Presentation on bancassurance

1. Exploiting Bancassurance
Insurance Opportunities in CEE
Alois Pichler
Affluent Banking/
Insurance
0

2. Agenda
Raiffeisen International – An Introduction
Insurance Market Environment
Bancassurance Sales Opportunity
Our Setup and Range of Products
Our Expectations and Best Practice
1

3. RI – The Leading Pure Play CEE Banking Group
Unique Network Of Banks Covering 16 CEE Markets
Leadership
Top 3 Bank By Assets In 9 Markets; No.1 In Two
Strong And Well Known Brand “Raiffeisen”
Proven Ability To Exploit Highest Growth Regions Of Europe:
Growth
10-year CAGR In Assets Of Approximately 40%
Profitability
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
Business Clear Focus On Retail Banking And Small &
Strategy Medium-sized Businesses
2

4. Dynamic Expansion of Our Footprint
Hungary Poland
Czech
Bulgaria Russia Romania Serbia
Successful Greenfield
Republic
Expansion
Slovakia Croatia Ukraine
1987 1991 1993 1994 1996 1998 2000 2001 2002 2003 2004 2005 2006
… Complemented By Bosnia and
Herzegovina Slovenia Kosovo Belarus Ukraine Russia
Targeted And Well Timed
Acquisitions. Albania Czech
Romania
Republic
3

5. Unique CEE Network in High Growth Markets
Commonwealth of
Independent States
Customers
13.5 m
Central Europe
Outlets
3,050
Staff:
57,019
Southeastern
Europe
4
* At 30/06/2007

6. Aval (Ukraine) and Impex (Russia) Improve our
Strategic Positioning
Market Share No. of
Position Countries Serbia
Albania
Bosnia & H. Ukraine
1- 3
Top
9 Kosovo
Bulgaria Belarus
Slovakia Romania
Croatia
4–6
Top
3 Czech
Hungary Republic
Russia
3
>6
Slovenia
Poland
0% 2% 4% 6% 8% 10% >
12%
Average Nominal GDP Growth Rate 2006-2009e
5

7. Branch Expansion Plans Through To 2009
Slovenia Czech
Poland Slovakia Belarus Hungary
Republic
2009: 14 2009: 120
2009: 120 2009: 180 2009: 100 2009: 160
Croatia Russia
2009: 75 2009: 350
Bosnia and Ukraine
Herzegovina 2009:
2009: 100 1,300
Serbia Romania
2009: 120 2009: 420
Total Branches*
Kosovo Albania 2009: 3,450 Bulgaria
2009: 40 2009: 105 2009: 190
* Including leasing and other branches
6

8. Strong Asset and Profit Growth
Assets (€ billion) Profit (€ million)
€68 €626
€56 594
9%
9%
R :3 41
3
AG
R:
C
G
382
CA
29
20 209
179
‘03 ‘04 ‘05 ‘06 9M ‘07 ‘03 ‘04 ‘05 ‘06 9M ‘07
7

9. Income Contribution By Region
2004 9M 2007
Pre-Tax Profit Pre-Tax Profit
€ 341 mm € 953 mm
CE
CIS
23% CIS
47% 27%
36%
30% CE
SEE 37%
SEE
Central Europe (CE) South East Europe (SEE) CIS
Poland, Czech, Hungary, Croatia, Bulgaria, Romania, Belarus, Russia,
Slovenia, Slovakia Serbia, Bosnia, Albania, Kosovo Ukraine, Kasakhstan
8

10. Income Contribution By Business Segment
2004 9M 2007
Pre-Tax Profit Pre-Tax Profit
€ 341 mm € 953 mm
Treasury 15%
Treasury
24%
Retail
Corporate 37%
67%
Retail Corporate
9% 48%
9

11. Stock Price
Total Return of 217% since IPO
10

12. Agenda
Raiffeisen International – An Introduction
Insurance Market Environment
Bancassurance Sales Opportunity
Our Setup and Range of Products
Our Expectations and Best Practice
11

