Raiff Bancassurance

0

Alois PichlerAffluent Banking/Insurance

Exploiting BancassuranceInsurance Opportunities in CEE

1

Agenda

Raiffeisen International – An Introduction

Insurance Market Environment

Bancassurance Sales Opportunity

Our Setup and Range of Products

Our Expectations and Best Practice

2

RI – The Leading Pure Play CEE Banking Group

Leadership

Growth

Profitability

Business Strategy

Unique Network Of Banks Covering 16 CEE MarketsTop 3 Bank By Assets In 9 Markets; No.1 In TwoStrong And Well Known Brand “Raiffeisen”

Proven Ability To Exploit Highest Growth Regions Of Europe: 10-year CAGR In Assets Of Approximately 40%

Pre-tax ROE 26.6%; 5-year CAGR In Net Income Of 55%; Cost Efficiency: Cost/Income Ratio Of 56% At The End Of Q3

Clear Focus On Retail Banking And Small & Medium-sized Businesses

3

Ukraine

Dynamic Expansion of Our Footprint

Hungary

1987 1991 1993 1994 1996 1998 2000 2002 2003 2004

Poland Bulgaria

Slovenia Belarus

Czech Republic Russia

Bosnia and Herzegovina Kosovo

Croatia

Serbia

Slovakia

Romania

Successful Greenfield Expansion

… Complemented By Targeted And Well Timed Acquisitions.

Albania

Ukraine

2006

Russia

CzechRepublic

Romania

20052001

4

Unique CEE Network in High Growth Markets

* At 30/06/2007

Central Europe

Commonwealth ofIndependent States

SoutheasternEurope

Customers13.5 m

Outlets3,050

Staff:57,019

5

Bosnia & H.

Aval (Ukraine) and Impex (Russia) Improve our Strategic Positioning

Market SharePosition

Average Nominal GDP Growth Rate 2006-2009e

Top

1 -

3>6

No. ofCountries

3

3

>

9

Top

4 –

6

CroatiaSlovakia

Serbia

Kosovo

Albania

RomaniaBelarusBulgaria

HungaryCzechRepublic

Poland

Slovenia

0% 2% 4% 6% 8% 10% 12%

Ukraine

Russia

6

Branch Expansion Plans Through To 2009

Poland2009: 120

Kosovo2009: 40

Hungary2009: 160

Czech Republic

2009: 120

Croatia2009: 75

Bulgaria2009: 190

Bosnia and Herzegovina2009: 100

Ukraine2009: 1,300

Romania2009: 420

Russia2009: 350

Serbia 2009: 120

Slovakia2009: 180

Slovenia2009: 14

Albania2009: 105

Belarus2009: 100

Total Branches*

2009: 3,450

* Including leasing and other branches

7

Strong Asset and Profit Growth

‘03 ‘04

20

41

‘05

29

€56

‘06

Assets

‘03 ‘04

382

‘05 ‘06

Profit

209179

594

CAGR: 39%

(€ million)

CAGR: 39%

(€ billion)

9M ‘07

€68

9M ‘07

€626

8

Income Contribution By Region

47%23%

30%

CISBelarus, Russia,

Ukraine, Kasakhstan

Central Europe (CE)Poland, Czech, Hungary,

Slovenia, Slovakia

South East Europe (SEE)Croatia, Bulgaria, Romania,

Serbia, Bosnia, Albania, Kosovo

CE

CIS

SEE

CIS

SEE

2004 9M 2007Pre-Tax Profit

€ 341 mmPre-Tax Profit

€ 953 mm

36%

37%

27%

CE

9

Income Contribution By Business Segment

2004 9M 2007

Treasury24% Retail

37%

Treasury 15%

Corporate 48%

Retail 9%

Corporate 67%

Pre-Tax Profit€ 341 mm

Pre-Tax Profit€ 953 mm

10

Stock Price

Total Return of 217% since IPO

11

Agenda






12

Banks Are A Dominant Or Very Important Channel For Life In Western EuropeLife distribution channel market share, percent

Source: National insurance statistics, McKinsey Research

ESTIMATE

OtherBanks

131991

86

2005

Portugal

37

1991

69

2005

Spain

39

1990

62

2005

France

21990

53

2005

Italy

Key drivers

New product focus (e.g., unit-linked)

Changed customer needs throughpension reform /taxIncentives

Distribution capabilities of banks

111990

45

2004

Belgium

91990

28

2005

Germany

21990 2005

Netherlands

41990

102004

UK

15 - 20

13

In CEE, Life Bancassurance Has Also Significantly Increased

Life distribution channel market share, percent

Source: VVO, McKinsey

ESTIMATE

45

1997

55

2005

Austria

51998

20

2005

Czech Republic

41998

19

2005

Slovakia

51998

17

2005

Hungary

20050

1998

10 - 200

1998

14

2005

Romania Poland

OtherBanks

14Source: Zeb/, EFMA (2005); RI analysis

Insurance significantly

contributes to a retail bank’s

revenue stream in mature

markets.

