The document analyzes Zurich's potential entry into 8 Central Asian markets. It conducted market analyses of each country, examined entry methods based on regulations and precedents, identified suitable product offerings, created a forecasting model, and made recommendations in individual business plans. The top 3 priority markets for potential near-term entry identified were Azerbaijan, Kazakhstan, and Pakistan based on their established insurance markets and positive trends.

1. Georgetown MBA Residency
Final Project Report
Michelle Kim, Suvo Nandi, Patrick Ottenhoff, Oscar Scolari
5 March 2012

2. Table of Contents
Executive Summary
Project Objectives and Scope
Objective One: Market Analysis by Country
Objective Two: Entry Method Recommendations
Objective Three: Product Offerings
Objective Four: Forecasting Model
Recommendations: Business Plan by Target Market
Evaluation & Summary
2

3. Table of Contents
Executive Summary
Project Objectives and Scope
Objective One: Market Analysis by Country
Objective Two: Entry Method Recommendations
Objective Three: Product Offerings
Objective Four: Forecasting Model
Recommendations: Business Plan by Target Market
Evaluation & Summary
3

4. Executive Summary
• Our project examined Zurich’s potential entry into eight Central Asia republics.
Scope
Analyses
Market
Analysis
Entry
Method
Product
Offering
Forecasts
Business
Plans
4
• Methodology included analysis of the broader market, regulatory environment, and competitive
landscape (insurers and product offerings).
• Preliminary scoring based on broad market outlook yielded a highest priority group of
Azerbaijan, Kazakhstan, and Mongolia.
• Survey of regulatory environments and entry precedents informed entry method recommendations
and revised the highest priority group to include Azerbaijan, Kazakhstan, and Pakistan.
• The state of insurance markets across target countries indicate that short-tail business would be a
sensible entry point for Zurich, along with other niche opportunities.
• Our high-level forecast model used steady-state assumptions to generate financial performance
benchmarks upon entry via greenfield, acquisition, and reinsurance into priority markets.
• Recommendations are presented as individual business plans by target market (timeline, entry
method, product offering, and benchmark).

5. Table of Contents
Executive Summary
Project Objectives and Scope
Objective One: Market Analysis by Country
Objective Two: Entry Method Recommendations
Objective Three: Product Offerings
Objective Four: Forecasting Model
Recommendations: Business Plan by Target Market
Evaluation & Summary
5
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

6. Our project explored Zurich’s potential entry
into eight target markets in Central Asia
Target Markets:
•
•
•
•
•
•
•
•
6
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Azerbaijan
Kazakhstan
Kyrgyzstan
Mongolia
Pakistan
Tajikistan
Turkmenistan
Uzbekistan
Summary

7. Our approach used market analyses with
various focuses to develop plans by country
Entry Method:
Regulations &
Case Studies
General Market
Analysis
Political & Economic Metrics
Social / Consumer Factors
Overall Stability for Business
Insurance Regulations
Past Market Entrants
Insurance Market
Product Offerings
Market Size & Concentration
Competitive Analysis
Lines of Business Offered
Forecasting Model
Estimates of premium/losses
Market Share, Acquisition drivers
Business Plan by Target
Market
Recommendations of:
•Entry Phase
•Method
•Product Offerings
7
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

8. Table of Contents
Executive Summary
Project Objectives and Scope
Objective One: Market Analysis by Country
Objective Two: Entry Method Recommendations
Objective Three: Product Offerings
Objective Four: Forecasting Model
Recommendations: Business Plan by Target Market
Evaluation & Summary
8
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

9. Our general market analysis examined key
environmental metrics to tier target markets
•
•
Goal: Tier target markets in phases according to
priority level for potential Zurich entry
Methodology:
•
•
•
9
Six different indicators were used to assess the
economic, social and political environment in these
countries
We developed a model to score, weight, and rank
countries according to key market indicators
We then assigned preliminary designations (“Tiers”)
•
•
•
Market Analysis
Entry Method
Political and
Social System
Openness
Labor Markets
Product Markets
Tier I (immediate entry)
Tier II (entry in ~5 years)
Tier III (entry in ~10 years)
Project Scope
Macroeconomic
Indicators
Capital Markets
Products
Forecast
Recommendations
Summary

10. Diverse drivers of the key indicators were
collected to measure each country’s potential
•
•
•
•
•
•
•
Political Stability Index
(includes institutions, corruption,
factionalism and nine other criteria)
•
•
•
FDI, Net Inflow
Tariffs
Openness to Media
•
•
Education Index
Unemployment
•
•
Logistics Performance
Presence of Global Firms
Product Markets
•
•
•
10
GDP
GNI per Capita
GDP Growth
Oil Production
Natural Gas Production
Global Competitive Index
Insurance & Financial Inflows
Total Listed Companies
Domestic Credit to Private Sector
Capital Markets
Project Scope
Market Analysis
Macroeconomic
Indicators
Political and
Social System
Openness
Labor Markets
Entry Method
Products
Forecast
Recommendations
Summary

11. Preliminary scoring determined a Tier I market
group of Azerbaijan, Kazakhstan, and Mongolia
Based on economic potential and growth, overall country stability,
and other parameters, markets are prioritized as follows:
Economic Political
Criteria
Stability
Kazakhstan
Azerbaijan
Mongolia
Turkmenistan
Pakistan
Uzbekistan
Tajikistan
Kyrgyzstan
Project Scope
Labor
Markets
Capital
Markets
Cumulative
1
1
1
1
1
2
1
2
2
4
4
3
5
2
6
3
1
8
2
1
3
3
4
7
3
4
7
4
3
8
3
6
4
3
5
5
5
8
2
4
7
6
7
6
5
7
8
3
7
8
6
5
5
4
6
8
Tier I
Kazakhstan
Azerbaijan
Mongolia
11
Openness
Product
Markets
Market Analysis
Tier II
Turkmenistan
Pakistan
Entry Method
Products
Forecast
Recommendations
Tier III
Uzbekistan
Tajikistan
Kyrgyzstan
Summary

12. Table of Contents
Executive Summary
Project Objectives and Scope
Objective One: Market Analysis by Country
Objective Two: Entry Method Recommendations
Objective Three: Product Offerings
Objective Four: Forecasting Model
Recommendations: Business Plan by Target Market
Evaluation & Summary
12
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

13. Regulatory barriers and precedents formed the
basis of our entry method recommendations
•
•
Goal: Identify most advisable entry strategy by
country
Methodology:
•
•
•
•
13
Research regulatory and other barriers for market
entry
Research case studies of competitor entrance in
target markets
Identify criteria to evaluate entry methods given
market analysis and barriers research
Prioritize entry strategies (acquisition, greenfield,
joint venture, reinsurance) based on classification of
market
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

14. Zurich’s global competitors provide precedents
for entry into some target markets
Azerbaijan
Kazakhstan
Pakistan
• AXA purchased
majority stake in
privately-held
MBASK
Insurance Co in
2010.
• Company
rebranded AXA
MBASK.
• ~$7M share
capital company.
• Chartis subsidiary
registered in 1998
as Closed Joint
Stock Company;
renamed and
registered in
2010.
• ACE Home
Insurance branch
office converted to
wholly-owned
subsidiary in 2000.
• Allianz joint
venture with EFU
Group in 2000.
• Allianz EFU
specializes in
healthcare.
• Generali – Joint
Stock Company
subsidiary based
in Almaty,
specializing in life.
• Chartis operates
via a local branch
office of one of the
company’s
subsidiaries.
14
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

