Ras 2003 results and 2004 market outlook

Transcription

1 Ras 2003 results and 2004 market outlook Mario Greco Capital Market Day Milan, 3 February 2004

2 Ras current positioning and strategic guidelines

3 Ras achievement and perspectives In February 2001 Ras launched the first 3-year plan, aiming to leverage its unique multi-channel strategy to reposition the company from a mainly P+C to a multi-business operator Over the latest 3 years Ras performance exceeded most targets, providing the Group with a strong and proper positioning to focus on growth Ras is now ready for exploiting expected market upturn, leveraging on its proven track record and first mover advantage

4 P+C and Life Mkt shares source: Ania for 1999 and Prometeia estimates for 2003 PFS mkt share source: Assoreti Ras positioning P+C: Ras strategy by LoB Differentiated growth strategy by client segment, focusing on portfolio quality Achieved Mkt share GPW 10.9% 11.1% Life: Leverage on multi-channel strategy for significant market share improvement GPW 6.8% 11.8% PFS: Establishment of a new Rasbank, thanks to strong investments in recruitment AuM on Fas system 10.8% 9.0% E

5 Ras multi-channel strategy Agents: Ras has developed a unique multibusiness model within the agency (1,200 agencies and 763 Fas) FAs: Ras has scaled up to 3rd position growing from 1,340 to 3,400 FAs (incl. BNL FAs) Banks: Ras has the most successful bancassurance agreement in (2,750 branches) Direct: Ras has created Genialloyd, leader in e-commerce in Potential Channel characteristics Motor Genialloyd Banks Life and P+C FAs Life and PFS Agents P+C, Life and PFS Multi-business level Based on GPW + Net inflows

6 Ras strategic targets Group 1 Continue the value creation program, with particular focus on PFS and Life 2 Enhance distribution model to strengthen Ras leadership in distinctive customer service Targeting growth 3 Leverage existing strong competencies in capital management to increase return on capital

7 2006 Key targets Group Mln euro PFS Life Key Drivers # of FAs Gross result GPW NBV 2006E targets 3, , P+C GPW Combined ratio 8, % Overall Net income ROE RORAC % 17.5%

8 2003 preliminary results

9 Ras results in 2003 Highest net inflows ever recorded by PFS business Significant growth in Life both in bancassurance and in proprietary channels Further satisfactory improvement in P+C Economic results will benefit from these trends and are expected to be fully in line with targets

10 Total GPW Group Mln euro - direct and indirect business Gross premium written YOY growth +10.2% 2003 Volumes YoY growth 99/03 CAGR 16,570 9,154 15,038 45% 42% 7, % 6.9% 59% 55% 58% 9, % 26.1% 41% P+C Life

11 Breakdown by country Group GPW - direct and indirect business - mln euro Life YOY growth +14.5% P+C YOY growth +4.8% 8,342 9,553 6,696 7,017 6,477 7, % 3,640 3, % Foreign countries 1,865 1, % 3,056 3, %

12 P+C GPW mln euro - direct business GPW - YOY growth +4.6% YoY growth 99/03 CAGR 3,597 3, % 7.0% 2,875 1,354 11, % 4.5% Non-motor 1,175 Motor 1,700 2,243 2, % 8.6%

13 Life New Business Premiums Mln Euro New business premium By channel YoY growth 99/03 CAGR 4,759 5,893 24% 47% 1, % 20% Agents and FAs 322 Banks 956 4,268 5,221 22% 53%

14 Agents and FAs: Life and PFS Mln euro PFS net inflows and New business premiums +29% 1,646 Last quarter results +91% 593 Life Banking , Asset Mgmt Q2002 4Q2003

15 2004 Outlook

16 2004 outlook Macroeconomic scenario Strong Euro vs. US dollar may delay expected rise in interest rates and European economic recovery Household confidence in the financial market is increasing, but propensity to make long-term commitments is still limited Confidence in the banking system is declining, and the appeal of the independent network is rising PFS will reveal its value potential for players offering a valid value proposition Life will continue to grow, but the gap between high quality advisors and commodity providers will widen P+C will stabilise, maintaining a selective approach in underwriting and contracts

