OREANDA-NEWS. May 29, 2009. In continuation of the annual events dedicated to strategic planning of the company’s regional development, ROSNO has held a strategic dialogue, whereat the management of the company and the Far Eastern Directorate summed up ROSNO’s performance results in the Far East and outlined business development prospects in this region, reported the press-centre of ROSNO.

The event was attended by Mr. Vasily Grishutkin, Deputy CEO of ROSNO and head of the Far Eastern Directorate, and ROSNO board members: Ms. Galina Talanova, Deputy CEO, and Ms. Olga Stepennova, Deputy CEO. The discussion focused on financial performance figures achieved in the Far East; crisis strategy, and overall development prospects of the regional insurance market.

In 2008, ROSNO’s Far Eastern Directorate collected 313.5 mln roubles of insurance premium (+10% as compared to 2007). The major growth factor has been the conclusion of a number of large voluntary medical insurance (VMI) contracts and the active development of partner sales.

The Far Eastern Directorate demonstrates positive dynamics across major business lines. For example, the Directorate has surpassed its annual VMI target by 22% (with 147 million roubles of collected premium), mainly owing to the efforts of the Khabarovsk branch. The positive result is based on the well-built market portfolio of own contracts and significant leadership positions in the region’s VMI sector.

In 2008, the Far Eastern Directorate was successfully developing its intermediary sales channel. The volume of premium collected via this channel increased by 21% in 2008, owing to growth in motor insurance and mortgage insurance (accounting for 15% in the aggregate premium collected). Last year, the Khabarovsk branch established cooperation with regional banks (such as Dalcombank and Regionbank), and the Kamchatka branch joined efforts with maritime insurance brokers.

Based upon the results of 2008, the Far Eastern Directorate demonstrated the highest sales growth within the company and ranked first by efficiency among all of the company’s regional directorates. At the same time, an impressive sales dynamics was shown by the Khabarovsk branch (+25%) accounting for 64% of all premium collected by the Directorate. In this very region, ROSNO has the strongest market positions (with the company’s overall market share of 6.3% and almost 13% in personal insurance). Also, the largest amount of premium collected by any ROSNO branch in Primorsky Kraj pertains to the Vladivostok branch (60 million roubles).

In general, the Far Eastern insurance market (in the regions where the Directorate is present) grew in 2008 by 21%, from 10 to 12.1 bn roubles, significantly exceeding the average Russian growth rates. The most intensive growth of the insurance market was registered in Kamchatka Kraj (+35%), the Magadan Region (+39%) and the Sakhalin Region (+36%).

The Q1 2009 performance results also demonstrate positive dynamics in ROSNO’s business development in the Far East. During the Q1 2009, the volume of premium collected by the Far Eastern Directorate increased by 8% as compared to the same period of 2008, amounting to 139 million roubles. Positive dynamics was shown in such sectors as VMI (+17%), MOD (+21%) and vessel insurance (38%).

In the first three months of the running year, the major share of all premium (over 80%) collected by the Directorate originated from Khabarovsk Kraj. During this period, ROSNO’s Khabarovsk branch collected 113.6 million roubles of insurance premium (+16%). The highest growth was demonstrated by the Kamchatka branch (+22.4%) and Yuzhno-Sakhalinsk branch (+55%). Kamchatka has recorded the growing volumes of maritime insurance (+98%), and Sakhalin has seen an increase in VMI sales (+733%).

According to ROSNO’s estimates, the development prospects of the Far Eastern regional insurance market are moderately optimistic. The forecasted average insurance business growth for the period of 2008 to 2011 will near 7%, taking into account the approximate 5% decrease in aggregate premium collected by insurance companies in 2009 vs. the year 2008. The most developed markets, Khabarovsk Kraj and Primorsky Kraj, are the most attractive regions for further growth of insurance business in the Far East.

In the years to come, the insurance market growth will be largely driven by OMTPL insurance, due to the expected significant increase in territorial tariffs. In 2008 to 2011, the average annual growth in this market segment may equal 11%. The most negatively affected business line will be the MOD insurance (with forecasted 1% growth in 2008 to 2011).

The current situation in the insurance market and in the macroeconomics in general force companies to change their operating principles. Following the strategy "One + 3" formulated by ROSNO for successful development in the times of economic crisis, the Far Eastern Directorate has outlined strategic plans and prospects. Thus, by developing business in this region, the company plans a considerable increase in its local competitive power and growth in operating profitability through establishing the Maritime Insurance Centre based in the Vladivostok branch.

"Until recently, we had followed a cautious Far Eastern growth strategy. However, today, the region’s immense business development potential is evident, especially taking into account the successes achieved in Khabarovsk Kraj, which, as we hope, will drive growth in other branches of the Directorate", notes Mr. Vasily Grishutkin, Deputy CEO of ROSNO and head of the Far Eastern Directorate. "Pursuant to ROSNO’s global strategy, the Far Eastern Directorate plans to use the specifics of the regional insurance market and offer the region’s residents such insurance products that may be of particular interest for the Far Eastern clients".