15. Two primary environment metrics were used to
prioritize entry methods for each country
Metric 1: Established
Attractiveness of Market
Positive
Markets scored high on this dimension
due to the following characteristics:
• Existing regulations encouraging FDI
• Past precedents of market entry
• Past reforms to develop insurance /
financial services industry
• Mandatory insurance lines
Metric 2: Positive Market
Trends
Markets scored high on this dimension
due to the following characteristics:
• Recent / forthcoming regulation
reducing competition (e.g., raising
capital requirements)
• Recent compulsory insurance lines
• Growth focused on private sector and
insurance lines of business
15
Project Scope
Market Analysis
Entry Method
Established
insurance market
AND growing…
Pursue:
•Acquisitions
•Greenfield /
Branch Office
High
Immature market
AND poor
outlook…
Pursue:
•Nothing?
•Reinsurance
Low
Immature
insurance market
BUT positive
trends…
Pursue:
•Joint Ventures
•Reinsurance
Established BUT
constrictive
trends…
Pursue:
•Branch Office
•Reinsurance
•Joint Ventures
Negative
Products
Forecast
Recommendations
Summary

16. Entry Method Recommendation:
AZERBAIJAN
Azerbaijan’s strong established insurance market, combined with its
developments in mandatory insurance, past precedent of acquisition, and
overall growth trajectory makes this market a prime candidate for
acquisition or greenfield entry.
Established Attractiveness of Market:
• Mandatory Insurance Lines: Azerbaijan requires fire insurance for all
commercial premises and third party motor insurance.
• Precedent of Success: AXA successfully purchased a majority holding in
MBASK in 2010.
• Overall Growth: Though the explosive growth in insurance has slowed
somewhat over the last couple of years, Azerbaijan remains very much a
developing market.
Positive Market Trends:
• More Mandatory Insurance Lines: Recently, real estate, exploitation of real
estate, and motor passenger insurance have all become compulsory lines.
• Decreasing Local Competition (?): Recent increases in capital
requirements may squeeze smaller local players out of the market and/or
leave them vulnerable for acquisition.
Areas of Concern:
• Confusion in Profit Tax Exemption: Insurers required to pay 10% profit tax
despite earlier government promises of exemption
• Potential for Global Competition: Opportunities for Zurich are also
opportunities for the competition, requiring differentiation and speedy entry.
16
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

17. Entry Method Recommendation:
KAZAKHSTAN
Kazakhstan enjoys the largest economy in the region with strong
macroeconomic trends and created a Financial Supervision Authority to
further develop the local insurance industry. This market is a
recommended candidate for acquisition or greenfield entry.
Established Attractiveness of Market:
• Existing Market Strength: Largest economy of the region with established
FDI council providing support for foreign companies entering market.
• Financial Supervision Authority (FSA): Infrastructure in place to develop
insurance industry and bring local legal / regulatory framework to standards
of EU and IAIS.
• Precedents for Market Entry: Relatively straightforward procedures to
establish subsidiaries enabled Chartis and Generali to do so successfully.
Positive Market Trends:
• Significant Recent Growth: 2011 was a strong year for local insurance, with
25% year-over-year growth in written premiums.
• Anticipated Consolidation: With rising capital requirements, smaller
companies will be vulnerable to acquisitive activity.
• Growing Sophistication: FSA developed earthquake insurance evaluation
and risk model in 2010 to better inform decisions of local insurers.
Areas of Concern:
• Higher Taxes: Insurers have been moved to the general taxation regime
earlier this year (4% to 20%).
• State Competition: Largest four commercial banks were taken into partial
state ownership in 2009; all four have insurance subsidiaries.
17
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

18. Entry Method Recommendation:
PAKISTAN
Pakistan offers mature insurance legislation, a move towards increased
mandatory lines, and growth opportunities in niche areas, on top of being
one of the largest insurance markets in the region. However, due to the
regulatory environment, Pakistan is better suited for a branch office or JV.
Established Attractiveness of Market:
• Mature Market with Opportunities: Large insurance market with significant
amount of competition, but still presents opportunities in niche lines, such
as terrorism covers and micro-insurance, following SECP report on
insurance needs of low-income people in response to 2010 floods.
• More Mandatory Lines: The World Bank and SECP are forming regulations
to provide protection to individual victims of terrorism, rain, flood, and
earthquake.
• Past Precedents: Successful JV by Allianz to become leader in healthcare;
Chartis and ACE able to operate or convert branch offices into subsidiaries
to continue growth in this market.
Negative Market Trends:
• Instability: Social turmoil and lawlessness are prevalent, and the judicial
system is not entirely reliable.
• M&A Difficulty: High cost of financing can negate any synergistic gains
from M&A, and insider trading has led to reluctance among locals in
pursuing such deals.
18
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

19. Entry Method Recommendation:
MONGOLIA
Mongolia’s insurance market has recently experienced positive steps in both
stabilizing regulation and in industry growth. However, due to the still
immature nature of the market and the concentration among few
competitors, this market is better suited for JVs and/or reinsurance.
Immaturity of Market:
• Small Scale: Relatively large number of insurers fighting over small
premium pot, without benefit of substantial compulsory insurance driving
consumption; over 60% of premium written by top three companies.
• Privatization: Two largest insurers, Mongol Daatgal and Tushig Daatgal,
were state-owned until 2003, potentially leading to added competition.
Positive Market Trends:
• Stabilizing Regulation: New insurance laws passed in 2004; Financial
Regulatory Commission created in 2006 to oversee insurance companies.
• Segment-driven Growth: Motor liability made compulsory in January 2012;
volume of mining projects leading to greater standardization for
international investors; life insurance growing and encouraged by the IMF
and Mongolian government.
• Growth in Reinsurance Spend: Mongol Daatgal recently began purchasing
reinsurance treaty from Hannover Re; others are anticipated to follow suit.
19
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

20. Entry Method Recommendation:
KYRGYZSTAN
While Kyrgyzstan may pose a growth opportunity in the future, its current
small, undeveloped, and unstable insurance market combined with
overall turmoil in the country makes this market too risky for near- or
medium-term entry, aside from the possibility of reinsurance.
Immaturity of Market:
• Instability of Large Competitors: AUB Insurance shot to the top as the
market leader in 2009, only to go bankrupt and nationalized following
inability to meet obligations in April 2010 uprisings.
• Few Compulsory Lines to Drive Adoption: Insurance is not trusted among
consumers, and adoption issues are not mitigated via mandating insurance
consumption.
• Heavy State Involvement: Insurance is tightly controlled by the state, but
given the instability of the state government, this presents a very risky
situation for insurers operating in the market.
Negative Market Trends:
• Ongoing Market Turmoil: With high degree of civil unrest and corruption,
insurance, among other businesses, remain difficult to penetrate and within
which to operate.
20
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

