The New Masters of Risk? How insurers are testing out their capabilities in finance
Profiles
AIG remains the undisputed leader
In our recent survey, Rosno was voted the best overall Russian insurer by, among others, a large international accounting and consulting firm, which has offices in Russia, and one of the biggest Russian mining firms. It was also voted the best insurer for product range, price and claims resolution.
The Russian insurance market, for business and personal cover, is growing strongly. Rosno grew by 41.9%, according to parent company Allianz. This was above the average among Russian insurance companies. In 2006, Rosno wrote more than $780 million-worth of cover. More than 50,000 companies and more than 15 million individuals in Russia have insurance through the Rosno group.
A controlling interest in Rosno is held by leading European insurer Allianz SE – the first foreign insurance company to operate in Russia – which holds 97%. Allianz SE assumed the majority stake in Rosno in February 2007, when it purchased an additional 49.2% of the company. The first purchase was in July 2001, when Allianz acquired 45% of Rosno.
Hannes Shariputra Chopra, CEO of Rosno, says the market is still developing, partly because of a lack of knowledge about insurance: “The Russian financial market is still immature and the popularity of insurance among individuals is still low.” But there is strong growth in personal income, and the economy continues to grow: “in all segments there is still a tremendous growth potential. There are real centres of wealth with relatively low insurance penetration such as western Siberia, the Krasnodar region and the Ural region.”
Rosno has historical and business ties to all the Commonwealth of Independent states. “Upcoming centres of wealth in the CIS like Kiev, Donetsk, Almaty, Astana, Baku and future ones like Tashkent have tremendous growth potential” says Chopra.
Rosno faces challenges that are common in developing markets. The Russian insurance market needs to develop an adequate legal and regulatory framework. “There is a lack of transparency in the market. There is no obligation to publish to International Financial Reporting Standards, so clients do not really know what is going on in the market”, says Chopra. Rosno claims to be the only insurance company that regularly reports in line with IFRS.
The potential customer base needs to be educated: “There is still a widespread scepticism towards financial institutions and long-term investment. Insurance, as a method of protecting, enhancing and upgrading your life, is not fully accepted yet.”
Chopra recognizes these challenges and plans to meet them. “As a leader you have to set your own standards and by that shape the market,” he says. Rosno was the first insurer to introduce directors and officers liability and financial risk insurance to the market. Its financial strength rating, from Moody’s, is Baa1, with a stable outlook. It is the highest in the Russian insurance market.
Rosno recently launched AGO Million, a third-party liability medical and motor insurance product. It is also developing new weather-related insurance products. In 2007, Allianz acquired ATF Polis, one of the top three non-life insurers in Kazakhstan. Rosno is in charge of developing and governing the company. Pension and asset management services are also offered to customers in the core countries – Russia, Ukraine and Kazakhstan.
Over the next five to 10 years, Rosno aims to be the “leading profitable, fast-growing and most trusted financial services provider in the main CIS markets,” says Chopra.
He aims to achieve this by having “a clearly defined target for leadership in our market. We take pride in being different, as we truly believe that transparency, international standards, a top financial rating, customer orientation and innovation mean real value for our customers and the other stakeholders. By being clear about this path we try to maximize business opportunities.”
