Eastern Europe Business Plan International Start-up CASE STUDY

Background Non-traditional marketing approach Local insurer wants to do business with us Recent deregulation in local market Get up and running in 6-9 months $10M-20M to invest All direct marketing expenses funded from HO

Countries under Consideration

Target Countries Market into Czech Rep and Slovakia Less competitive pressure 15 million population Relatively the richest in terms of purchasing power

Local Company Structure Negotiate to buy local insurer in each country Change name to our company name Keep the people but install an officer from our company to oversee operations

Channel Distribution Strategy Plan to make agreements with major banks Bank managers and officers Direct mail Call center follow up Trusted advisor approach

Product Development and Pricing Simple personal accident and term package Cross-over phase, Hospital cash, Dread disease, Riders Simple savings product Mortgage product Underwriting - Simplified, short form Local Currency, indexed  Czech Rep - 9.2%  Slovakia - 14%

Regulatory Issues Purchase of licenses should mitigate corruption costs Ability to close deals quickly No dividend restrictions to shareholders Reinsurance

Business Model Assumptions GNP Growth: 4% Insurance market share of GNP:  1% increasing to 4% Our market share:  2.5% initially - $13.75M premium first year Growth:  100% in year 2  50% in year 3  25% in year 4  15% in year 5

Business Model Assumptions Average premium per policy: $175 Benefit ratio: 40% Lapse rate:  20% first year  10% thereafter Start-up costs: $5 million  Cost of acquisition  Software and hardware  Physical plant, etc. Per policy expenses:  $75 first year  $35 renewal

Business Model Assumptions Commissions: 15% all years Other expenses: 15% of premiums per year Asset earning rate: 8%

Revenue/Start Up

Gain From Operations

Surplus

Recommendation Start first in Czech Rep within nine months Enter Slovakia market within nine months thereafter