21. Entry Method Recommendation:
TAJIKISTAN
Tajikistan has proposed several initiatives that would enhance the stability
and growth prospects of the local insurance market. As those initiatives
have yet to gain momentum, and the current market is dominated by a
legal monopoly, this market is not advisable for entry at this time.
Immaturity of Market:
• Legal Monopoly: State-owned insurer Gosstrakh currently dominates the
compulsory lines of insurance, which makes new entry difficult, since
overall insurance consumption is not very high in this market.
• Relatively Novel Stabilization (?): Anticipate stable and growing market in
future, but somewhat early to tell (e.g., local currency is only ten years old;
export-heavy economy highly vulnerable to exogenous shocks).
Negative Market Trends:
• Lack of Momentum: Legislation accompanying ten new compulsory
classes proposed in 2010 have yet to be written; market is limited to basic
insurance lines and local players.
21
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

22. Entry Method Recommendation:
TURKMENISTAN
Turkmenistan’s insurance market remains dominated by one state-owned
insurer following renationalization about a decade prior. Until the market
(that is, the state and the one insurer) show signs of opening up to additional
insurers, entry into this market is not feasible.
Immaturity of Market:
• Monopoly as Relic of Soviet Era: Turkmen Gosstrakh controls all
government business and most compulsory lines, without indication of
opening up the market; cites mission to promote stability and growth of
Turkmenistan.
Negative Market Trends:
• Renationalization: 15 private insurers/reinsurers closed in 2000 as part of
renationalization effort
22
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

23. Entry Method Recommendation:
UZBEKISTAN
Like Tajikistan, Uzbekistan has proposed reforms to the insurance sector.
However, these reforms (among other economic reforms) have been slow to
materialize, compounded by the overarching poverty of the country and
long-standing state control of insurance. Entry is not advisable at this time.
Immaturity of Market:
• Lack of Openness: Not only is there a legal monopoly on compulsory lines,
but the state insurance regulator is also highly reticent on information / data
regarding the insurance market, making due diligence prior to entry very
difficult. Neighboring Kazakh investors are unable to enter.
• Domination of State Companies: Though the Uzbek government has
acknowledged the importance of privatizing the insurance sector, these
reforms have been slow to gain momentum.
Negative Market Trends:
• Poverty Stagnates Insurance Growth: Due to high degree of poverty,
insurance is more likely to grow in the commercial sector. However, the
commercial sector itself is unable to grow with the current restrictive
atmosphere of this market.
23
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

24. Analysis of regulatory environment and entry
recommendations led to revised market tiers
Priority
Entry
Mkt
Method
Tier I
Tier II
Tier III
Acquisition
Azerbaijan
Kazakhstan
Greenfield
Pakistan
JV
Kyrgyzstan
Mongolia
Tajikistan
Reinsurance
Turkmenistan
?
Going forward, we refer to these tiers as the
finalized “Phases” that we recommend.
24
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Uzbekistan
Summary

25. Table of Contents
Executive Summary
Project Objectives and Scope
Objective One: Market Analysis by Country
Objective Two: Entry Method Recommendations
Objective Three: Product Offerings
Objective Four: Forecasting Model
Recommendations: Business Plan by Target Market
Evaluation & Summary
25
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

26. Product offerings depend on
competition, consumer trends, and market size
/ growth
•
•
Goal: Recommend products and services for
Zurich to offer upon market entry
Methodology:
•
•
•
•
Research insurance market by country
(size, concentration, growth, major lines of
business)
Analyze competitors’ presence, both global
insurers and local providers
Identify areas of alignment among Zurich’s
expertise, market trends, and competition
Product Mix
Key Outcomes:
•
•
•
26
Market Concentration
Sophistication of local insurance market aligns
with overall stability of country
Target markets have significant room for growth
Main concern is high concentration and
Project Scope Market Analysis Entry Method Products Forecast Recommendations
competition
Summary

27. Phase I countries present the best opportunity
in size and concentration
Market Size and Concentration
2010 Written Premium $M
1,200.00
1,000.00
Phase I Countries have the
most substantive insurance
markets in terms of written
volume
800.00
600.00
400.00
200.00
-
Market Concentration
Kazakhstan and Azerbaijan
have somewhat more
fragmented markets than the
other countries; concentration is
problematic across-the-board
27
Project Scope
Market Analysis
Entry Method
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Products
Other
Top 5
Forecast
Recommendations
Summary

28. Target markets currently exhibit low insurance
consumption with relatively few local insurers
Market Penetration
Market
Premium as %
of GDP
Per Capita
Expenditure
USD
No. of Local
Insurers
Azerbaijan
0.37%
21.71
25
Kazakhstan
0.67%
60.29
15
Kyrgyzstan
0.27%
2.10
10
Mongolia
0.60%
6.10
6
Pakistan
0.72%
6.05
20
Tajikistan
0.44%
3.47
15
Turkmenistan
0.56%
10.44
1
Uzbekistan
Developed
Markets
0.33%
3.47
15
10% - 14%
3,000 – 5,000
All target markets have relatively low insurance spend, which
suggests both room for growth as well as potential adoption
issues.
28
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

29. Zurich’s global competitors have largely
focused expansion efforts on Phase I countries
Global Competitor Presence in Central Asian Countries
Company
Zurich Insurance
ACE
AIG (Chartis Insurance)
Allianz SE
AXA
Assicurazioni Generali S.p.A.
ING Groep N.V.
Mitsui Sumitomo Insurance Group
Tokio Marine Group
PHS ($M)
FY2010
converted
31,900
23,000
27,000
58,958
65,848
23,173
55,646
21,158
24,618
Munich Re
Project Scope
Pakistan
Kazakhstan, Pakistan, Uzbekistan
Azerbaijan, Pakistan
Azerbaijan
Kazakhstan
Kazakhstan - Structured finance products
No presence
No presence
30,473 Azerbaijan, Kazakhstan - out of Moscow office
Azerbaijan, Kazakhstan, Turkmenistan,
25,300
Uzbekistan - out of Munich office
Swiss Re
29
Central Asia Locations
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

30. Property, Liability, Motor, and Marine lines are
all widely purchased across target markets
Current Primary Lines of Business
Market
Property
Motor
Azerbaijan
X
X
Kazakhstan
X
X
Kyrgyzstan
X
Mongolia
X
X
Pakistan
X
X
Tajikistan
X
Turkmenistan
X
Uzbekistan
WC & EL
Marine
PA & HC
(NonLife)
X
X
X
X
X
Liability
X
X
X
X
X
X
X
X
X
Split not valid; insurance classified as compulsory vs. voluntary
Property and Marine Lines make sense for short-term entry tactics:
• Widely purchased, short-tail business
• Opportunities across personal, commercial, and public customers
• Build client base and expand into casualty lines with maturing market
30
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary
X

31. Preliminary business plans by country
incorporate potential partners and products
Phase of Entry (1, 2, or 3)
Products Currently Written
Predominant lines of business of
example target firms, which Zurich
in turn will write through targets
Potential Partners / Targets
Examples of existing firms on the
ground in target market to consider
buying / pursuing joint venture /
reinsuring
Other areas of opportunity in
market based on example firms’
areas of expertise and market
conditions
Comments…
Notes / Rationale / Caveats regarding comments
above
31
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