13. Banks Are A Dominant Or Very Important
Channel For Life In Western Europe ESTIMATE
Other
Life distribution channel market share, percent
Banks
Portuga Spain France Italy
l
86 Key drivers
69 62
39 53
37
13 2 New product focus
1991 2005 1991 2005 1990 2005 1990 2005 (e.g., unit-linked)
Changed customer
Belgium Germany Netherlands UK needs through
pension reform /tax
Incentives
15 - 20 Distribution capabilities
45 of banks
28
11 9 2 4 10
1990 2004 1990 2005 1990 2005 1990 2004
Source: National insurance statistics, McKinsey Research 12

14. In CEE, Life Bancassurance Has Also
Significantly Increased ESTIMATE
Other
Life distribution channel market share, percent Banks
Austria Czech Republic Slovakia Hungary Romania Poland
55
45
20 19 17 10 - 20 14
5 4 5 0 0
1997 2005 1998 2005 1998 2005 1998 2005 1998 2005 1998 2005
13
Source: VVO, McKinsey

15. Structure Of The Potential Household Returns
Percent of average
household
profitability
Insurance
significantly
Loans
contributes to
a retail bank’s
revenue
Payments stream in
41%
mature
Investments markets.
Insurance 2% 5%
Developing Markets in Mature
Markets Transition Markets
RU, UA, PL, CZ, SK,
SM, BH, HR, SL HU,
AL, KO, BY RO, BG
Source: Zeb/, EFMA (2005); RI analysis 14

16. Agenda
Raiffeisen International – An Introduction
Insurance Market Environment
Bancassurance Sales Opportunity
Our Setup and Range of Products
Our Expectations and Best Practice
15

17. Preference for Receiving Advice before
Purchase (by product)
Life insurance
Pension
Funds, Stocks
Home insurance
Auto insurance
Saving/current
account
NOT prefer Prefer
Source: Capgemini Analysis, 2006 – Total UK, US, FR, GER, IT, NL, ES
16

18. Factors Influencing Customer Purchasing
Decisions
Service
Not important 10% Important
Brand/ Trust
Price
13%
38%
Advice
17%
Product
Source: Capgemini Analysis, 2006 – Total UK, US, FR, GER, IT, NL, ES
22%
17

19. Loyalty: Customers Who Buy Life Insurance
Are “Sticky”
63%
Life
Non-Life
% of Customers changing
47%
42%
Non-Life
34% Total: 39%
31% 31%
26%
11% 13%
10% 9% 9% 9% 10% Life
Total: 10%
NL US FR IT GER ES UK
Source: Capgemini Analysis, 2006 % of Customers changing Insurance Providers in the Last 5 Years
18

20. Sales Opportunity-Example: Retirement
Respondents who think that institution is well
placed to address retirement needs (%)
Country Banks Insurance
Italy 74 8
UK 38 19
France 48 37
Germany 24 7
Belgium 53 11
Netherland 21 26
Source: McKinsey 19
2007

21. Customer Service as Claim Handling:
Which Channel do Customers Prefer?
Agent/
40%
Financial Advisor
Phone/Other Direct 36%
Internet 12%
Through a Bank 7%
Other 5%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
% of Customers
Source: Capgemini Analysis, 2006 –
Total UK, US, FR, GER, IT, NL, ES 20

22. Agenda
Raiffeisen International – An Introduction
Insurance Market Environment
Bancassurance Sales Opportunity
Our Setup and Range of Products
Our Expectations
21

23. 2 Different Co-operation Models
e
d el w ll
mo s we
The er a
f
pre
•Life
•Health
•Motor
•Property/ Liability
•Accident
•Other
Branding: Bank Insurance
• Focused product range • Broad product range
(e.g., no health/ motor) • Simple and complex
• Simple products products
• Attractive bundles • Attractive bundles
Source: Mystery Shopping, McKinsey 22