17 Conclusion The new scenario remains consistent with the Ras 3-year plan framework The Bnl acquisition is an important step towards the achievement of targets of the new Ras plan The new scenario confirms Ras strategic guidelines, making the 2006 targets even more achievable

18 PFS: A strongly positioned FAs network, accelerating target achievement Massimo Arrighi Capital Market Day Milan, 3 February 2004

19 Rasbank Re-launch in the last 3-years

20 Rasbank change Rasbank, a major player in PFS In 2000, the target was to make Ras a leading player in PFS in In the last 3 years, financial market performance has significantly impacted the FAs networks, forcing a market consolidation Succeeded in leveraging this weakened environment to scale up to leading positions Set up a new structure able to gain a strong client perception of Rasbank offer and service Outstanding track record in terms of: Volumes and Assets growth Efficiency improvement Network integration capability

21 Rasbank scaling up to leading positions # of FAs +79% 3,400 2,400 Rasbank ranks 3rd in terms of FAs number, vs. 7th in 1999 (1) Fideuram Mediolanum Rasbank+BNL 4,470 4,050 3,400 1,342 Generali Xelion 2,500 2, Including BNL Fas Network acquisition - preliminary agreement singed on 19 Dec. 03 (1) excluding Agents with financial advisors licence

22 Rasbank structural changes Different segmented initiatives integrated into a single PFS entity New brand image, with advertising support campaigns and completely renewed product/service offer New competencies acquired in marketing, client segmentation and product innovation Open architecture through Multi- Manager product approach A common IT platform serving all FAs and Clients Rasbank was one of the few success stories in the PFS market in the last 3 years and has created structural assets that will be leveraged in the future

23 (1) Net Inflows: Assets under management and banking assets + Life new business premiums FAs net inflows Mln euro - YoY growth rate - Net Inflows and Life NB Premiums (1) Life NB Premiums Banking AuM % , Last quarter results % Multi-Manager products Q2002 4Q

24 Focus on FAs Life New Business premiums Mln euro - YoY growth rate - Life New business premiums % % Last quarter Annual premium +44% Recurrent premiums Single premiums Q2002 4Q2003 APE (1) (1) Recurrent premiums + 1/10 single premiums

25 FAs assets under administration Mln euro - YoY growth rate - Assets Under Administration 17,8% 2003 Mutual Fund Mix Life Reserves Banking 9,898 1,208 12,799 2,901 12,058 2,214 15,083 3,025 Bond and Monetary 47% 53% AuM 8,690 9,844 Equity and Balanced

26 PFS efficiency improvement Mln euro Cost cutting results Actions Personnel IT Other (1) % Merger of DivalRas, Ras Investimenti, Rasfin into Rasbank Outsourcing of IT and back office Flattening of FAs commercial structure (1) Pro forma after merger

27 Cami Acquisition and integration September 2003: Acquisition of Cami, a network of 200 FAs, for 8 mln euro December 2003: Merger of Cami into Rasbank Integration of IT systems and back office in progress Client relation already activated January 2004: Rasbank product range fully available to Cami FAs, including Irish Life products Integration results 96% of FAs have been retained and integrated in Rasbank structure Ex Cami Area Managers are now responsible for the new Recruitment Task Force Assets Under Management have grown by 4% (since acquisition date) to 721 mln euro Cost synergies amount to 20 mln euro per year (starting from 2004)

28 PFS 3-year plan

29 Market scenario and Rasbank positioning Market scenario Major banking players are weakened by reputation problems Clients recognise value of qualified advisors without conflicts of interest Further consolidation is expected in FAs market Major historical FAs competitors are facing internal reorganisation Rasbank recently launched a new growth plan, targeting 40% growth of number of FAs by 2006 Rasbank is already implementing initiatives to achieve these targets: Acquisition of BNL FAs Network Reinforcement of brand image as a major market player

