Azerbaijan Reinsurance Market Azerbaijan International Insurance Forum Fuad

Azerbaijan Reinsurance Market Azerbaijan International Insurance Forum Fuad Kuliyev (Az. Re) June 20, 2013

General Information Establishment: 28 May 1918 Independence: 18 October 1991 Official Language: Azerbaijanian Political system: Presidential Republic Area: 86. 6 ths. sq. km. Population: 9, 36 million Capital: Baku Autonomous Republic: Nakhchivan Currency: Manat AIIF 2013 2

Macroeconomic indicators 2011 2012 Population 9, 24 million 9, 36 million GDP 63. 4 bln USD 69. 2 bln USD GDP per capita 7. 0 thsd USD 7. 5 thsd USD Inflation 7. 9 % 1. 1% Poverty level 7. 6 % 6. 0 % Average monthly salary 460 USD 502 USD Foreign Investments 8. 7 bln USD 10. 3 bln USD Domestic Investments 13. 0 bln USD 15. 4 bln USD Strategic Currency reserves 40 bln USD 46 bln USD AIIF 2013 3

Country ratings Long term credit rating: “BBB-” with stable outlook • Long term credit rating: “BBB-” with stable outlook • Long term credit rating: “Baa 3” with stable outlook AIIF 2013 4

Insurance Market (USD) 2011 2012 Total Assets 581. 9 mln 765. 4 mln Paid-up capital 321. 8 mln 374. 6 mln Gross Written Premium 270. 8 mln 436. 3 mln Paid Claims 78. 3 mln 119. 6 mln GWP/GDP % 0, 43% 0, 63% 29. 9 47. 3 GWP per capita AIIF 2013 5

Gross / Net Outgoing Reinsurance Premium Gross Reinsurance Premium AZN 88, 17 mln Net Reinsurance Premium AZN 81. 40 mln 40% 43% 57% Local Reinsurers 60% Overseas reinsurers AIIF 2013 Local Overseas 6

Paid Claims & Loss Ratio Paid Claims – AZN 14. 49 mln 33% 35% 30% 25% 20% 18% 15% 10% 75% 7% 5% 0% Local Reinsurers Overseas reinsurers AIIF 2013 Average Overseas Local 7

Life and Non-life Gross written premium Loss Ratio 1. 5% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 98. 5% Life Non-life AIIF 2013 Life Non Life 8

Proportional & non-proportional Gross reinsurance premium Net reinsurance premium 28% 27% 72% 73% Non-proportional Non proportinal Proportional AIIF 2013 9

Personal insurance Reinsurance structure (by types) Property insurance Motor Hull 3% 2% 2% 1% 3% 3% Compulsory Motor TPL 31% 4% Aircraft insurance 5% Others 7% Compulsory Life TPL 11% 28% Cargo insurance AIIF 2013 Compulsory Property Insurance 10 Aircraft liability insurance

Paid Claims Personal insurance Property insurance Motor Hull 1% 1% 1% Compulsory Motor TPL 8% 7% 1% Aircraft insurance 4% Other 15% 58% Compulsory Life TPL Cargo insurance 4% AIIF 2013 Compulsory Property Insurance 11 Aircraft liability insurance

n Lia bi al lit y in su ra nc e Ot he rs M ot or Hu Av ll ia t i on Ca rg Hu o ll in s Co ur an m pu c lso e ry Lif e Pr op er Co TP ty m L in pu Co s ur l m an pu sory ce lso M ry ot M or P ar ro TP in pe L e rty lia bi In lit su yi. . . ns ur an ce rs on Pe ia tio Av Loss Ratio (Claims/NRP) 80% 70% 60% 50% 40% 30% 20% 10% 0% AIIF 2013 12

Reinsurance structure (by countries) 3% 3% 2%2% 2% 1% 1% 4% 5% 43% 8% 26% AIIF 2013 Azerbaijan Great Britain Russia Germany Turkey Poland Switzerland Other Countries Kazakhstan USA France Luxembourg 13

Reinsurance structure (overseas reinsurers) 4% 3% 3%2% 2% Great Britain Russia Germany 5% Turkey Poland 5% 46% 7% Switzerland Other Countries Kazakhstan 9% USA France 14% Luxembourg AIIF 2013 14

Reinsurance Structure (by S&P rating) 0. 15% 10. 02% 1. "A-" & above, including local placement 7. 75% 2. from "BB-" to "BBB+" 3. from "CCC" to "B+" 4. Others 82. 08% AIIF 2013 15

Reinsurance Structure – overseas reinsurers only (by S&P rating) 17. 46% 0. 27% 1. "A-" & above, including local placement 2. from "BB-" to "BBB+" 13. 51% 3. from "CCC" to "B+" 68. 77% AIIF 2013 4. Others 16

Initiative for market Cat cover Country risk profile AIIF 2013 17

Initiative for market Cat cover Background of demand • • - Earthquake Floods Landslides Hailstorm Main risks Loss history Zaqatala earthquake, April 2012 – AZN 420 mln economic loss Kur-Araz floods, April-May 2010 – AZN 20 mln economic loss Baku earthquake , 2001 Covered natural perils by compulsory law Earthquake, volcanic eruption, storm, hailstorm, hurricane, flood, inundation, heavy rain, landslide AIIF 2013 18

THANK YOU fkuliyev@azre. az