1. OVERSEAS BUSINESS DEVELOPMENT: GOALS, OPPORTUNITIES, RISKS Dmitry GARMASH Deputy Managing director, Ph.D., MBA Unity Re Ltd 14 th All-Russian reinsurance conference 25 March 2010 – Hotel ‘National’, Moscow

2. Russian in-ward reinsurance market – 43 billion RUR Overseas business share – 10 billion RUR Gradual share growth - 5,3% (2006)  24% (2009) Growth for 5 years – about 25% per annum Territories: 40% - former USSR, 60% - pure overseas Overseas business segment

3. Overseas business segment dynamics Source: Federal Service for Insurance Supervision

4. 18% 60% 15% 5% 2% Territorial sources

5. Double based – market growth for 2005-2008  crisis 2009- …! Globalization and active development of emerging markets world-wide Cycle phaze  stable demand for alternative R/I capacity Geographical expansion & growth of broking Financial & technical strengthening of Russian (re)insurers Very competitive domestic market Tight & saturated competition domestically  search for new sources of business from abroad Grounds for development

6. LOBPure overseas business, million USD Business from former USSR, million USD Property20500 Energy15250 CAR/EAR20300 Marine hull60150 Aviation hull1075 Available local R/I capacity

7. Key goals of development «Drifting in a stream» Extreme scantiness of ‘pure domestic market player’ strategy Diversification of business sources Diversification of portfolio Compensation of decaying domestic R/I premiums Support of captive projects No strategy for ‘global player’

8. Common classes: PD, CAR, Marine Facultative – up to 75-80% Major strategy - supporting market Clear ‘regionality’ of business – by geography & structure Internationality – inc. all +/- of business customs & practice Major & the only channel – broker! Stake on support of large-scale projects Accounts’ high deviation by risk quality and pricing Basic characteristics of business

9. Financial strength, available capacities  crisis Business base in any way remains - Russia & CIS! Rating requirements & legislative restrictions Reasonable segmentation of available business by reinsurers’ quality (BBB and higher vs all others) Very limited: distribution channels, market expansion strategies, marketing plans Growth base – struggle for clear differentiation, reputation and distribution channels Where is the interest of potential investors? Barriers for further development

10. Low ‘portfolioness’ and light playing of the law of large numbers No role for real corporate underwriting Claims settlement = follow the fortune Significant CAT-exposure Documentary issues & procedures variation per region Trust & experience: reinsurer is manipulated by broker Much more close binding to regional macroeconomic trends & factors Major risks

11. Thanks for your attention! Unity Re Ltd. T:956 6589 F:956 6598 E:re@unityre.rure@unityre.ru W:www.unityre.ruwww.unityre.ru