1. Innovation and Distribution Osvaldo do Nascimento Taipei, Taiwan July, 2008 International Insurance Society, Inc 44th Annual Seminary V6 – 30/06/08

2. 1.Brazil: - Prepared to develop its Insurance Industry 2.Insurance Market - Need of Growing 3.Information Technology to develop insurance sales 4.Micro-insurance: Definition and Challenge 5.“Brazil Case” – CRM and Life Insurance Sales at Itaú 2

3. Brazil Area (km 2 ): 8,511,965 GDP 2007: US$ 1,3 trillion Population 2007: 191.8 million 3 About Brazil...

4. Conditions to Develop the Insurance Industry in Brazil  Inflation under control  Wealth distribution  Market Growth 4

5. Inflation in Brazil (INPC - % p.y.) Source: IBGE 5 (*) 2008 until May (*)

6. Nominal and Real SELIC Rate (in 12 months, % p.y.) Interest Rate 6 Source: Brazilian Central Bank

7. Net Debt Net debt of public sector (% GDP) -9.4 41.0 -15,0 -10,0 -5,0 0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 abr-01 jul-01 out-01 jan-02 abr-02 jul-02 out-02 jan-03 abr-03 jul-03 out-03 jan-04 abr-04 jul-04 out-04 jan-05 abr-05 jul-05 out-05 jan-06 abr-06 jul-06 out-06 jan-07 abr-07 jul-07 out-07 jan-08 abr-08 Dollar denominated debt 30,0 35,0 40,0 45,0 50,0 55,0 60,0 Net debt Dollar denominated debt/GDPNet debt/GDP Apr / 2008 Source: Brazilian Central Bank 7

8. Foreign Reserves Source: Brazilian Central Bank US$ Billion 195,8 (*) (*) Apr, 2008 US$ Billion Investment grade by Standard & Poor’s Upgrades on April 30, 2008 – long-term foreign currency Brazil: BBB - 8

9. Source: ACLI Fact Book, 2005 Mutual Fund Companies Life Insurance Industry Robert A. Kerzner, President and CEO of LIMRA International presented this slide during the LIMRA 2007 Annual Meeting in Boston last October. 9

10. And more… According to LIMRA, 60% of consumers in the USA say they prefer to buy “face-to-face”. (*) But, to be physically present to sell “face-to-face” nowadays we have to consider: (*) Trillion Dollar Baby, LIMRA International, 2005 10 So, we can be available, but not physically present, offering the most recent technology to interact with clients.  Costs of transportation  Traffic jam into big cities  New stile of life  Face-to-face preference  Personalized approach  Opportunity to establish relationship X

11. 11 1.4 billion Internet users worldwide! Source: Internet World Stats Brazil: 46.2 million

12. 12 Wealth Distribution in Brazil Bolsa Família – a Brazilian program to reduce the poverty  11 million families supported by Bolsa Familia  45 million people are covered  US$ 6.8 billion * is the budget to 2008 (*) US$ 1,00 = R$ 1,597 – 06/30/2008 Mr. Luiz Inácio Lula da Silva (President Lula) President of República Federativa do Brasil

13. 13 15% 18% 34%36%46% 51%46% 39% 200520062007 Source: Ministry of Finance - Research IPSOS (O Estado de São Paulo, pages B16, 03/30/2008). Class A/B Class C Class D/E Wealth Distribution in Brazil More than 86 million people Changes in the population distribution by classes

14. Micro-insurance Micro-insurance is a type of insurance with low premiums developed to protect low-income people against specific risks. As the premium price is very low, there is a need of a large scale to allow its economic viability and one important issue is to define the distribution model to be adopted by insurers. In Brazil SUSEP (the Governmental Supervisor) and FENASEG (the insurance market institutional representative) are working hard to create the adequate environment to develop the micro-insurance. Of course, some partnerships will be relevant to sell micro-insurance, like utilities companies (electricity and gas bills), retail market, credit cards providers and financial institutions. China, India and Russia have significant experience in micro-insurance distribution, but Brazil certainly will be a expressive player in this business considering its technological structure provided by the financial industry and specialized insurance brokers developed inside the communities. 14 Challenge!Regulatory changes…

