Motor Insurance Day Sinaia, May 22 nd, 2013 Presented by: Artur BOROWINSKI

MTPL – GWP vs Paid Claims period Data source: ISC annual reports Negative trend of the claims paid comparing to the GWP trend for the analyzed period: -Steady increase of claims paid (gross), affected by the increasing of the claims frequency and the negative impact of bodily injuries cases; -At the end of 2011, GWP have decreased with 20% compared with the end of For 2012 is forecasted that the premiums will be at the level of 2008; -Compared with 2008 the paid claims have increased with 25%. Mio EUR (GWP, Claims).000 Pieces (registered cars)

Top 10 MTPL 12M Number of MTPL players in CEE, 2012 Source : - Insurance Profile; - Fondul de Protectie al Victimelor Strazii; - NBS (National Bank of Slovakia) Company 12M M 2011Market share % % change in RON RON mn 12M M ASTRA Asigurari EUROINS Romania Carpatica ASIG Asirom VIG Omniasig VIG GROUPAMA Asigurari ALLIANZ-TIRIAC UNIQA Asigurari GENERALI Romania CITY Insurance TOTAL TOP ,156.71, TOTAL MTPL MARKET6.062,159.51, % Source : -Insurance Profile 1/2013 (38)

CASCO – GWP vs Paid Claims - period Data source: ISC annual reports Mio EUR (GWP, Claims) -Huge decrease by ca. 56% (2012 vs 2008) mainly caused by the decreasing of the Leasing / new cars business; -Very bad situation on the market: since 2010 the insurance companies have paid more claims comparing to the written premium! -Casco market is almost entirely controlled by multinational companies which have lost a lot of money for this line of business

KPI MTPL business: VIG companies in CEE 2011 – 6M Source: Internal data Claims frequencyAvg paid material domestic claim in € Avg paid bodily injury domestic claim in € Average Premium in € M M M (market) VIG CZ3.8%3.6%1, ,6883,23190 VIG SK8.2%8.3% ,4992, VIG PL5.3%4.9%9771,0302,4072, VIG RO6.9%7.4% ,9767,768100

KPI CASCO business: VIG companies in CEE 2011 – 6M Source: Internal data Claims frequencyAvg paid claim in €Average Premium in € 20116M M 20128M 2012 VIG CZ11.0%11.5%1,1911, VIG SK17.4%18.4%1,4701, VIG PL18.9%17.7%1,1861, VIG RO53.0%50.4% Foreign Exchange Rates used: 1 EUR = CZK / Year EUR = CZK / 8M 2012 Czech National Bank; online currency converter 1 EUR = PLN / Year EUR = PLN / 8M 2012 National Bank of Poland; 1 EUR = RON / Year EUR = RON / 8M 2012 National Romanian Bank

Main problems in MTPL for 2010 – 2012 (Romanian market general) Unsustainable MTPL prices caused by crazy competition (underwriting for cash-flow by some companies) Avg. price in total ca. EUR Very low prices for trucks/ transport vehicles; offers for haulage companies even below than EUR Material claims are paid almost 100% to the repair shops; Huge increase of Bodily Injury claims and Green Card claims; they represent ca % of the value of all claims incurred (in numbers represent only ca. 5-6% !!!) Relatively high frequency >7%; No automatic renewal; Relatively high commissions; Trends in Europe: higher protection toward the clients (replacement car etc.) Great initiative of CSA/ ASF: to force the insurers to have the combined ratio <100% (Norm 3/2013) 7

Main problems in CASCO for 2010 – 2012 (market general) The average premium for CASCO is decreasing due to the increase of the Romanian motor fleet age and in many cases the tariff is based on the sum insured (premium rate); Almost 100% payments to the repair shops; Increasing of fraud cases; No deductibles in many cases; Extremely high frequency >50% and as result the highest prices in CEE; Big problems with loss ratios for imported cars; No real bonus-malus system and no mechanism for prevention in order not to insure the clients with many claims Only few information regarding the loss history for fleets. 8

Back-up slides 9

Calculation of MTPL premium (profitability exercise) 10 NoItemDeaths caused by road accidents Heavily injured Total 1Official police statistics for year No of family members to receive compensations 4-- 3No of claimants Bodily Injury [BI] claim per person (EUR) Value of compensations (4*3) No of MTPL insured vehicles (estimation) Value of BI compensation per policy (5/6) in EUR Domestic claim per policy (average claim EUR 1.000; 6% frequency) in EUR Green card claim per policy (average claim EUR 5.000; 0.4% frequency) in EUR Claim per policy in total (sum[7,8,9]) Avg premium per policy with 30% costs loading

Conclusions reg. profitability of MTPL business A crucial and unpredictable point is the value of Bodily Injury claims, especially moral damages which are not clearly regulated by the law; –If we use the amount of EUR as average compensation, the correct price is ca. EUR 202 Of course the result depends very much on portfolio structure but the figures are average rough estimations; In my opinion, the correct average premium in Romania is in the range of EUR ; The self-regulation of the market is unrealistic; 11