NOSSA Seguros

Angolan Insurance Company

2017, March 28th

1. NOSSA Seguros Corporate Overview

2. Angolan Financial System Overview

3. Angolan Insurance Market

4. NOSSA Seguros Review

5. Insurance Sector Challenges

Agenda

NOSSA SEGUROS CORPORATE OVERVIEW

5%MATEBA

Shareholding Structure Highlights

In 2012 BAI assumed control of NOSSA Seguros with the purchase of Real

Seguros’ shares. BAI shareholdings reached 72% of NOSSA’s share capital.

NOSSA Seguros - Nova Sociedade de Seguros de Angola, S.A. was founded in 6

October 2004, resulting of a partnership between the Insurance company Real

Seguros, Banco Angolano de Investimentos, International Finance Corporation

and a group of Angolan small investors. NOSSA Seguros, part of the BAI Group, is

one of the pioneering companies to start business in the insurance sector in

Angola.

Officially, NOSSA Seguros started its activity in November 2005 and, closely

attuned to the multiple needs of the Angolan market, operates in Life and Non-Life

insurance, in the corporate and private segments.

3,5% MRN

19,3% SMALL

SHAREHOLDERS

72,2%

BANCO ANGOLANO

DE INVESTIMENTOS

Mission and Values

Our mission is to contribute to the development of the Angolan insurance market

by promoting inclusion, innovation and quality of services, meeting the needs of

customers, employees, partners and shareholders.

CUSTOMERORIENTED

RESPECT FOROTHERS

It is our main purpose and where we

focus our attention. We work to meet

your expectations and needs

For the people and for the commitments we

make with them, either being employees,

customers, partners or shareholders

VALUINGHUMANCAPITAL

PROFESSIONALETHICS

Our employees are our most

precious resource. Through

their effort, we build and

consolidate our brand

We are guided by clear principles, in all

our relations, based on integrity,

transparency, accuracy and truth

SOCIAL RESPONSIBILITY

CORPORATESUSTAINABILITY

We strive to develop a more

fair, cooperative and more

socially aware society

We support sustainable conditions

for the planet, for people and for our

business

Governing Bodies

In 2016 ended the mandate of the current administration and NOSSA Seguros in

an ordinary General Shareholding Meeting proceeded to the appointment of new

governing bodies for the period 2016-2020.

Chairman

2 Members

2 Substitute

Members

SUPERVISORY

BOARD

Chairman

2 Members

REMUNERATION

COMMITTEE

Chairman

Secretary

GENERAL

SHAREHOLDERS

MEETING

Chairman

Chief Executive

Officer

2 Executive

Directors

Non Executive

Director

BOARD OF

DIRECTORS

EX

TE

RN

AL

AU

DIT

OR

S

SH

AR

EH

OL

DE

RS

ANGOLAN FINANCIAL SYSTEM OVERVIEW

Financial System in Angola

REGULATORS

NUMBER OF

PLAYERS

BANKING CAPITAL MARKETS INSURANCE

27 Banks

24 insurance companies

(3 with Pension Funds

under management)

51 brokers

399 agents

6 pension funds managers

26 Pension Funds

45 registered entities

Financial sector development strategy (1/2)

STRATEGIC PILLAR II STRATEGIC PILLAR III STRATEGIC PILLAR IV

FINANCIAL STABILITY FINANCIAL INCLUSION CAPITAL MARKETSINSURANCE & PENSION

FUNDS

• Strengthening of the legal

framework and supervision

effectiveness to oversee

and rule the financial

sector, banks resolution,

crises management,

contingency plans, anti

money laundering (AML),

countering financing of

terrorism (CFT), financial

services networks (FSN)

and financial services

relevant IT systems.

• Shore up collaterals,

strengthen payments

systems and promote retail

payments, savings

campaigns, ensure

financing to SMEs,

consumer protection and

financial education

initiatives.

• To promote the

development of capital

markets with an initial focus

on sovereign debt,

subsequently expanding to

corporate debt and

ultimately the equity

market.

• To diversify the insurance

products offering and

spread the insurance

coverage.

• To develop the pension

funds industry alongside

strong regulation and

sound governance.

IMPLEMENTATION STRATEGY

STRATEGIC PILLAR I

Financial sector development strategy (2/2)

STRATEGIC PILLAR IV

INSURANCE & PENSION

FUNDS

• To diversify the insurance

products offering and

spread the insurance

coverage.

• To develop the pension

funds industry alongside

strong regulation and

sound governance.