32. Preliminary Business Plan:
AZERBAIJAN
Phase One: Immediate Entry
Potential Partners / Targets
Ateshgah
(possible capability for financial products)
Products Currently Written
Property / Motor
Workers’ Compensation
Healthcare
Marine
Azersigorta
Opportunities in diverse industries
(major player, especially in energy)
International Insurance Co.
(energy, agriculture, food, construction)
(personal lines powerhouse)
Comments…
No state insurance companies currently
Acquisition seems highly feasible
32
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

33. Preliminary Business Plan:
KAZAKHSTAN
Phase One: Immediate Entry
Potential Partners / Targets
Kazkommerts-Policy
(Strong underwriting operations)
Products Currently Written
Property / Motor
Workers’ Compensation
Liability
Marine
Numerous small players
Growing property cat R/I market
(2nd largest; bank-owned)
Nomad Insurance
(reinsurance potential)
Comments…
Main competition likely to be Allianz and Eurasia
33
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

34. Preliminary Business Plan:
PAKISTAN
Phase One: Immediate Entry
Potential Partners / Targets
National Insurance
Products Currently Written
Property / Motor
Marine
Miscellaneous
(potential for privatization)
EFU General
(JV with Allianz)
Uptick in terrorism covers
Numerous small players
(including branches of competitors)
Comments…
Reinsurance market may be difficult due to statesponsored Pakistan Reinsurance Co Ltd.
34
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

35. Preliminary Business Plan:
MONGOLIA
Phase Two: Medium Term Entry (3-5 years)
Products Currently Written
Property / Motor
Marine
Liability
CAR
Potential Partners / Targets
Mongolian Insurance Group
(need fac capacity for large engineering risks)
Bodi Daatgal
(possible life insurance partner)
Growth in mining sector
necessitates large loss protection
Banks / Other Businesses
(provide insurance for local operations)
Comments…
Reinsurance is as yet not well understood among
insurers, but likely to grow due to Mongol Daatgal.
35
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

36. Preliminary Business Plan:
KYRGYZSTAN
Phase Three: Long-Term Entry, if any
Potential Partners / Targets
Kyrgyzinstrakh
Products Currently Written
Property
Liability
(reinsurance needs in P&C and aviation)
Kyrgyzstan Insurance
(largely property writer)
Personal & Small Business
New players as market stabilizes
long-term
Comments…
Reinsurance is likely the best bet for entry, barring
rapid reduction in poverty / increase in consumption.
36
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

37. Preliminary Business Plan:
TAJIKISTAN
Phase Three: Long-Term Entry, if any
Products Currently Written
Property
Liability
Marine
Potential Partners / Targets
Orien Insurance
(competing with state co.s for lead;
Believed to be politically connected)
New players as market opens up to
additional competition long-term
Some specialty lines in construction
and engineering, financial and
business risks
Comments…
Very small volume of business makes both insurance
and reinsurance for Zurich not very attractive.
37
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

38. Preliminary Business Plan:
TURKMENISTAN
Phase Three: Long-Term Entry, if any
Products Currently Written
Property
Liability
Other Personal Lines
Potential Partners / Targets
None available at this time
Comments…
Will need to monitor potential developments leading to
opening of market to additional competitors
38
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

39. Preliminary Business Plan:
UZBEKISTAN
Phase Three: Long-Term Entry, if any
Products Currently Written
Information not available, but likely
concentrated around
Property
Motor
Construction
Potential Partners / Targets
None available at this time (all
state-owned), but potential for new
players writing diverse lines if/when
reforms take effect
Comments…
Market worth monitoring to see if openness problem
indicates any signs of relaxing
39
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

40. Table of Contents
Executive Summary
Project Objectives and Scope
Objective One: Market Analysis by Country
Objective Two: Entry Method Recommendations
Objective Three: Product Offerings
Objective Four: Forecasting Model
Recommendations: Business Case by Target Market
Evaluation & Summary
40
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

41. High-level benchmarks were estimated via
market share and acquisition target value
•
•
Goal: Perform projected cost-benefit
analysis of market entry with five-year
horizon
•
•
•
41
Assumptions
Overall Market WP Growth Rate
Target's Market Share Growth Rate
Target's Premium Base Growth Rate
Loss Ratio Growth Rate
Expense Ratio Growth Rate
Acquisition & Integration Costs
Investment Hurdle Rate
Methodology:
Identify comparables for valuation / estimate
Zurich’s performance in market upon entry
Develop high-level forecasting model to
calculate potential profit and conduct
Operating Year
sensitivity analysis
Overall Market Written Premium
Target's Market Share
Target's Premium Base
Estimate investment(s) required and
Loss Ratio
Ratio
performance of Zurich operations within ExpenseMargin Premium
Target's
Target's Margin %
forecast horizon
Discounted to 2013
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
2010
193.86
7.5%
14.54
34.7%
35.0%
4.40
30.3%
-
Summary
2011
199.68
7.7%
15.42
35.2%
36.1%
4.43
28.7%
-
2012
205.67
8.0%
16.36
35.8%
37.1%
4.44
27.1%
-
3.00%
3.00%
6.09%
1.50%
3.00%
9.68
10.00%
2013
211.84
8.2%
17.36
36.3%
38.2%
4.42
25.5%
4.42
2014
218.19
8.4%
18.42
36.8%
39.4%
4.38
23.8%
3.98

42. Steady-state assumptions were used to
forecast key markets barring any shocks
• General Assumptions
•
•
•
•
Investment Hurdle Rate
Market growth rate, based on trend over last few years
Market Average Loss Ratio Growth Rate
Market Average Expense Ratio Growth Rate
• Greenfield / Branch Office Model Assumptions: Azerbaijan,
Kazakhstan, Pakistan
• Anticipated Zurich Market Share Growth
• Initial Start-up Costs
• Acquisition Model Assumptions: Azerbaijan, Kazakhstan
• Target’s Free Cash Flows, based on P&L / Annual Report (if available)
• Growth Rate of Target’s Business
• Reinsurance Model Assumptions: Mongolia
• Commission and Cession Percentage (Pro Rata)
• Cedant’s Market Share Growth Rate
42
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

43. Table of Contents
Executive Summary
Project Objectives and Scope
Objective One: Market Analysis by Country
Objective Two: Entry Method Recommendations
Objective Three: Product Offerings
Objective Four: Forecasting Model
Recommendations: Business Plan by Target Market
Evaluation & Summary
43
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

44. Final Business Plan:
AZERBAIJAN
Phase of entry: Phase ONE; we recommend immediate entry. Azerbaijan ranks number two in our
model finishing in the top three spots for half of our model’s indicators. Openness, capital markets, and
product markets still show room for improvement; however, the country has mandatory insurance lines
and precedent of success of other insurance companies entering the market. Recently, more insurance
lines have become mandatory and higher capital requirements have squeezed out smaller competitors.
Entry Method: Azerbaijan has a strong established insurance market, combined with development of
mandatory insurance. Additionally, it has solid past precedent of acquisition and growth trajectories.
Taking into account the high capital requirements in Azerbaijan, we recommend acquisition of a local
company. Our research shows Ateshgah (major player in energy), International Insurance Co. (possible
capability for financial products) and Azersigorta as potential candidates, due to competitive position in
the market, experience writing diverse lines of business, and other niche opportunities.
Potential concerns include the need to pay 10% profit tax despite promise of exemption and potential
global competition.
Product Offering: Predominant lines of business of potential companies to acquire are: i) property /
motor, ii) worker’s compensation, iii) healthcare and iv) marine. There are opportunities in diverse
industries within Azerbaijan such as energy, agriculture, food, and construction.
Forecast 2013-2018: Acquisition of Target Comparable to Ateshgah yields $20.3M in profit, less $9.7M
in acquisition and integration costs
Greenfield Entry yields $12.4M in profit
44
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

