OREANDA-NEWS. August 18, 2009. According to the operating results posted by Allianz Eurasia, the aggregate insurance premium collected in the first six months of 2009 by ROSNO Group, together with Progress-Garant, Allianz Kazakhstan and CJSC SAK Allianz equalled 16.7 bn roubles, reported the press-centre of ROSNO.

The major contribution to the premium collected by Allianz Eurasia is made the companies of ROSNO Group, accounting for 81% of the aggregate premium. According to the non-audited IFRS financials for the first six months of 2009, ROSNO Group earned 576% more operating profit than in the same period last year. In the first 6 months of 2009, ROSNO Group’s net profit equalled 563 million roubles, indicating a considerable improvement of financial performance against the net loss of 302 million roubles in the first 6 months of 2008. The results achieved in the first 6 months of 2009 fully conform to the Group’s portfolio optimization and profitability improvement strategy.

Mr. Hannes Shariputra Chopra, head of Allianz Eurasia and CEO of OJSC IC ROSNO, comments on the Group’s performance results as follows: "In the second quarter, we continued consistent pursuit of our strategy „One + 3“, concentrated on profitable growth and improvement in the company’s competitive power and value proposition. Despite the persisting economic crisis leading to the general slowing of growth in insurance premium collected, almost all companies of the group managed to increase their operating profit. The increase in operating profit has been primarily achieved through consistent re-segmentation of insurance portfolio and, as a result, lower loss ratio. Furthermore, all companies of the Group achieved better efficiency and cost reduction. Just as in the first quarter, the second-quarter profit further multiplied. Therefore, the formulated strategy enables us to overcome negative effects of the economic crisis and remain a stable, profitable and most customer-focused Russian insurance company".

Major financials of ROSNO Group
The results of the first six months of 2009 reflect the profitability growth strategy followed by ROSNO Group. In the first six months of 2009, ROSNO Group’s operating profit grew by 576% to 1010 mln roubles, which is 1226 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 threefold.

In the first six months of 2009, the secured yield of automobile insurance portfolio and ROSNO’s increasing business profitability caused the combined non-life insurance ratio to decrease to 93% (vs. 101% in the first six months of 2008). In the first six months of 2009, the aggregate loss ratio (ratio of actual losses to insurance premium earned) decreased to 52% (vs. 61% in the first six months of 2008).

As compared to the first 6 months of 2008, the companies of ROSNO Group increased net profit by 865 million roubles. Such a significant growth resulted from better insurance and investment results across IC ROSNO and lower losses of its subsidiaries.

ROSNO Group insurance premium and insurance compensations
The aggregate insurance premium collected by ROSNO Group in the first 6 months of 2009 amounted to 13.5 bn roubles (vs. 14.4 bn roubles in the first 6 months of 2008). The insignificant decrease (as compared to the first 6 months of 2008) in the total premium collected has been caused by segmentation of the motor insurance portfolio, the market’s general medical insurance cost reduction trend prevailing in the client companies, and lower volume of insurance premium collected by Allianz Ukraine (by 60%).

The share of IC ROSNO in the aggregate premium collected by the Group in the first 6 months of 2009 equalled 94.1% (as compared to 90.6% in the first 6 months of 2008).

The aggregate insurance compensations paid by ROSNO Group under gross insurance and reinsurance contracts grew by 15.8% in the 6 months of 2009, reaching 6.6 bn roubles (vs. 5.7 bn roubles in the first 6 months of 2008).

Major business lines
ROSNO Group’s portfolio remains well-balanced. Its major business lines are as follows: voluntary medical insurance (28.8% of the insurance portfolio), property insurance (26.6% of the insurance portfolio), and motor insurance, including OMTPL (27.5% of the insurance portfolio). In the first 6 months of 2009, their aggregate share in the insurance portfolio equalled 83%.

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 9% decrease (as compared to the first 6 months of 2008) in the premium collected in the voluntary medical insurance segment is in line with the market’s general social benefit cost reduction trend prevailing in the client companies. There has been an increase in the premium collected in the property and financial risks segments, attributed to commencement of relations with several large corporate clients. 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. Continuing to follow this strategy, in the first six months of 2009, ROSNO completed optimization of the investment portfolio by introducing stricter requirements to corporate bonds and banking investments in favour of the largest and most financially stable companies. By placing insurance reserves and own funds solely with large and reliable banks, ROSNO increases the share of fixed-income bank instruments to 48% (vs. 22% as of the end of the first half of 2008).

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
Allianz Eurasia Group renders long-term life insurance services via Allianz ROSNO Life. In Q2 2009, as part of restructuring of Allianz Eurasia Group, the company was withdrawn from ROSNO Group, now having become a fully-owned subsidiary of Allianz New Europe, part of Allianz SE. Just as in Q1 2009, the company continues demonstrating active growth, as evidenced by the rapid increase of premium collected (by 14.8% vs. Q2 2008) and by the considerable improvement of the financial result. The company’s net loss has decreased by 126 million roubles, equalling 127 million roubles (against 253 million roubles in Q2 2008).

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 60%, as expected. In the first 6 months of 2009, the company’s insurance premium amounted to 181 mln roubles, as compared to 453 mln. roubles in the first 6 months of 2008. The company’s future growth will be more focused on property insurance.