Azerbaijan Reinsurance Market

Azerbaijan International Insurance ForumFuad Kuliyev (AzRe)

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

2AIIF 2013

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

3AIIF 2013

Country ratings

Long term credit rating: “BBB-” with stable outlook

• Long term credit rating: “BBB-” with stable outlook

• Long term credit rating: “Baa3” with stable outlook

4AIIF 2013

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%

GWP per capita 29.9 47.3

5AIIF 2013

Gross / Net Outgoing Reinsurance Premium

Gross Reinsurance Premium AZN 88,17 mln

43%

57%

Local Reinsurers Overseas reinsurers

Net Reinsurance Premium AZN 81.40 mln

40%

60%

Local Overseas

6AIIF 2013

Paid Claims & Loss Ratio

Paid Claims – AZN 14.49 mln

75%

25%

Local Reinsurers Overseas reinsurers

Loss Ratio

Average Overseas Local0%

5%

10%

15%

20%

25%

30%

35%

18%

7%

33%

7AIIF 2013

Life and Non-life

Gross written premium

1.5%

98.5%

Life Non-life

Loss Ratio

Life Non Life0%2%4%6%8%

10%12%14%16%18%20%

8AIIF 2013

Proportional & non-proportional

Gross reinsurance premium

27%

73%

Non-proportional

Proportional

Net reinsurance premium

28%

72%

Non proportinal

Proportional

9AIIF 2013

Reinsurance structure (by types)

31%

28%11%

7%

5%

4%3

%

3%

3% 2% 2%1%

Personal insurance Property insuranceMotor Hull Compulsory Motor TPLAircraft insurance OthersCompulsory Life TPLCargo insurance Compulsory Property

InsuranceAircraft liability insurance Marine liability insurance

10AIIF 2013

Paid Claims

58%

4%

15%

1%

5% 7%

1%

1%

1%

8% Personal insurance Property insuranceMotor Hull Compulsory Motor TPLAircraft insurance OtherCompulsory Life TPLCargo insurance Compulsory Property

InsuranceAircraft liability insurance Marine liability insurance

11AIIF 2013

Loss Ratio (Claims/NRP)

Aviation Li

abilit

y

Personal

insu

rance

Others

Moto

r Hull

Aviation Hull

Cargo in

suran

ce

Compulsory

Life

TPL

Property

insu

rance

Compulsory

Moto

r TPL

Compulsory

Property

Insu

rance

Mari

ne liabilit

y insu

rance

0%10%20%30%40%50%60%70%80%

12AIIF 2013

Reinsurance structure (by countries)

43%

26%

8%

5%

4%

3%3%

2% 2%2%1% 1%AzerbaijanGreat BritainRussiaGermanyTurkeyPolandSwitzerlandOther CountriesKazakhstanUSAFranceLuxembourg

13AIIF 2013

Reinsurance structure (overseas reinsurers)

46%

14%

9%

7%

5%

5%

4%3%3% 2%2% Great Britain

Russia

Germany

Turkey

Poland

Switzerland

Other Countries

Kazakhstan

USA

France

Luxembourg

14AIIF 2013

Reinsurance Structure (by S&P rating)

82.08%

7.75%

0.15%

10.02%

1. "A-" & above, including local placement2. from "BB-" to "BBB+"3. from "CCC" to "B+"4. Others

15AIIF 2013

Reinsurance Structure – overseas reinsurers only (by S&P rating)

68.77%

13.51%

0.27%17.46%

1. "A-" & above, including local placement

2. from "BB-" to "BBB+"

3. from "CCC" to "B+"

4. Others

16AIIF 2013

Initiative for market Cat coverCountry risk profile

17AIIF 2013

Initiative for market Cat coverBackground of demand

18AIIF 2013

Main risks• Earthquake • Floods• Landslides • Hailstorm

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

THANK YOU

fkuliyev@azre.az