30 First step towards 3-year plan targets BNL FAs Network Solid long standing network established in 1983 (20 mln euro of shareholders equity) Ranks 8th in terms of AuM (4.1 bln euro) with a sales-force of 1,000 FAs and 33 Financial Shops One of the few networks active in Life sales Lean headquarter structure (137 employees) thanks to outsourcing Cash-out 100 (1) mln euro, below 3% of AuM (compared to 5.6% avg. price paid in previous transactions) Preliminary contract signed on 19 Dec. 03 Expected closing April /May 04 (1) Life Company and Asset Management Factory is not included in the deal

31 BNL FAs network acquisition opportunities Consolidate market positioning Maintain current Rasbank profile thanks to highly compatible network structure Exploit synergies, leveraging Rasbank track record in network integration Further recruitment efforts refocused on highly experienced FAs with large portfolios Accelerate Rasbank achievement of targets

32 Consolidation of Rasbank positioning 2003 data - estimates Net Inflows per FA Qualitative positioning- mln euro 1.0 Credem Xelion 0.5 (2) Generali Mediolanum BNL Inv. 0 7 Azimut Fideuram AuM per Financial Advisor (1) 14 AuM Ranking - bn euro Fideuram Mediolanum Rasbank + BNL Generali Xelion (1) Independent Rasbank Fas (2) excluding Simgenia

33 Rasbank and BNL FAs: comparable structures Compatibility areas Asset Breakdown BNL FAs asset breakdown very similar to Rasbank s Rasbank Life BNL FAs Entry and management fee structure in line with Rasbank FAs hierarchical network structure and organisational levels match Rasbank s 20% 80% 15.1 bln euro AuM 27% 73% 4.1 bln euro

34 Rasbank and BNL FAs segmentation 2003 data AuM per client (/000 euro) FAs segmentation 197 Ex CAMI Rasbank FAs in agency BNL others BNL top 600 AuM per FA (mln euro) Independent Rasbank FAs 1, Integration opportunities A large part of BNL FAs network has similar attitudes and profile to Rasbank FAs The rest have good productivity but are still small in terms of portfolio The huge Ras client base is an opportunity to readdress part of existing productivity

35 BNL FAs network: synergies and integration costs Cost Synergies: rationalisation of support headcount Revenue Synergies: Align BNL FAs productivity to Rasbank Exploit Rasbank product knowhow (particularly in Life) Integration Costs: retention packages for FAs; integration of IT system and operations Current BNL FAs cost structure amounts to 26 mln Cost synergies could reach mln euro per year starting from 2005 Integration costs: 36 mln euro mainly charged to 2004

36 Rasbank new recruitment: focus on quality Net numbers - excluding FAs in agencies Target FAs Profile After BNL FAs acquisition, Rasbank can refocus recruitment process on quality - Previous - - New - > 6.0 mln euro > 7.5 mln euro The new recruitment plan targets 200 FAs (vs. previous 600) and raises candidate profile towards highly experienced FAs with large portfolios Expected expenditure for the new targets is 40 mln euro Avg. AuM per FAs # of client per FAs Avg. AuM per FAs # of client per FAs

37 Acceleration of target achievement Financial Advisors 3,600 3,400 3,400 2,800 Gross result % Previous plan New plan

38 Summary After several years of restructuring, Rasbank can now benefit from its current positioning to focus on growth Just 3 months after the launch a first important step has been taken towards 3-year targets Rasbank will also benefit from its leadership position in a more favourable competitive environment

39 P+C: Growing at a profitable pace through a selective business segment approach Paolo Vagnone Capital Market Day Milan, 3 February 2004

40 Ras strategy and achievements in the last 3 years

41 Ras achievements in the last three years Ras priorities three years ago were to regain profitability in Motor, reform the GTPL portfolio and, in general, achieve a strategic repositioning of the P+C business The plan required important investments, which today are key strengths of RAS: Selective underwriting processes supported by investments in IT architecture Reinforcement of technical skills, in part through recruitment drive Implementation of continuous controls on the portfolio as well as Client quality These assets have brought significant improvement in technical results, ending up with high quality portfolio and solid reserves

