OVERVIEW OF THE INSURANCE MARKET IN BULGARIA

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OVERVIEW OF THE INSURANCE MARKET IN BULGARIA
May 13, 2005 / Gdansk , Poland
Ventsislav Stoykov
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Marketplace Trends

• Market Indexes - Penetration and Density
• Non Life Industry- Overview, Key Players, PI
  structure
• Life Industry - Overview, Key Players, PI
  structure
• Health Care Insurance- Key players, PI structure
• Whats in the future- Bulgarian EU accession and
  the impact over the insurance market
• Marsh Bulgaria - Nr.1 broker in the country
• - about us
• - improving cooperation with insurers

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Major Market Indexes

• Market Penetration - A positive trend is outlined
  for both Insurance penetration density indexes,
  as exposed by figures /Table 1 and Table 2/
• Market capacity increased- over EUR 400 M
• Underwriters remained aggressive with regard to
  market share

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Table 1Sums in thousands EUR
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Table 2Growth in GDP and Premium Income
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Non-life Insurance Market

• Non-life insurance business have generated for
  the year 2004 total premium income of EUR 375 M,
  24 growth compared to 2003. Analysts attribute
  this growth mainly to developing of the PD
  segment and Motor insurance.
• Bulgaria has a diversified insurance industry
  comprising of 20 domestic non-life entities
• -15 local joint stock companies and mutuals
• -5 branches affiliates of foreign companies
• Supervision Commission
• 157 licensed brokers

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Non-life Insurance Market /contd/Premium
Income structure
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Non-life Insurance Market /contd/ Key Players

• DZI former state-owned company, leader in the
  market since its establishment in 1946,
  privatized in 2002. For the year 2004 DZI have
  generated EUR 63.65M, holding the major market
  share of 16.98
• Allianz Bulgaria- second major player on
  Bulgarian market - subsidiary of Allianz Group .
  Operates in Bulgaria since 1992, established 6
  affiliates and more than 35 branches/agenesis in
  the country

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Non-life Insurance Market /contd/

• Bulstrad and Bulins generated about EUR 51 M
  each.
• Bulstrad is also a former state-owned company,
  now part of TBI Group of Companies.
• Bulins is a local insurance company holding
  the major share of Motor insurance market
• Other 16 insurance companies represent altogether
  less than 40 market share
• Orel Insurance Co. 6.74
• Vitosha 5.53.
• International insurance giants like AIG (1.65)
  and QBE (0.66) are still precautiously operating
  on Bulgarian market.

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Non-life Insurance Market /contd/ Market share
- structural chart
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Life Insurance Industry

• Significant development is achieved in life
  insurance sector premium income is increased by
  more than 35 comparing 2003
• Total premium income for year 2004 amounts to
  EUR 51.7 M most part of which is allocated in
  Credit Life insurance

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Life Insurance Industry /contd/ Premium
Income structure
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Life Insurance Industry /contd/Key Players

• 11 life entities 8 local and 3 foreign
• DZI Life is the leader in life insurance market ,
  generating near EUR 14.6 M
• Allianz Bulgaria Life is again the second major
  player EUR 14.2 M
• Orel Life and AIG Life are other key players
  EUR 5.8 M and EUR 5.6 M respectively

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Life Insurance Industry /contd/ Market Share
Structure
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Health Insurance

• Voluntary health insurance market is still in the
  initial stage of its formation.
• Yet there is a considerable growth in premium
  income of 81, comparing 2003.
• Major premium amounts are allocated in Hospital
  and Outpatient modules
• Only 11 Health Insurance companies are operating
  on Bulgarian market
• Key players -The leading health insurance company
  is Zakrila an affiliate of Orel Group of
  Companies, holding major share of 64, other
  players are Mediko21 and Doverie holding 11
  each

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Health Insurance /contd/ Premium Income
Structure
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Health Insurance /cont/
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Bulgaria in the EU- Accession will lower the
risks of doing business in and increase
competition. As a border country we will face
the great changes in all business sectors
including insurance, skill intensive sectors will
face increased competition.

• Foreign Firms
• more foreign producers and customers on local
  markets- wealthier consumers, level playing field
• European distribution strategies
• New regulatory requirements in insurance esp.in
  Casualty- limits premiums.
• Changes to internal and external corporate risk
  profiles

• Local businesses
• increased competition
• access to larger markets
• compliance costs to conform with EU regulations,
  increases in standards, compliance and
  enforcement
• costs to raise brand awareness in foreign markets
  
• New preventative and protective measures needed -
  increases , incompensation/fines new compulsory
  insurances?

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Marsh Bulgaria- Nr.1 Broker in the Country

• Who is Marsh Bulgaria
  
  - fully
  owned subsidiary of Marsh Inc. the Global Leader
  in Insurance and Risk Management Services
  - leader also on the
  Bulgarian Insurance market (FSC)
  - over 60 of the sizable FDI
  are our clients
• Our services
  
• - unique combination of global capabilities and
  expertise and local knowledge and availability
• - ensure full compliance with local statutory
  and regulatory requirements
• - ensure adequate professional care in the
  insurance and risk management
  
• - facilitate optimal corporate governance by one
  trusted point of contact for all insurance and RM
  needs.

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Marsh Bulgaria- Nr.1 Broker in the Country
/contd/

• Improving Cooperation between Marsh and insurers
• Marsh
• By understanding insurers and working closely
  with them to understand their capabilities and
  strategies , appetite and underwriting guidelines
  
• With the removal of MSAs and increased pressure
  on commission and fees, the work that Marsh does
  need to be recognized by insurers.
• One of the ways in which this can be recognized
  is through products and services that are only
  available to Marsh.
• Insurers
• Flexible underwriting approach - size of business
  and geography
• Target client list
• Work closely with Marsh on new product ideas,
  coverage amendments to suit local conditions

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• Thank you for your attention !!!