OREANDA-NEWS. March 18, 2009. ROSNO Group is publishing consolidated financial performance results for the 12 months of 2008, prepared under IFRS (preliminary non-audited data), reported the press-centre of ROSNO.

According to the results posted by Allianz Eurasia, the aggregate insurance premium collected in 2008 by ROSNO Group, Progress-Garant, Allianz Kazakhstan and CJSC SAK Allianz equalled 32 bn roubles. The major contributions to the aggregate premium collected by Allianz Eurasia have been made by OJSC IC ROSNO and Progress-Garant, with 69.7% and 14% respectively.

Major financials of ROSNO Group
The aggregate insurance premium collected by ROSNO Group in the 12 months of 2008 amounted to 24.7 bn roubles (vs. 26 bn roubles in 2007). ROSNO’s share in the Russian market in 2008 equalled 5.0% (vs. 6.1% in 2007). The major reason for the lower collected premium in 2008 (a decrease by 5%) is the optimization of the automobile insurance portfolio aimed at promoting business stability and profitability of the Group’s insurance operations.

The year 2008 results reflect ROSNO Group’s strategy of increasing profitability and diversifying the insurance portfolio and spreading business volumes across various sales channels. This year, the Group succeeded in growing the share of medical insurance to 26% (vs. 25% in 2007) and the share of property insurance — to 22% (vs. 21% in 2007) in the Group’s insurance portfolio. In 2008, insurance premium was collected via the following sales channels: agents (24%), intermediaries (31%) and corporate sales channel (45%).

In 2008, the secured yield of automobile insurance portfolio and increasing business profitability caused the combined non-life insurance ratio to decrease to 98% (vs. 102% in 2007). In 2008, the aggregate loss ratio (ratio of actual losses to insurance premium earned) decreased to 59.3% (vs. 63.4% in 2007). In 2008, the Group’s operating profit in this type of insurance grew 3.4 times as compared to 2007, reaching 1.6 bn roubles.

In 2008, the share in the Group’s aggregate premium of such companies as IC Medexpress, IC Allianz ROSNO Life and IC Allianz Ukraine increased, demonstrating the Group’s strategic focus on continuing investments in developing the subsidiaries. The share of IC ROSNO in 2008 equalled 90.3% (vs. 90.4% in 2007). The share of other subsidiaries has decreased vs. the year 2007, due to the sale of IC VTB Insurance in 2007.

In 2008, ROSNO’s operating profit equalled 1.5 bn roubles, which is 1.1 bn roubles more than in 2007. The depreciation of securities and the securities sales losses have not had any negative effect on the operating result.

Major ROSNO Group activities remain as follows: voluntary medical insurance, property insurance, and motor insurance (including OMTPL). In 2008, their aggregate share in the insurance portfolio equalled 87.5% (as compared to 90.2% in 2007).

The decrease in motor insurance sales can be attributed to the implemented scheduled measures restricting sales in the major loss-making segments in order to grow profitability. Another factor positively affecting the profitability of this segment has been the growing proportion of contracts prolongated with the Group’s target audience of car owners.

The decrease in the premium collected in the voluntary medical insurance and property insurance segments is in line with the general cost reduction trend prevailing in the client companies. 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 focus on reliability and liquidity of investments. In 2008, ROSNO introduced even stricter requirements to reliability of investment instruments. In particular, the company has minimized the share of stocks in its portfolio, since stocks are most susceptible to market fluctuations, and it also toughened its requirements to corporate bonds and banking investments in favour of the largest and most financially sound companies.

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.

The significant exchange rate fluctuations have had no negative effect on the company’s stability, since ROSNO has consistently followed the "golden rule" of balancing the currency structure of assets and liabilities, thus minimizing foreign exchange risks.

As a result, high credit quality of ROSNO’s assets supports the company’s liquidity and enables timely performance of its obligations to the clients and employees.

In the 4th quarter, the company resolved to fix losses from the stock portfolio by selling the portfolio. The share of stocks in ROSNO’s investment portfolio as of the end of 2008 approximated 2.5%, as compared to 19% as of 2007. Despite the fact that this risk management step negatively affected the company’s net profit, it was necessary in order to limit the effect of stock market uncertainty on the company’s investment portfolio, and also to maintain sound quality of assets. The share of deposits in the investment portfolio has grown by 14% to 41% as of the end of 2008.

Subsidiaries
ROSNO Group renders long-term life insurance services via its subsidiary Allianz ROSNO Life. The company’s active expansion in 2008 is evidenced by the 39.5% growth in collected premium vs. 2007. The aggregate insurance premium collected equalled 558 mln roubles, while the insurance reserves have grown twofold against the previous year, reaching 755 mln roubles. The overwhelming majority of sales have been made in the retail insurance sector.

In 2008, the major development priority for the group of companies ROSNO-MS was to increase operating efficiency, service quality, and affordability of medical aid for the vulnerable social groups. The company has also continued working on implementation of 24-hour call centres in the regions. In 2008, insurance payments of the group of companies ROSNO-MS grew by 20%, exceeding 43 bn roubles, and the market share was above 13%.

As of December 31’ 2008, the value of assets managed by AMC Allianz ROSNO Asset Management equalled 15,699 mln roubles, representing a 13% decrease vs. the year 2007 (18,107 mln roubles). The major reason for the decrease in assets is the sinking stock market.

In the Ukrainian insurance market, IC Аllianz Ukraine demonstrated the growth of insurance premium by 35.2% in 2008. In 2008, the insurance premium amounted to 825 mln roubles, as compared to 610 mln roubles in 2007. The major premium growth drivers are property insurance products, whose share in the insurance portfolio increased in 2008 from 18.7% to 26%.
Another company of ROSNO Group — Medexpress — is actively expanding in the medical insurance market of the North-Western region of Russia.

In 2008, the company has collected 954 mln roubles of insurance premium, 11% higher than in 2007. Just as in the previous year, Medexpress demonstrated sound profitability in 2008: its operating profit grew by 33 mln roubles to 103.7 mln roubles.