42 (1) Ras Tutela Giudiziaria, AID, Creditras, Bernese, Mondial 2003 Gross Premium Written Mln euro - direct and indirect business Total GPW 2003 YoY growth +4.2% GPW by Company GPW YoY Growth 3,097 3,640 3,794 Ras spa 2,831 Allianz Subalpina 2.0% % Genialloyd % Others (1) %

43 (1) Net of reinsurance business, including other technical items, calculated on Net Earned premium Technical improvement Combined ratio - % (1) Motor TPL claims frequency Automotive - Ras spa 10.0% 8.2% bp 7.6% Total P+C 2003E Motor E

44 2003 GPW breakdown by market segment Mln euro - direct business = 3,763 Different competitive levers by client segment reflecting: Very different distribution channels Sensitivity to different features (advice, price, offer) Different capital absorption Ras has a unique bottom-line oriented organisation, structured to serve the different market segments Motor and Retail GPW 3,022 03/ 00 CAGR +7.5% SMIs % Commercial Lines Large Corporate Public entities % Distribution Agents Agents Agents/ Medium brokers % Large brokers % Public tenders/ Agents

45 Ras selective growth strategy Ras action Mkt combined ratio in 2002 Ras Mkt shares - in % E Motor focused on portfolio quality through a strong risk selection 97.7% +30 bp Strong reduction of Health due to targeted reforms especially in corporate sectors 103.8% bp 9.2 Extensive portfolio reform in General TPL since % bp Combined ratio source: Companies Annual Report - based on 82% of the total market Mkt shares source: Ania for 2000 and Prometeia estimates for 2003

46 Ras expected development in P+C

47 P+C cycle by line of business Motor claims frequency decrease will level off, but market will benefit from structural changes in regulations. Product offer will become more segmented SMIs will record positive growth thanks to higher market share and a growing market segment Commercial lines could possibly benefit from an anti-cycle after experiencing strong competition in the last 3 years General TPL, still mis-priced, will record even stronger growth Large corporate market, after two years of strong improvement, is turning soft especially in property

48 (1) Net of reinsurance business, including other technical items, calcualted on Net Earned premium 3-year plan: further technical improvement Combined ratio - % (1) Maintenance of quality portfolio in Motor and product innovation Growth in SMIs supported by new product launches and marketing Important improvement in Public entities area as result of the General TPL reform -780 bp E -300 bp E

49 Ras differentiated growth strategy Direct business - gross of reinsurance, including IBNR 2003E Claims ratio 2003/2006 Technical trend 2003/2006 Growth Retail and Motor 63.8% = Focus on growth SMIs 66.0% ++ Commercial Lines Large 71.2% +/= Corporate 65.9% - = Focus on portfolio reform Public entities 99.3% +++

50 (1) Net of reinsurance business, including other technical items, calculated on Net Earned premium Motor: combined ratio development Direct business - net of reinsurance Combined Ratio - % (1) Solid reserves and portfolio quality will sustain good claim ratio level even in a soft market G&A expenses and acquisition costs reduction will further increase efficiency E 2006E

51 SMIs: important growth area Mln euro GPW Action to push growth % +6% % +8% E 2006 Standardised and bundled product offer Integrated product platform to cover different client segment (large, medium, small) Offer enhancement with products targeting different client sub-segments CAGR

52 General TPL reform Mln euro - direct business - gross of reinsurance Other 220 Non leading coinsurance 42% Hospitals and Public entities Claims ratio % 238% Policies reformed on total 89% 84% under reform 58% Others with negative performance 233% 72% 2003

53 General TPL: combined ratio improvement Claims reported Accident year 48,500 39,113-51% 23, E 1 IBNR 28,915 23,508 17,367-40% Group Combined ratio - % (2) E E /2001 growth (1) Estimate based on November 2003 (2) Net of reinsurance business, including other technical items, calculated on NEP