41%

DevelopingMarkets

Markets inTransition

MatureMarkets

Loans

Payments

Investments

RU, UA, SM, BH,

AL, KO, BY

PL, CZ, SK, HR, SL HU,

RO, BG

2% 5%

Percent of averagehousehold profitability

Structure Of The Potential Household Returns

Insurance

15

Agenda






16

Saving/currentaccount

Auto insurance

Home insurance

Funds, Stocks

Pension

Life insurance

Preference for Receiving Advice before Purchase (by product)

NOT prefer Prefer

Source: Capgemini Analysis, 2006 – Total UK, US, FR, GER, IT, NL, ES

17

Factors Influencing Customer Purchasing Decisions

Source: Capgemini Analysis, 2006 – Total UK, US, FR, GER, IT, NL, ES

Price38%

Product 22%

Advice17%

Service10% ImportantNot important

Brand/ Trust13%

18

Loyalty: Customers Who Buy Life Insurance Are “Sticky”

Source: Capgemini Analysis, 2006

LifeTotal: 10%

Non-LifeTotal: 39%

% of Customers changing Insurance Providers in the Last 5 Years

9% 9% 9%

26%31% 31%

34%

42%47%

63%

11% 13%10%10%

NL US FR IT GER ES UK

% o

f Cus

tom

ers

chan

ging

LifeNon-Life

19

Respondents who think that institution is well placed to address retirement needs (%)

Italy

UK

France

Germany

Belgium

Netherland

Country Banks Insurance

Source: McKinsey 2007

74

38

48

24

53

21

8

19

37

7

11

26

Sales Opportunity-Example: Retirement

20

Customer Service as Claim Handling:Which Channel do Customers Prefer?

Agent/Financial Advisor

Phone/Other Direct

Internet

Through a Bank

Other

Source: Capgemini Analysis, 2006 –Total UK, US, FR, GER, IT, NL, ES

5%

7%

12%

36%

40%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

% of Customers

21

Agenda





Our Expectations

22Source: Mystery Shopping, McKinsey

•Life•Health•Motor•Property/ Liability•Accident•Other

• Broad product range• Simple and complex

products• Attractive bundles

• Focused product range (e.g., no health/ motor)

• Simple products• Attractive bundles

Branding: Bank Insurance

2 Different Co-operation Models

The model we

prefer as well

23

General KSFs and Bancassurance Principles of at RI

Management sees insurance as a core product and key priority.

Integrated sales approachFully integrated sales

approach for banking and insurance products

Scripted lead-over scheme to approach customers

Developed incentives for sale of insurance products reflecting product profitability to bank.

Key Success Factors for

Extensive training of branch personnelIdentification of customer needsFamiliarity with insurer’s IT interfaceBasic product knowledge with access

to specialists for more complicated issues

1

3

2

5

Select a Local Preferred Partner

4

24

The Products

25BY, RU, UA, AL, KO, BH, CZ, SK SL, AL, KO, BH, PL, RO, BG

PPI on personal loans

PPI on mortgage loans; bundled home insurance

Credit Cards

SME insurance:

Direct marketing (DM)accident and health insurance

Unit-linked sold over-the-counter (OTC)

Endowment sold OTC

Accident and health sold OTC

Development path

» … Hmm this is starting to make us cash «

» Eureka! It’s so easy; why didn’t I do this earlier? «

» Ok I’ll do it coz’Our Boss says I should «

Our Evolution of Bancassurance Products

1

2

3

26

For the Bank:

PPI is primarily a FEE−GENERATOR,

Secondly, a Risk-Mitigation tool.

For The Client:PPI provides Protection against

Credit Shield (Payment Protection Insurance, PPI) is a simple Insurance Cover tied to Loans.

Death

Disability

Unemployment

Loans: Credit Shield

27

Insurance Can Contribute up to 40% of a Credit Card’s Income in the Long Run (Competitive Market):

40%

40%

20%

Margins

Insurance

Fees

Contribution to Profit:

Loans: Credit Card (Protection)

28

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Loans: Mortgage Endowment

PrincipalInterest

Standard Loan Endowment Loan

Endowment Loan Backed by Unit Linked FX Endowment Loan Backed by Unit Linked

29

Short term deposits

Over the Counter Insurance Is The Final Color Of Our Savings Rainbow

Long term deposits

Endowment

Mutual Funds

Equity Funds

Unit Linked

Risk

Risk

Appe

tite

Appe

tite

Savings

30

Client pushing Bank: „I want a loan!“

Bank pushing Client: „You need Insurance!“

Need to Push Insurance Sales

31

Product Training: Does Sales-Staff understand the insurance product?

Is product an integral part of saving value proposition?

Sales Training: Does Sales-Staff know how to pro-actively sell?

Is insurer’s IT in place in the branch on POS?

Are sales promotion or incentive system in place?

Is Insurance product compelling – an added value for client?

Is the staff familiar with FAQs?

Are general insurance conditions accessible for the client?

Is marketing material available?

ProductSalesIT

Aspects Of A Successful »OTC« Push ...

Policy entered in Insurer’s IT system and printed in bank-branch at the same time

www is key for »OTC«

Secure Internet Connection on Point of Sales

Policyprinted on Point of Sale

Raiffeisen Bank Poland Example

Today’s Value

of the Unit-Linked Policy:

Raiffeisen Bank Poland Example

35

Agenda





Our Expectations

36

RI Insurance Vision and Aspiration

2007E

€ MM

Additional Insurance

Profit2011

Stand-alone OTC

2006 PPI Costs*

* Assumed cots to income ratio of 20% of the total commission from insurance.

9.220

In 2011 we expect

insurance to contribute

significantly to Retail

Profits

Thank You For Your Attention

Alois PichlerAffluent Banking/ Insurance

Raiffeisen InternationalBank-Holding AG

A-1030 Vienna, Am Stadtpark 9Tel.: +43 (1) 71707 2087e-mail: [email protected]

http://www.ri.co.at