First of all, the crisis will cause increased pressure from the shareholders on the insurance companies, in order to grow profit, considering the fact that they will no longer be able to inject capital, as they have done so far, to cover the losses. It is, therefore, expected that the insurers subscribe risks in a more careful manner, one of the consequences being the increase of the costs which the high risk insured have to pay. Second of all, the crisis will be beneficial for the auto insurance market, leading to the stop of the prices war, ruled by the "Clients at all costs" slogan.

Obviously, I have to also mention the risks for the Romanian insurance market, in 2009.

At a general level, I am thinking firstly about two very important issues: living standards and population confidence in financial instruments. Speaking about living standards, Romanians will have to face the difficulty of obtaining financial support for their personal and professional projects. Also, they will probably manage more carefully their daily expenses and they will also delay taking a decision about personal and professional investments. Considering the general decrease of confidence in insurance products, their attitude is understandable if we have in mind the failure of the financial corporations at the end of 2008.

In a more particular plan, there are certain local signs that show that some specific insurance categories will be affected. We only have to look at the drop in car sales, which will definitely affect everybody to a smaller or greater extent.

Generally speaking, the smaller insurance companies will probably face some problems, not having the financial support of international groups or of strong investors. This is definitely not the situation for GENERALI Asigurari, which benefits from great support from GENERALI PPF Holding and which has been prepared to face difficult situations caused by the financial crisis, thanks to the prudent approach of the management in underwriting and to the focus on increasing profitability.

XPRIMM: What type of insurance do you believe holds the greatest potential in the near future?
M. K.:
GENERALI Asigurari will focus in 2009 on life insurance, non-motor insurance, non-life for retail and non-life corporate insurance. In our opinion, these are the segments with the greatest growth potential.

XPRIMM: Which are the main measures that an insurance company must adopt in order to be prepared for the upcoming period?
M. K.:
A healthy business approach in insurance requires a prudent underwriting process and concerns for profitability, in the detriment of the market share. I am sure that every player in the Romanian insurance market has already made an analysis of the organization's assets, but also of its weak points.

XPRIMM: Are there visible reactions from the clients due to the financial crisis? Do they have problems paying or are they cancelling the policies?
M. K.:
If we look at the preliminary results for 2008 and for January 2009, we haven't noticed so far this kind of problems. But we definitely expect to face them in the near future.

XPRIMM: Do you plan to further develop your relationship with the insurance brokers or do you plan to increase the number of agents?
M. K.:
We are proud to have a strong professional relationship with our brokers' network and our intention is to make all efforts in order to consolidate it.
Concerning our agents, starting this year we will implement a special program which aims to encourage and reward the efficiency and the free initiative of our agents, but also to extend our team. I want to underline the fact that our expectations from our agents are very high. They represent the GENERALI Asigurari values in the relationship with our customers and their attitude and behavior have to rise up to our quality standards. I think that our efforts towards preparing a highly professional and motivated team will give us a strong advantage on the market.

XPRIMM: What do you believe to be the most significant problem for the Romanian insurance market?
M. K.:
First of all, the insurance products still have a low penetration in Romania. The main cause is a general lack of financial education of the population. And the main concerning effect is a lacking in financial protection. Especially in a crisis period, it is highly recommended not to give up the financial protection.
Also, the motor segment is taking a significantly large part of all premiums, 60% (data for Q3/2008), while in Czech Republic, for instance, motor products represent 29% of the market. But this is not the main problem. The real problem is that the motor market is immature and engaged in a war of low prices. Also, it has difficulties in implementing modern instruments, such as the deductibility.

XPRIMM: Are there visible effects of the crisis in the activity of your company?
M. K.:
We definitely see the effects on the motor segment, caused by the decrease in new cars sales. But we have already prepared a coherent strategy, in order to decrease the possible impact. Also, we expect a lower increase in the life sector, compared to 2008.

XPRIMM: Which are your company's main objectives for this year?
M. K.:
GENERALI Asigurari will target increase in the gross written premiums on all product categories, focusing on life insurance, non-motor insurance, non-life for retail and non-life corporate insurance. Also, the prudent underwriting process for motor insurance will continue, as well as the improvement of the claims rate and the improvement of the quality of services offered to our clients. Last, but not least, the company is reconfirming its intentions to obtain a more balanced portfolio between the corporate and the retail clients and to grow its presence and visibility throughout the country.

XPRIMM: What do you believe to be the impact of the activity decrease in the credit and leasing sectors on the insurance market?
M. K.:
Fortunately, GENERALI PPF Holding and also GENERALI Group have a safe investment strategy, hence we are not exposed to toxic actives.

| Published on 08.05.2009






















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