45. Final Business Plan:
KAZAKHSTAN
Phase of entry: Phase ONE; we recommend immediate entry. Apart from the Capital Market indicators,
where it is ranked as number two, this country ranks number one in every sector of our model. It
represents the best option among the eight countries that we evaluated. Kazakhstan enjoys the largest
economy in the region with strong macroeconomic trends and created a Financial Supervision Authority
to further develop the local insurance industry.
Entry Method: Given the country’s existing market strength and straightforward procedures for
establishing local subsidiaries, we recommend acquisition of an existing company within Kazakhstan or
a greenfield entry. Our research shows Kazkommerts-Policy (second largest, bank owned) and Nomad
Insurance (strong underwriting operations) as two potential acquisitions. However, there are several
other smaller operators that can also represent good opportunities.
Potential concerns include higher taxes which have recently been raised from 4% to 20%, as well as
state competition which partially owns four of the largest commercial banks.
Product Offering: Predominant lines of business of potential companies to acquire are: i) property /
motor, ii) worker’s compensation, iii) liability and iv) marine. A secondary potential opportunity is the
growing property cat R/I market within Kazakhstan.
Forecast 2013-2018: Acquisition of Target Comparable to Kazkommerts-Policy yields $263.3M in
profit, less $182.6M in acquisition and integration costs
Greenfield Entry yields $155.1M in profit, less start-up costs
45
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

46. Final Business Plan:
PAKISTAN
Phase of entry: Phase ONE; we recommend immediate entry, as Pakistan is both a mature market and
trending towards increased mandatory insurance lines. There are opportunities in niche areas such as
terrorism insurance and Pakistan is quickly becoming one of the largest insurance markets in Central
Asia. However, serious risks remain in political stability and economic development that might offset
gains in the insurance sector policy development.
Entry Method: The mergers and acquisitions regulatory environment in Pakistan is not stable and for
this reason we recommend opening a branch office or entering into a joint venture. M&A activities are
difficult in Pakistan due to lack of industry synergy and large industrial development base and product
markets. The World Bank and the SECP are currently developing newer regulations for individual
protection for terrorism, flood, rain and earthquakes to allay government reliance in event of such
catastrophic events. In the past competitors such as ACE, Allianzs and Chartis have entered into
successful JVs and opened new branches.
Product Offering: Predominant lines of business of potential companies to enter into joint venture or
branch offices are i) property, ii) motor and iii) marine (transportation) insurance. These represent
growing areas in the Pakistani market.
Forecast 2013-2018: Greenfield Entry yields $111.4M in profit, less start-up costs
46
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

47. Final Business Plan:
MONGOLIA
Phase of entry: Phase TWO; we recommend entry within five years. There has been tremendous
industry growth in Mongolia and regulations are emerging to stabilize the markets. However, the
insurance industry is still small and just beginning to mature.
Entry Method: Joint ventures and reinsurance are the two methods suitable in Mongolia, particularly for
entry in the nearer term. The immaturity of the markets makes the scope smaller and the rate of
privatization has yet to pick up. The mining sector is experiencing a lot of growth and more insurance
lines are being made mandatory. There is potential for growth in reinsurance, with Mongol Daatgal
setting a purchase precedent. Overall the country shows a lot of potential in the medium term. However
the two largest insurers were state owned until recently, enjoy government support still, and might hinder
free market competitors. New regulations are in the pipeline and will aid new entrants in the near future.
Product Offering: Predominant lines of business of potential companies to enter into joint venture or
reinsurance are i) property, ii) motor, iii) liability, iv) marine (transportation) insurance and v) non-life
insurance lines such as personal accident and health care. These take into account the trends in the
market in Mongolia.
Forecast 2014-2018: Pro rata reinsurance treaty with target comparable to Bodi Daatgal yields
$4.53M in net premium accruing to Zurich
47
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

48. Final Business Plan:
KYRGYZSTAN
Phase of entry: Phase THREE. No entry recommended at this time.
Necessary Developments for Entry: Before entry is worth considering, political and market turmoil
must calm and stabilize. Kyrgyzstan must also climb out of recession, show some signs of sustained
growth, and indicate signs of an emerging consumer class
Other Areas to Monitor: Expansion of compulsory lines of insurance would also indicate potential
growth in insurance consumption.
48
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

49. Final Business Plan:
TAJIKISTAN
Phase of entry: Phase THREE. No entry recommended at this time.
Necessary Developments for Entry: Government first would have to open compulsory lines to
competition to Gosstrakh. The unemployment rate must stabilize and recede, eventually sparking
growth of consumer class.
Other Areas to Monitor: Overall insurance market would need to grow significantly and pending
legislation to reform industry must be implemented.
49
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

50. Final Business Plan:
TURKMENISTAN
Phase of entry: Phase THREE. No entry recommended at this time.
Necessary Developments for Entry: Government would first need to relinquish monopoly of insurance,
which it has shown no indication of doing. Additionally, the state must relax overall control of economy,
and unemployment must stabilize and recede, enabling growth of consumer class beyond elites.
50
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

51. Final Business Plan:
UZBEKISTAN
Phase of entry: Phase THREE. No entry recommended at this time.
Necessary Developments for Entry: Government would first need to open up compulsory lines of
insurance to competitors. Inflation must stabilize for sustained periods and the state must harness
growth of energy industry in a way that expands overall economy and drives down unemployment.
Other Areas to Monitor: Insurance reforms which have yet to take effect need to be implemented so
that the business is sustainable within the country.
51
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

52. Table of Contents
Executive Summary
Project Objectives and Scope
Objective One: Market Analysis by Country
Objective Two: Entry Method Recommendations
Objective Three: Product Offerings
Objective Four: Forecasting Model
Recommendations: Business Plan by Target Market
Evaluation & Summary
52
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

53. Evaluation
Discussion Points of Analyses
• High degree of uncertainty in target markets, driven by
• Increasing competition in more established markets
• Regulatory changes (e.g., taxes in established markets, reforms in immature
markets)
• Instability in immature markets
• Limited data / information released by more closed, immature markets
• Use of steady-state assumptions underlying recommendations
• Assume no shocks, such as new regulations, macroeconomic events, etc.
• Realistically can expect consolidation in more established markets
• Recommendations and forecast designed as baseline, but need additional
evaluation per Zurich’s operating procedures and risk appetite
• Zurich’s internal evaluation
• Recommendations contingent upon areas of expertise within Zurich’s Dubai and/or
Istanbul office
• Project hurdle rates and other metrics
53
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