54 Conclusion Ras unique client-segment organisation allows the implementation of a differentiated market strategy in P+C This approach enables Ras to achieve strict underwriting controls, good portfolio quality and strong improvements in technical results Ras is therefore in a solid position to face a softening in the market and to reach its 2006 targets

55 Agents distribution power: an effective contribution to 3-y targets Claudia Motta Capital Market Day Milan, 3 February 2004

56 Agent channel contribution to enhance NBV

57 Ras current positioning Agents Ras has the second largest agent network in, counting for almost 60% of Group Life New Business value In the last few years, Ras has successfully developed a unique multi-business distribution model in the agency network, transforming a group of sales people into a service oriented center The extensive reorganisation, started in 1998, has brought important results in terms of volumes and cultural change Other players have begun to replicate the model, but what makes Ras really unique is its integrated approach and the first mover advantage

58 Ras Agent distribution capacity Sales-force capacity 1,200 agencies: 880 of Ras and 320 of Allianz Subalpina agencies 3,500 subagents working to expand customer base 2,700 Life specialists focused on life annual premium production 763 Financial advisors working in 250 Rasbank Points inside the agencies to cross sell on clients of agents Ras sales-force can exploit a large client base, amounting to more than 4 million people

59 Agencies reorganization Ras spa Number of Agencies 1, Sizeable consolidation achieved through the merger of smaller agencies into the more structured ones, in order to increase the critical mass needed to support new demanding required investments

60 Agencies re-qualification Ras spa - Number of Agencies 880 Current situation Action on Top agencies Top High Potential Small /Medium size 25% 30% 45% 6.0 mln euro avg portfolio 80% of total PFS inflows 60% of total Life new premiums 4.0 avg portfolio 20% of PFS inflows 20% of Life new premiums 2.0 avg portfolio Strengthening of sales-force structure with the introduction of 763 FAs Dedicated product development 2003

61 (1) Administration, Claims, IT systems, Marketing and Control Ras Top Agencies unique model Agency characteristics Entrepreneurial organization, structured to co-ordinate model complexity Service model based on an integrated approach towards customers High specialisation of sales people to insure high advice quality Full product range to cover all client needs (from protection to financial) Organizational structure An Example Personal lines specialists P+C lines Staff (1) Agent Team Manager Life consultants Life recurrent Typical of a Top agency FAs Financial Services

62 Ras central support for model development Important investments in technology: a single on line platform (web-based) for continuous process alignment one client database paperless process for all Lobs Enhancement of marketing intelligence: about 60 people dedicated to improve client segmentation model and launch marketing initiatives 275 people in field to address, monitor and support agencies in achieving Group targets Although other players have some key elements, what makes Ras successful is their full integration

63 Agent Channel Results Mln Euro - CAGR PFS +35% Net Inflows Life +15% GPW (1) P+C +6% GPW ,524 2,109 2, (1) Retail only

64 Ras Achievements in cross-selling (2003 number of clients) Penetration Rate on 2.4 million customers (1) Life or PFS (982,000) Life (769,000) PFS (327,000) Banking (183,000) 42% 34% 31% 33% 9% 14% 4% 8% (1) On Group clients that bought more than just one Motor policy

65 Agent channel outlook

66 Ras Agent outlook Market outlook Traditional agencies may face a difficult period with Motor tariffs locked to inflation Only organized and structured agencies will be truly competitive in terms of service vs. other channels Client relationship and service quality will continue to be key success factors Ras targets Develop distribution capacity in geographical areas where Ras is under-represented Further strengthen sales-force with particular focus on high potential segment Enhance products/services offer Further increase client penetration with targeted marketing initiatives

67 Ras Agency network reorganization 2003 data Total Agencies High Potential Top High Potential Small /Medium size 25% 30% 45% Investment to raise service level to top Agency best practice Introduction of 2,000 new Life Specialists Recruitment / training of 300 new FAs to leverage existing clients Expected productivity 2006/2003 Cagr per agency (+34%) compared with top agencies (+10%) 2003