INSURANCE:

a) Improve the regulations and supervision of the insurance industry:

New insurance regulation consistent with the international standards issued by the International

Association of Insurance Supervisors (IAIS).

b) Strengthen of the supervision over the insurance industry:

Effective prudential and market supervision ensuring compliance with the regulation, based on a well

trained and resourceful supervisor.

c) Spread the access to insurance products

d) Set up ARSEG’s Insurance and Pension Funds Academy

e) Reinforce “Motor insurance” and introduce mandatory “Personal indemnity insurance”

f) Develop “Agriculture insurance”

PENSION FUNDS:

a) Review and update the legal and regulatory framework for insurance

b) The taxation around insurance needs to be reviewed

c) Increase awareness of the industry through the establishment of an association

ANGOLAN INSURANCE MARKET

NON-LIFE INSURANCE PENETRATION (GWP IN % OF GDP) AND GDP PER

CAPITA (USD) IN 2014 (IN AFRICA)

Context

20152014

Life Non-Life

2015

31% 32% 32% 32%

69% 68% 68% 68%

2012 2013

AFRICA

20142012 2013

ADVANCED MARKETS

42% 44% 43% 44%

58% 56% 57% 56%

Source: Swiss Re, sigma explorer (non-life insurance penetration) and IMF, World Economic Outlook April 2016 (GDP per capita)

NUMBER OF COMPANIES

IN ANGOLA

ASAN – Association of Angolan Insurance Companies

ASAN

4

9

17

24

2005 2010 2015 2016

• Consultation with public

entities to improve the

efficiency of healthcare

provision;

• Creation of networks of

preferred providers.

HEALTH TECHNICAL

COMMISSION

• From a self-regulatory

perspective, all the

associates subscription

and claims management

procedures are being

reviewed;

• FUNDAP Creation.

WORKMEN’S COMPENSATION

TECHNICAL COMMISSION

• Investment rules;

• Solvency requirements;

• New Chart of Accounts;

• Pension Funds fiscal

framework;

• Savings Insurance

Incentives.

FINANCIAL AND FISCAL AFFAIRS

TECHNICAL COMMISSION

• New minimum capitals

and new TPL rate;

• National registration file;

• Auto claims and fraud

file.

AUTO TECHNICAL COMMISSION

WORKING GROUP ON LEGISLATION REVIEW MARKETING WORKING GROUPTRAINING WORKING GROUP

NOSSA SEGUROS REVIEW

NOSSA Seguros operational review

NOSSA Seguros operates Life and Non-Life insurance and manages open and

closed Pension Funds.

With a wide structure, expanding throughout the Angolan territory, it has 26

agencies installed in 15 provinces.

PENSIONS FUND

LIFE (RISK)

AUTO

ACCIDENTS, HEALTH

AND TRAVEL

TRANSPORT, PROPERTY

AND OTHERS

It also relies on the support of

the Bank BAI agencies’

network, under the channel

Bancassurance.

NOSSA Seguros financial review

• Reinforcement of solvency from 166% in

2015 to 195% in 2016;

• Growth in 143% of net income;

• Increased coverage of technical

provisions from 150% in 2015 to 186% in

2016;

• ROE of 31%;

• Reduction of the Loss Rate;

• Maintenance of the Expense Ratio.

2016 Highlights

NOSSA Seguros financial review

INSURANCE SECTOR CHALLENGES

Is there a need to increase the number of mandatory insurance?

e.g. Freight transport insurance, multi peril insurance, personal indemnity insurance, etc

Reinsurance in Angola… When?

ANGOLA’S CURRENT LEVELS OF RISKS TAKEN MEANS

THAT THERE IS A NEED FOR RISK TRANSFER, RESULTING IN

HIGH CEDED RATIOS TO REINSURERS.

AS SUCH, INSURERS’ PROFITABILITY IS VULNERABLE TO

SHARP INCREASES IN REINSURANCE RATES.

• 1st African Reinsurer:

Egypt Re (1957)

• 1st Privately owned Reinsurer:

Best Re (1985) in Tunisia

• 1st Continental Reinsurer:

Africa Re (1976)

• Today: 36 Reinsurers based in Africa

− 15 privately owned

− 4 regional / sub-regional

− 5 South African based

(Swiss Re Life & Health, Munich Re,

Hannover Re, Scor Re and Gen Re).

− 10 State owned &

2 Private/State owned

Estimated non-life reinsurance market size

Sources: Africa Reinsurance Pulse 2016Where AngoRe should be

Do we need AngoRe?

• Currently the insurance sector in Angola only

retains half of the GWP, being the other half

ceded to international reinsurers;

• By increasing the retention of risk:

• Local wealth increases;

• The FX pressure easies.

0,47

0,48

0,49

0,5

0,51

0,52

0,53

0,54

0,55

0,56

0,57

2011 2012 2013

Source: ARSEG/PWC 2014

REINSURANCE BUSINESS RETENTION IN

ANGOLA (%)

Could the whole players in the industry apply for Oil & Gas co-

insurance?

• Unrated insurance companies?

• Lack of internal controls?

• True & fair audited financials?

• More stringent solvency requirements to operate the oil & gas insurance

business?

• Lack of underwriting expertise?

• Lack of actuaries to fairly price the oil & gas insurance risk?

Can bancassurance be a solution for growth?

• The banking sector in Angola

is now relatively developed,

and insurers are somehow leveraging

this through bancassurance and other

cross-marketing options.

• New commercialisation channels trends

(e.g. internet, mobile, etc.).