54. Summary
Overview of Recommendations
• Tiering of target markets
• Phase 1 (Immediate): Azerbaijan, Kazakhstan, Pakistan
• Phase 2 (3-5 years): Mongolia
• Phase 3 (10 years, if at all): Kyrgyzstan, Uzbekistan, Tajikistan, Turkmenistan
• Key regulatory issues & entry recommendations
• Acquisition in Azerbaijan is feasible (precedent: AXA)
• Largely free foreign entry into Kazakhstan
• Pakistan difficult to enter via acquisition, but others have been successful converting
branch offices to wholly-owned subsidiaries
• Product Offerings
• Initial entry: Property for personal and commercial clientele; Marine for commercial /
public
• Expansion: Liability products for commercial clientele
• Maturity: Specialized offerings for larger commercial clients (WC & EL, PA & HC)
54
Project Scope
Market Analysis
Entry Method
Products
Forecast
Recommendations
Summary

55. APPENDIX
55

56. Background Information:
AZERBAIJAN
Government Structure: Presidential form of government, authoritarian,
high corruption
GDP (PPP): $90.8B
GDP growth rate (real): 5%
Population (2010): 9M
Investment: 17% of GDP
Inflation: 5.7%
Central Bank Interest Rate: 3%
Commercial Prime Interest Rate: 21%
Agriculture: Cotton, grain, rice
Industry: Petroleum, natural gas
Oil Production: 1.04M bbl/day
Industrial Prod Growth Rate: 2.6%
Natural Gas: 16.52B cubic meter
Exports: $26.5B; Oil and Gas (90%); Italy, USA, Germany
Imports: $6.7B; Machinery & equipment; Turkey, Russia, Germany
56

57. Background Information:
KAZAKHSTAN
Government Structure: Presidential, authoritarian rule, little power
outside the executive branch; Economic growth was 9% during 2000-2007
GDP (PPP): $196.4B (2010)
GDP growth rate (real): 7% (2010)
Population (2010): 16.3M
Investment: 25.2% of GDP (2010)
Inflation: 7.1% (2010)
Central Bank Interest Rate: 4.25% (2010)
Commercial Prime Interest Rate: 8.161%
Agriculture: Grain (Wheat), Cotton
Industry: Oil, Coal, Iron ore
Industrial Prod Growth Rate: 10%
Oil Production: 1.61 million bbl/day (19th worldwide)
Natural Gas: 35.61B cubic meter (25th worldwide)
57
Exports: $60.8B; mostly oil (59%); China, Germany and Russia
Imports: $32B; machinery and equipment; Russia, China and Germany

58. Background Information:
PAKISTAN
Government Structure: Presidential, heavily dominated by military and ISI
GDP (PPP): $464.9B
GDP growth rate (real): 4.8%
Population (2010): 173.6M
Investment: 13.8% of GDP
Inflation: 13.9%
Central Bank Interest Rate: 0.07%
Commercial Prime Interest Rate: 13.462%
Agriculture: Cotton, wheat, rice
Industry: Textile and apparel, food Industrial Prod Growth Rate: 4.6%
Oil Production: 63,580 bbl/day
Natural Gas: 38.4B cubic meter
Exports: $21.5B; Textiles, rice, leather goods; USA, Afghanistan, UAE
Imports: $32.9B; Petroleum, Petro products, machinery; China, Saudi Arabia,
UAE
58

59. Background Information:
MONGOLIA
Government Structure: Parliamentary form headed by Prime Minister
GDP (PPP): $11B
GDP growth rate (real): 6.1%
Population (2010): 2.8M
Investment: 36.1% of GDP
Inflation: 10.2%
Central Bank Interest Rate: 10.99%
Commercial Prime Interest Rate: 17.9%
Agriculture: Wheat, barley, vegetables
Industry: Construction, mining, oil Industrial Prod Growth Rate: 3%
Oil Production: None
Natural Gas: None
Exports: $2.9B; Copper, Apparel, livestock; China, Canada, Russia
Imports: $3.3B; Machinery & equipment, fuel, cars; Russia, China, Japan
59

60. Background Information:
KYRGYZSTAN
Government Structure: Presidential, republic, very slow pace of
democratization, poor mountainous country, dominantly agricultural
GDP (PPP): $12.02B
GDP growth rate (real): -1.4%
Population (2010): 5.4M
Investment: 28% of GDP
Inflation: 8%
Central Bank Interest Rate: 2.5%
Commercial Prime Interest Rate: 29.425%
Agriculture: Tobacco, cotton, potatoes
Industry: Small machinery, Textile Industrial Prod Growth Rate: 9.8%
Oil Production: 946 bbl/day
Natural Gas: 15.4M cubic meter
Exports: $1.78B; Cotton, wool, meat; Russia, Uzbekistan, Kazakhstan
Imports: $2.98B; Oil and Gas, Machinery; China, Russia, Kazakhstan
60

61. Background Information:
TAJIKISTAN
Government Structure: Presidential form, bicameral legislature, Prime
minister appointed by the president
GDP (PPP): $14.74B
GDP growth rate (real): 6.5%
Population (2010): 6.9M
Investment: 20.6% of GDP
Inflation: 6.4%
Central Bank Interest Rate: 5%
Commercial Prime Interest Rate: 21.7%
Agriculture: Cotton, grains, fruit
Industry: Aluminum, Cement
Oil Production: 220 bbl/day
Industrial Prod Growth Rate: 7.5%
Natural Gas: 38M cubic meter
Exports: $1.3B; Aluminum, Electricity, Cotton; Turkey, Russia, Uzbekistan
Imports: $2.9B; Petroleum products; Machinery &equipment; China,
Russia
61

62. Background Information:
TURKMENISTAN
Government Structure: Presidential republic, secular democracy, but
actually power concentrated with presidential administration
GDP (PPP):$36.9B
GDP growth rate (real): 9.2%
Population (2010): 5M
Investment: 19.7% of GDP
Inflation: 10%
Central Bank Interest Rate: NA
Commercial Prime Interest Rate: 17.5%
Agriculture: Cotton, grains, livestock
Industry: Natural gas, Oil
Industrial Prod Growth Rate: 7.3%
Oil Production: 202,400 bbl/day Natural Gas: 38.1B cubic meter (24th)
Exports: $10.5B; Gas, Crude, Petrochemicals; China, Turkey, UAE
Imports: $8.27B; Machinery & equipment, chemicals; Russia, Turkey,
China
62

63. Background Information:
UZBEKISTAN
Government Structure: Republic, authoritarian presidential rule
GDP (PPP): $85.85B
GDP growth rate (real): 8.5%
Population (2010): 28.2M
Investment: NA
Inflation: 15%
Central Bank Interest Rate: NA
Commercial Prime Interest Rate: NA
Agriculture: Cotton, vegetables, fruits
Industry: Textiles, food processing Industrial Prod Growth Rate: 8%
Oil Production: 58,650bbl/day
Natural Gas: 61.4B cubic meter (14th)
Exports: $12B; Energy products, cotton; China, Russia, Turkey
Imports: $8B; Machinery & Equipment, foodstuff; Russia, South Korea,
China
63