24. General KSFs and Bancassurance
Principles of at RI
Key Success Factors for
1 Management sees insurance as a 4 Developed incentives for sale of
core product and key priority. insurance products reflecting product
profitability to bank.
2 Select a Local Preferred Partner
5 Extensive training of branch personnel
3 Integrated sales approach
Identification of customer needs
Fully integrated sales
Familiarity with insurer’s IT interface
approach for banking and
Basic product knowledge with access
insurance products
to specialists for more complicated
issues
Scripted lead-over scheme to
approach customers
23

25. The Products
24

26. Our Evolution of Bancassurance Products
» Eureka! It’s so
easy; why didn’t I
do this earlier? «
3
» … Hmm this is
starting to make us
cash « 2 Unit-linked sold over-
» Ok I’ll do it coz’ the-counter (OTC)
Our Boss says I
Credit Cards Endowment sold OTC
should «
1 SME insurance: Accident and health
sold OTC
Direct marketing (DM)
PPI on personal loans accident and health
PPI on mortgage insurance
loans; bundled home
insurance
BY, RU, UA, AL, KO, BH, CZ, SK SL, AL, KO, BH, PL, RO, BG Development path
25

27. Loans: Credit Shield
Credit Shield (Payment Protection Insurance,
PPI) is a simple Insurance Cover tied to Loans.
For The Client: For the Bank:
PPI provides Protection against
PPI is primarily a
Unemployment FEE−GENERATOR,
Disability
Secondly, a Risk-
Death Mitigation tool.
26

28. Loans: Credit Card (Protection)
Contribution to Profit:
Insurance Can
Contribute up to 40% 20%
Fees
of a Credit Card’s
Income in the Long Margins 40%
Run (Competitive
Market):
Insurance 40%
27

29. Loans: Mortgage Endowment
Standard Loan Endowment Loan
Interest
Principal
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
Endowment Loan Backed by Unit Linked FX Endowment Loan Backed by Unit Linked
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 28 20
19

30. Savings
Equity Funds
Unit Linked
Mutual Funds
e
tit
pe
Endowment
Ap
sk
Ri
Long term deposits
Short term deposits
Over the Counter Insurance Is The Final Color Of Our Savings Rainbow
29

31. Need to Push Insurance Sales
Client pushing Bank: „I want a loan!“
Bank pushing Client: „You need Insurance!“
30

32. Aspects Of A Successful »OTC« Push ...
Is Insurance product compelling – an added value for client?
Is insurer’s IT in place in the branch on POS?
Is product an integral part of saving value proposition?
Product Training: Does Sales-Staff understand the
insurance product?
Sales Training: Does Sales-Staff know how to
pro-actively sell?
Sales Product
IT
Are sales promotion or incentive system in place?
Are general insurance conditions accessible for the client?
Is the staff familiar with FAQs?
Is marketing material available?
31

33. www is key for »OTC«
Policy entered
in Insurer’s IT
system and
printed in
bank-branch at
Secure Internet the same time
Connection on
Point of Sales

34. Raiffeisen Bank Poland Example
Policy
printed on
Point of
Sale

35. Raiffeisen Bank Poland Example
Today’s
Value
of the Unit-
Linked
Policy:

36. Agenda
Raiffeisen International – An Introduction
Insurance Market Environment
Bancassurance Sales Opportunity
Our Setup and Range of Products
Our Expectations
35

37. RI Insurance Vision and Aspiration
€ MM
e expect
In 2 011 w contribute
in s u rance to Retail
signifi cantly to
Pr o f i t s
20
9.2
2006 2007E PPI Additional Stand- Costs* Profit
Insurance alone OTC 2011
36
* Assumed cots to income ratio of 20% of the total commission from insurance.

38. Thank You
For Your
Attention
Alois Pichler
Affluent Banking/ Insurance
Raiffeisen International
Bank-Holding AG
A-1030 Vienna, Am Stadtpark 9
Tel.: +43 (1) 71707 2087
e-mail: alois.pichler@ri.co.at
http://www.ri.co.at