15. INSURANCE COMPANIES BROKERSAGENTSDIRECT SALES BANKASSURANCE FINANCIAL ADVISORS CLIENT Distribution Players at Insurance Industry Mobile Phones (SMS & 3G technology) InternetCall CentersFinancial Services Providing the distributors… … with high technological tools 122 million of mobile phones in Brazil (1) 46.2 million of internet users in Brazil (2) and 99% of Income Tax Declarations delivered by internet (3) 166,773 ATM’s (5) 18,308 Bank Braches (4) 1.Source: ANATEL – Brazilian's Telecommunications Agency 2.Source: Internet World Stats – Dec/2007 3.Source: O Estado de São Paulo, 04/may/2008 – Mrs. Renata veríssimo, Jornalist 4.Source: Tribuna do Brasil, 28/may/2008 5.Source: Research “O setor bancário em números” by FEBRABAN – Brazilian's Association of Banks – Dec/2007 15

16. 16 Experience of Itaú in Segmentation and Distribution Key Information (*) :  2 nd largest financial institution in Brazil  2,594 branches  11.2 million current account holders  US$ 138.7 billion** billion in AUM (*) March, 2008 (**) US$ 1,00 = R$ 1,597 – 06/30/2008

17. CRM Environment 17 Material prepared by Banco Itaú, Brazil CLIENT Internet ATM Video Phone E-mail SMS Mailing Insurance Products Insurance Providers  Brokers  Agents  Financial Advisors  Insures  Banks  Partners Stimulation Interaction Insurance Products Service Interactive Providers

18. Post-Sales Valuation Segmentation Control of stand- by Contacts Policies for Product-Channel 2 Elected Customers to offers 1 Sales Probability Models Sales Optimization Budgets/Scenario, Capacity Planning 7b Warnings optimization Algorithm 7a Customers CRM Feedback Registers 3 Potential Offers Basket for each Customer  % (Stimulated x Controlled) $ post-sell  % x $ =  Potential stimulations  Valuation Products Uses (renew cancel, attrition, up-sell, etc) Stimulation feedback (acceptation/refuses) Operational Return (no-call, phone and address actualization and signalization good/bad) Performance Manage Customers Feedback Feedback analysis to support the Correct Value Proposition (price, product, channel, communication/script) Warnings and Telemarketing Committees Bureau 45 6 Control Groups Feedback (to determine  Stimulus) Objective:  Total Valuation Maximization Channels 8 Intranet accompaniment / alert triggers 9 CRM Operational Platform DW CUSTOMER Telemarketing Bankline Direct Mail e-mail Telemarketing ATM Bankline Bankfone Cashier Branch 18 Material prepared by Banco Itaú, Brazil

19. Filters: Customer File Quality and Contact Restrictions 100% Active Customers & Prospects 31,5% Elect for Telemarketing 65,2% Elect to Offers Unique Selection Optimization CRM Policies 24,7% Sent to Operation 19,6% Effective Contact 15% Conversion (Sell) $ - Results (Valuation 7 years) Relation Customer-Channel saturation Relation Customer-Product saturation Preferred Channel to buy Profile: Investor, Mixed, etc. Product propensity CRM Feedback for each Customer Modeling  CRM byCustomer/Product /Channel CRMxValuation 50% effective Call Operational Optimization Workflow  Filters: Elect to Offers and Standby Policies 19 Material prepared by Banco Itaú, Brazil

20. 20 2008 (Jan to May) 2007 30% 70% 27% 73% Sales by electronic stimulation (1) Sales by “face-to-face” (2) (1)ATM, Internet, Bank Cashier and Telemarkting (2)Sales Team and brokers Material prepared by Banco Itaú, Brazil 277,000 646,000 115,000 312,000 Experience of Itaú in Life Insurance Sales (Number of individual polices sold)