OREANDA-NEWS. May 15, 2009. According to the operating results posted by Allianz Eurasia, the aggregate insurance premium collected in Q1 2009 by ROSNO Group, together with Progress-Garant, Allianz Kazakhstan and CJSC SAK Allianz equalled 7.9 bn roubles, reported the press-centre of ROSNO.

The major contribution to the premium collected by Allianz Eurasia is made by the companies of ROSNO Group, accounting for 82% of the aggregate premium. According to the non-audited IFRS financials, in the 1st quarter of 2009, ROSNO Group earned 397% more operating profit than in the same period last year. In the first 3 months of 2009, ROSNO Group’s net profit equalled 245 million roubles, indicating a considerable improvement of financial performance against the net loss of 222 million roubles in the first 3 months of 2008.

The achieved first quarter results fully conform to the Group’s portfolio optimization and profitability improvement strategy.

Says Mr. Hannes Shariputra Chopra, head of Allianz Eurasia and CEO of OJSC IC ROSNO: "The long-term strategy that we have chosen and are consistently implementing, despite the continuing economic instability, has enabled the Group to reverse the negative financials of the year 2008 brought in by investment losses. The operating profit has multiplied, and, despite the 11% decrease in overall market growth in Q4 2008, we have managed to retain in Q1 2009 the same volume of collected premium as last year. Due to the completed portfolio resegmentation, the general loss ratio has decreased. Capitalization remains one of the best in the Russian insurance market. Thus, the accumulated „cushion“ will enable ROSNO to continue following the established course of action. We proceed from the fact that such issues as slower premium growth or cost cutting shall not worry our clients. ROSNO will continue performing all of its obligations in an impeccable manner".

Major financials of ROSNO Group
The Q1 2009 results reflect the profit increase strategy of ROSNO Group. In Q1 2009, ROSNO Group’s operating profit grew by 397% to 531 mln. roubles, which is 710 mln. roubles more than over the same period of the previous year.

The most active growth in operating profit within the Group has been demonstrated by IC ROSNO, which managed to increase its operating profit more than sixfold.

In Q1 2009, the secured yield of automobile insurance portfolio and ROSNO’s increasing business profitability caused the combined non-life insurance ratio to decrease to 94.5% (vs. 96.6% in Q1 2008). In Q1 2009, the aggregate loss ratio (ratio of actual losses to insurance premium earned) decreased to 54.7% (vs. 57.4% in Q1 2008).

As compared to the first 3 months of 2008, the companies of ROSNO Group increased net profit by 467 million roubles. Such a significant growth resulted from better insurance and investment results across IC ROSNO and lower losses in subsidiaries.

ROSNO Group insurance premium
In the first 3 months of 2009, the quantity of contracts concluded by IC ROSNO increased by 8% to 720 thousand contracts.

The aggregate insurance premium collected by ROSNO Group in the 3 months of 2009 amounted to 6.5 bn roubles (vs. 6.8 bn roubles in Q1 2008).The aggregate premium collected by OJSC IC ROSNO remained almost the same as in 2008. A slight change in the Group’s Q1 premium in 2009 mainly results from the decrease in insurance premium collected by Allianz Ukraine (by 47.1%).

The share of IC ROSNO in the aggregate premium collected by the Group in Q1 2009 equalled 91.2% (as compared to 88.3% in Q1 2008).

Major business lines
ROSNO Group’s portfolio remains well-balanced. Its major business lines are as follows: voluntary medical insurance (42.7% of the portfolio), property insurance (16.2% of the portfolio), and motor insurance, including OMTPL (28% of the portfolio). In Q1 2009, their aggregate share in the insurance portfolio equalled 86.9%.

The decrease in motor insurance sales can be attributed to the scheduled motor insurance portfolio optimization measures restricting sales in the major loss-making segments in order to grow profitability. The insurance premium collected in the voluntary medical insurance segment increased by 1.1% vs. the 1st quarter of the previous year. The decrease in the premium collected in the property segment is in line with the general cost reduction trend prevailing in the client companies.

The share of collected corporate premium decreased by 13%. At the same time, the insurance premium collected under personal insurance contracts has grown considerably (by 38% as compared to the same period of the previous year). The property insurance business line includes insurance coverage of real estate, construction and assembly works, as well as transport insurance, which, in its turn, includes insurance coverage of water, air and railway transport, cargo insurance and carrier liability insurance.

Investment policy
The company’s investment strategy implies conservative approach with emphasis on reliability and liquidity of investments. In Q1 2009, ROSNO continued pursuing its policy of minimizing market risks in the investment portfolio and introduced stricter requirements to corporate bonds and banking investments in favour of the largest and most financially stable companies.

In order to decrease the impact of stock market fluctuations on the company’s investment result, ROSNO is increasing the share of fixed-income banking instruments in its portfolio. For such investments, only large and reliable banks are used. The share of banking instruments in the investment portfolio has grown by 23% to 51% as of the end of Q1 2009.

Along with monitoring credit quality of its investment portfolio, the company pays much attention to diversifying its investments, balancing the proportions of government and corporate securities in its portfolio, and restricting the maximum share of investments per issuer.

Subsidiaries
ROSNO Group renders long-term life insurance services via its subsidiary Allianz ROSNO Life. The company continues demonstrating active growth in Q1 2009, as evidenced by the rapid growth of premium collected (by 14.8% vs. Q1 2008) and the considerable improvement of the financial result. The company’s net loss decreased by 26 million roubles to 59 million roubles (against 85 million roubles in Q1 2008). In Q1 2009, the aggregate insurance premium collected equalled 142 million roubles, with private individuals having an overwhelming contribution thereto.

Due to the unstable financial and economic situation in Ukraine and in the Ukrainian insurance market, the company’s management decided to modify the development strategy of IC Allianz Ukraine. As a result of this decision, the company’s insurance premium collected decreased by 47.1%, as expected. In Q1 2009, the company’s insurance premium amounted to 122 mln roubles, as compared to 231 mln. roubles in Q1 2008.

Non-audited IFRS data.