• Insurtech is a burgeoning phenomenon

that has the potential to help the

insurance industry to connect with its

customers. This is an evolving

landscape.

INSURANCE BROKERAGE CURRENTLY REPRESENTS

AN EFFECTIVE WAY OF DISTRIBUTING INSURANCE

PRODUCTS. NEVERTHELESS, ONLINE IS GROWING!

0

5

10

15

20

25

30

35

40

2009 2010 2011 2012 2013 2014 2015

INVESTMENT IN INSURTECH AND FINTECH

($ BILLION)

Motor insurance… A growing constraint?

• Angolan vehicle sales will continue to decline in 2017, as the combination of high inflation,

foreign exchange constraints and unattractive borrowing costs weight on the demand for

passenger cars and commercial vehicles.

• Angola is in the “High Risk, Low Reward” quadrant.

2016f20152014 2017f

Sourc

e: B

MI

Researc

h -

Angola

Auto

s R

eport

Q2 2

017 –

January

2017

MOTOR RISK/REWARD INDEXPASSENGER VEHICLE SALES

IN UNITS

Motor insurance… A growing constraint?

• Given the current economic situation in Angola, motor insurance segment is underperforming.

• Motor insurance has the second biggest percentage of market share.

• Available statistics on Claims in Angola still lag from developed countries.

Indicators 2011 2012 2013 2014 2015 2016 Trend

As % of non-life insurance 21% 24% 23% n.a. 27,2% 18,6%

Motor insurance, in million

Kwanza17 921,2 20 891,3 22 717,3 n.a. 20 665 16 640

Motor insurance, % Change 17% 9% n.a. -9%(13-15) -19.5%

Motor insurance claims, in

Kwanza3 243,6 4 601,6 5 564,2 n.a. 5 996 6 241

IS THERE ANY POSSIBILITY OF SETTING UP A LEGAL FRAMEWORK LEVELING THE ANGOLAN MOTOR

INSURANCE CLAIMS STATISTICS WITH THE DEVELOPED COUNTRIES?

MOTOR INSURANCE

Should we price Motor Insurance using which available

statistics?

THERE IS URGENT NEED TO ACT!

Kenya

3 191

Angola

5 591

South

Africa

7 190

Botswana

7 770

Nigeria

2 710

25,1

Angola

26,9

Kenya Nigeria

20,5

Botswana

23,6

South

Africa

29,1

• FINANCIAL EDUCATION IN SCHOOLS

• INTER-MINISTERIAL COMMISSION FOR ROAD CASUALTY

• CAMERAS ON VEHICLES AND ROADS

Source: World Health Organization – Global Status Report on Road Safety - 2015

2011 2012 2013 2014 2015

Accidents

Deaths4 5053 802

18 750

15 121

3 593

14 844

17 057

4 428

17 262

4 305

So

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e: P

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irecçã

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çã

oe

Trâ

nsito

ROAD TRAFFIC IS THE SECOND CAUSE OF DEATH

IN ANGOLA, AFTER MALARIA

REPORTED ROAD TRAFFIC CAUSALITIES IN ANGOLA

REPORTED NUMBER OF ROAD TRAFFIC DEATHS

ESTIMATED ROAD TRAFFIC DEATH RATE

PER 100,000 INHABITANTS

Regulation Trends

THE PATH TO IFRS THE PATH TO SOLVENCY II

• Half-way IFRS implementation in the short term

(similar to "Insurance CONTIF");

• Aiming for full IFRS in the medium to long term,

carving out the adoption of IFRS 17;

• Extended deadline for the IFRS 17 adoption.

• Introduce a regulatory requirement in having a

self-assessment report on the internal control

system effectiveness;

• Introduce a regulatory requirement in having an

external audit on the internal control system

effectiveness;

• Introduce a regulatory requirement in having the solvency margin audited by an external auditor.

OVERHAUL OF IT SYSTEMS & INFRASTRUCTURE

WHAT ARSEG’S TIMELINE IS GOING TO BE?

Skills and Competencies

• Insurance companies are struggling for talent;

• Ongoing strong investment in professional training should be maintained.

Marketing

Technical

Finance

Technology

Claims management

Actuarial and Risk

Accounting and Tax

IT Infrastructure

FOCUS AREAS EXAMPLES OF KEY SUBJECTS

Regulator

All skills

Corporate governanceStrategy

Underwriting

Compliance

Internal control

Insurance’s

Academy

• INCREASED CREDIBILITY & CLIENT SATISFACTION

• INCREASED PROFESSIONALISATION

• FAIR COMPETITION ENHANCEMENT

Insurance sector challenges

INSURANCE SECTOR

CHALLENGES

• Better regulation;

• Improved supervision;

• Increased policyholders

protection.

.

REGULATOR

• Strong solvency ratios;

• Diversified investments

through capital markets;

• Statutory auditors;

• Appointed actuaries;

• International rating.

FINANCIAL STABILITY

• Skilled & knowledgeable

professionals.

PEOPLE

• Financial literacy;

• Credibility of the

insurance industry;

• Increased satisfaction.

CLIENT