64. APPENDIX: Market Analysis by Country
Economic Factors
GDP (PPP)
(billion
USD)
Kazakhstan
Kyrgyzstan
Tajikistan
Turkmenistan
Uzbekistan
Pakistan
Azerbaijan
Mongolia
Kazakhstan
Kyrgyzstan
Tajikistan
Turkmenistan
Uzbekistan
Pakistan
Azerbaijan
Mongolia
64
196.4
12.02
14.74
36.9
85.85
464.9
90.8
11
2
7
6
5
4
1
3
8
GNI per
Capita
(USD,
2010)
7590.00
2100.00
2140.00
7490.00
3120.00
2790.00
9280.00
3670.00
2
8
7
3
5
6
1
4
GDP/Capita
(PPP)
13,000
2400
2000
7,500
3,300
2,800
10,200
4,500
1
7
8
3
5
6
2
4
GDP
growth
(real)
7.00%
-1.40%
6.50%
9.20%
8.50%
4.80%
5.00%
6.10%
3
8
4
1
2
7
6
5
Natural Gas
Domestic
Oil
Production
Credit to
Production
(billion
the Private
(thousand
cubic
Sector (%
bbl/day)
meter)
of GDP)
Natural Resources
1610
35.61
39.30
0.946
0.0154
0.00
0.22
0.0380
0.00
202.4
38.1
0.00
58.65
61.4
0.00
63.58
38.4
21.50
1040
16.52
18.30
0.0
0.0
39.60
1
4
2
6
7
8
7
5
8
3
3
8
5
1
8
4
2
3
2
6
4
8
8
1
Export
(billion
USD)
Import
(billion
USD)
60.8
1.78
1.3
10.5
12
21.5
26.5
2.9
1
7
8
5
4
3
2
6
32
2.98
2.9
8.27
8
32.9
6.7
3.3
2
7
8
3
4
1
5
6
Inflation
7.10%
8.00%
6.40%
10.00%
15.00%
13.90%
5.70%
10.20%
6
4
2
5
8
7
1
6

65. APPENDIX: Market Analysis by Country
Political Risk in Central Asian Countries
65

66. APPENDIX: Market Analysis by Country
Openness
Kazakhstan
Kyrgyzstan
Tajikistan
Turkmenistan
Uzbekistan
Pakistan
Azerbaijan
Mongolia
Kazakhstan
Kyrgyzstan
Tajikistan
Turkmenistan
Uzbekistan
Pakistan
Azerbaijan
Mongolia
66
FDI, Net
Openness
Global
Inflow
to Media Competitiv
9961.0
65.5
4.18
437.6
103.0
3.45
15.8
87.0
3.77
2083.0
2.3
0.00
822.0
60.0
0.00
2016.0
68.0
3.58
563.1
55.8
4.31
1454.7
107.3
3.86
1
5
2
7
2
6
8
3
4
2
8
8
5
6
8
3
4
5
6
7
1
4
1
3

67. APPENDIX: Market Analysis by Country
Product Markets
Logistics Performance
Index (1-5, low to high)
Kazakhstan
Kyrgyzstan
Tajikistan
Turkmenistan
Uzbekistan
Pakistan
Azerbaijan
Mongolia
67
2.66
2.09
2.00
2.24
2.54
2.08
2.23
1.94
1
5
7
3
2
6
4
8

68. APPENDIX: Market Analysis by Country
Labor Markets
UN
UN
Education
Education
Index
Index
Unemploy(expected
(expected
ment rate
and mean
and mean
years of
years of
schooling
schooling
Kazakhstan
0.834
5.40%
1
Kyrgyzstan
0.716
8.20%
5
Tajikistan
0.704
60.00%
7
Turkmenistan
0.739
70.00%
3
Uzbekistan
0.711
8.00%
6
Pakistan
0.386
5.95%
8
Azerbaijan
0.763
6.00%
2
Mongolia
0.722
3.60%
4
68
Unemployment rate
2
6
7
8
5
3
4
1

69. APPENDIX: Market Analysis by Country
Capital Markets
Insurance
and
Total Listed
Financial
Domestic
Sector (% Companies
of imports)
Kazakhstan
Kyrgyzstan
Tajikistan
Turkmenistan
Uzbekistan
Pakistan
Azerbaijan
Mongolia
69
5.0%
3.0%
7.0%
0.0%
0.0%
3.0%
3.0%
4.0%
60
11
0
0
0
644
0
336
Money and
quasi
money
supply
(M2) (%
GDP)
36.60
0.00
0.00
0.00
0.00
38.50
22.80
44.90
Insurance
and
Total Listed
Financial
Domestic
Sector (% Companies
of imports)
2
4
1
7
7
4
4
3
3
4
5
5
5
1
5
2
Money and
quasi
money
supply
(M2) (%
GDP)
3
5
5
5
5
2
4
1

70. APPENDIX: Acquisition Forecast - Azerbaijan
Target Market
Target Comparable
Azerbaijan
Ateshgah
USD Millions
Assumptions
Overall Market WP Growth Rate
Target's Market Share Growth Rate
Target's Premium Base Growth Rate
Loss Ratio Growth Rate
Expense Ratio Growth Rate
Acquisition & Integration Costs
Investment Hurdle Rate
Operating Year
Overall Market Written Premium
Target's Market Share
Target's Premium Base
Loss Ratio
Expense Ratio
Target's Margin Premium
Target's Margin %
Discounted to 2013
70
3.00%
3.00%
6.09%
1.50%
3.00%
9.68
10.00%
2010
193.86
7.5%
14.54
34.7%
35.0%
4.40
30.3%
-
2011
199.68
7.7%
15.42
35.2%
36.1%
4.43
28.7%
-
2012
205.67
8.0%
16.36
35.8%
37.1%
4.44
27.1%
-
2013
211.84
8.2%
17.36
36.3%
38.2%
4.42
25.5%
4.42
2014
218.19
8.4%
18.42
36.8%
39.4%
4.38
23.8%
3.98
2015
224.74
8.7%
19.54
37.4%
40.6%
4.31
22.0%
3.56
2016
231.48
9.0%
20.73
38.0%
41.8%
4.20
20.3%
3.15
2017
238.42
9.2%
21.99
38.5%
43.0%
4.05
18.4%
2.77
2018
245.58
9.5%
23.33
39.1%
44.3%
3.86
16.6%
2.40
Total
20.28

71. APPENDIX: Acquisition Forecast - Kazakhstan
Target Market
Target Comparable
Kazakhstan
Kazkommerts-Policy
USD Millions
Assumptions
Overall Market WP Growth Rate
Target's Market Share Growth Rate
Target's Premium Base Growth Rate
Loss Ratio Growth Rate
Expense Ratio Growth Rate
Acquisition & Integration Costs
Investment Hurdle Rate
Operating Year
Overall Market Written Premium
Target's Market Share
Target's Premium Base
Loss Ratio
Expense Ratio
Target's Margin Premium
Target's Margin %
Discounted to 2013
71
6.00%
2.00%
8.12%
2.00%
3.00%
182.61
10.00%
2010
2011
2012
2013
2014
2015
2016
2017
2018
949.80 1,006.79 1,067.20 1,131.23 1,199.10 1,271.05 1,347.31 1,428.15 1,513.84
8.0%
8.2%
8.3%
8.5%
8.7%
8.8%
9.0%
9.2%
9.4%
75.98
82.15
88.82
96.04
103.84
112.27
121.38
131.24
141.90
10.0%
10.2%
10.4%
10.6%
10.8%
11.0%
11.3%
11.5%
11.7%
35.0%
36.1%
37.1%
38.2%
39.4%
40.6%
41.8%
43.0%
44.3%
41.79
44.16
46.60
49.12
51.69
54.32
56.99
59.67
62.36
55.0%
53.8%
52.5%
51.1%
49.8%
48.4%
46.9%
45.5%
43.9%
49.12
46.99
44.89
42.81
40.76
38.72
Total
263.29

72. APPENDIX: Greenfield Forecast - Azerbaijan
Target Market
Azerbaijan
USD Millions
Assumptions
Overall Market WP Growth Rate
Sub / Branch Market Share Growth Rate
Sub / Branch Premium Base Growth Rate
Loss Ratio Growth Rate
Expense Ratio Growth Rate
Initial Start-up Costs
Investment Hurdle Rate
Operating Year
Overall Market Written Premium
Sub / Branch Market Share
Sub / Branch Premium Base
Loss Ratio
Expense Ratio
Sub / Branch Margin Premium
Sub / Branch Margin %
Discounted to 2013
72
3.00%
3.00%
6.09%
1.50%
3.00%
3.00
10.00%
2010
193.86
0.0%
34.7%
35.0%
0.0%
-
2011
199.68
0.0%
35.2%
36.1%
0.0%
-
2012
205.67
0.0%
35.8%
37.1%
0.0%
-
2013
211.84
5.0%
10.59
36.3%
38.2%
2.70
25.5%
2.70
2014
218.19
7.0%
11.24
36.8%
39.4%
2.67
23.8%
2.43
2015
224.74
8.0%
11.92
37.4%
40.6%
2.63
22.0%
2.17
2016
231.48
8.2%
12.65
38.0%
41.8%
2.56
20.3%
1.92
2017
238.42
8.5%
13.42
38.5%
43.0%
2.47
18.4%
1.69
2018
245.58
8.7%
14.23
39.1%
44.3%
2.36
16.6%
1.46
Total
12.37

73. APPENDIX: Greenfield Forecast - Kazakhstan
Target Market
Kazakhstan
USD Millions
Assumptions
Overall Market WP Growth Rate
Sub / Branch Market Share Growth Rate
Sub / Branch Premium Base Growth Rate
Loss Ratio Growth Rate
Expense Ratio Growth Rate
Initial Start-up Costs
Investment Hurdle Rate
Operating Year
Overall Market Written Premium
Sub / Branch Market Share
Sub / Branch Premium Base
Loss Ratio
Expense Ratio
Sub / Branch Margin Premium
Sub / Branch Margin %
Discounted to 2013
73
6.00%
2.00%
8.12%
2.00%
3.00%
5.00
10.00%
2010
2011
2012
2013
2014
2015
2016
2017
2018
949.80 1,006.79 1,067.20 1,131.23 1,199.10 1,271.05 1,347.31 1,428.15 1,513.84
0.0%
0.0%
0.0%
5.0%
8.0%
10.0%
10.2%
10.4%
10.6%
56.56
61.15
66.12
71.49
77.29
83.57
10.0%
10.2%
10.4%
10.6%
10.8%
11.0%
11.3%
11.5%
11.7%
35.0%
36.1%
37.1%
38.2%
39.4%
40.6%
41.8%
43.0%
44.3%
28.93
30.44
31.99
33.56
35.14
36.73
0.0%
0.0%
0.0%
51.1%
49.8%
48.4%
46.9%
45.5%
43.9%
28.93
27.68
26.44
25.22
24.00
22.80
Total
155.07

74. APPENDIX: Greenfield Forecast - Pakistan
Target Market
Pakistan
USD Millions
Assumptions
Overall Market WP Growth Rate
Sub / Branch Market Share Growth Rate
Sub / Branch Premium Base Growth Rate
Loss Ratio Growth Rate
Expense Ratio Growth Rate
Initial Start-up Costs
Investment Hurdle Rate
Operating Year
Overall Market Written Premium
Sub / Branch Market Share
Sub / Branch Premium Base
Loss Ratio
Expense Ratio
Sub / Branch Margin Premium
Sub / Branch Margin %
Discounted to 2013
74
8.00%
1.00%
9.08%
1.50%
3.00%
12.00
10.00%
2008
1,070.60
0.0%
11.0%
35.0%
0.0%
-
~
2012
2013
2014
2015
2016
2017
2018
1,248.75 1,348.65 1,456.54 1,573.06 1,698.91 1,834.82 1,981.61
0.0%
3.0%
5.0%
8.0%
8.1%
8.2%
8.2%
40.46
44.13
48.14
52.51
57.28
62.48
11.3%
11.5%
11.7%
11.9%
12.0%
12.2%
12.4%
37.1%
38.2%
39.4%
40.6%
41.8%
43.0%
44.3%
20.33
21.60
22.90
24.25
25.63
27.04
0.0%
50.3%
48.9%
47.6%
46.2%
44.7%
43.3%
20.33
19.63
18.93
18.22
17.51
16.79
Total
111.40

75. APPENDIX: Pro Rata Reinsurance Forecast Mongolia
Target Market
Target Comparable
Mongolia
Bodi Daatgal
USD Millions
Assumptions
Overall Market WP Growth Rate
Cedant's Market Share Growth Rate
Cedant's Premium Base Growth Rate
Loss Ratio Growth Rate
Expense Ratio Growth Rate
Commission
Quota Share Percentage
Investment Hurdle Rate
Operating Year
Overall Market Written Premium
Cedant's Market Share
Cedant's Premium Base
Loss Ratio
Expense Ratio
Cedant's Margin Premium
Cedant's Margin %
Commission
Net Premium Accruing to Zurich
Net Premium Discounted to 2014
75
10%
0%
10%
0.50%
3%
20%
50%
10%
2009
16.27
20.0%
3.25
10.2%
37.5%
1.70
52.3%
20.0%
0.68
-
2010
17.90
20.0%
3.58
10.3%
38.7%
1.83
51.1%
20.0%
0.73
-
2011
19.69
20.0%
3.94
10.3%
39.8%
1.96
49.9%
20.0%
0.79
-
2012
21.66
20.0%
4.33
10.4%
41.0%
2.11
48.6%
20.0%
0.84
-
2013
23.82
20.0%
4.76
10.4%
42.3%
2.26
47.3%
20.0%
0.90
-
2014
26.20
20.0%
5.24
10.5%
43.5%
2.41
46.0%
20.0%
0.96
0.96
2015
28.82
20.0%
5.76
10.5%
44.8%
2.57
44.7%
20.0%
1.03
0.94
2016
31.71
20.0%
6.34
10.6%
46.2%
2.74
43.3%
20.0%
1.10
0.91
2017
34.88
20.0%
6.98
10.6%
47.6%
2.92
41.8%
20.0%
1.17
0.88
2018
38.36
20.0%
7.67
10.7%
49.0%
3.10
40.4%
20.0%
1.24
0.85
Total
4.53