68 Enhance product/service offer Improve knowledge of client behaviour and characteristics Implement a new service model Implement a highly detailed client segmentation model Product offer more closely targeted to specific client segment Enhance service level thanks to a new service approach integrating also Wealth planning for the client Develop a consistent communications strategy for each client segment Deliver consistently with Ras brand claim: builders certainty

69 Marketing initiatives GROWTH POTENTIAL High propensity to buy a further product or service from the Group (protection, pension or financial product) Low propensity 1,7 million Targeted marketing initiatives Communication tone to match client standing Offer in line with the client profile MASS MARKET AFFLUENT+HNWI CLIENT ESTIMATED WEALTH

70 Conclusions Agents are a key high value channel in the 3- year plan Growth can be fostered through agency upgrading (focus on high potential segment ) Cultural change is challenging but Ras is in the ideal position to exploit its first-mover advantage

71 Life: Double digit growth and new product mix, shaping future profitability Alessandro Scarfò Capital Market Day Milan, 3 February 2004

72 Ras achievements

73 Market development and Ras achievements Market development Ras achievements The market has recorded important growth, but concentrated on investment products with a short duration All channels have performed well, but with significant differences among players Low interest rates have squeezed in-force business and new business margins Ras has almost doubled its market share in the last few years, thanks to its multichannel strategy Ras has grown significantly in all channels thanks to its differentiated approach to channel management Ras has enhanced overall value, through active management of in-force business (ALM) and product innovation

74 Ras life market share Mkt share Top five players (1) Var. 11.6% 11.8% Generali excl. Alleanza RAS 20.3% 6.8% 13.9% 11.6% % S.Paolo IMI 3.3% 6.6% 3.3 Alleanza 7.2% 6.3% E Banca Fideuram 2.0% 5.6% 3.6 (1) source: Insurance groups - ANIA

75 Ras Channel Performance - NB Volumes Mln Euro Bancassurance CAGR+29% Agents CAGR+25% FAs CAGR+81% 3,125 4,268 5, Main growth drivers Product innovation and alliance management Agency requalification and cross-selling action Growth in FAs numbers and service quality improvement

76 Agents and FAs new business volumes Mln euro - Direct Business YoY New products contribution 51% % +7% YoY +121% +27% Recurrent Premium Single Premium % % Q02 4Q03

77 Irish Life Factory Mln Euro New Irish company launched in April 2003 Low operating costs (outsourced platform) and important fiscal benefits High flexibility, due to less restrictive regulation than in and a faster authorisation process New Business Volumes Equal to 87% of FAs single premium production F A 30 Jan. 04

78 Life outlook

79 Market Life outlook and Ras targets Mln Euro Italian Life market will continue to record important growth Clients are gradually taking more risks, but are still reluctant to make a long-term commitment Margins will suffer from competition in the investments segment (single premium short duration) Top networks will be able to readdress new business towards high value products Ras targets Strong value growth +71% E New Business Value (1) (1) Based on 2002 EV assumptions.

80 Ras Levers to enhance NBV Volume growth Margins defence Bancassurance new business volumes expected to grow at cagr 3% Proprietary channels expected to record double-digit growth rate The launch of an innovative value proposition will ensure stable and appealing margins, increasing access to richest segments (savings, pension and risk coverage) A new generation of product, more flexible and innovative, will be designed to support the new service model Poor differentiation opportunity for investments segment

81 (1) Source Prometeia Agents and FAs: Volume growth New business volumes 06/03 CAGR - % Increase of salesforce productivity 7-8 Upgrade of 2nd agency tier Leverage existing distribution power Increase Financial Advisors numbers, focusing recruitment on high quality FAs recruitment Continue agency requalification, applying Top agents best practices to high potential agencies Mkt growth Exp. (1) 2006E

82 New service model Customer attitudes: Uncertainty over the long term, due to unclear role of Public Administration in welfare issues Lack of structured approach to family s welfare Low sensibility to personal accident needs Wealth planning approach Integrated approach to client needs (pension+risk+investments) Product solutions develop to match the main client need: maintain standard of life over the long term Customer relationship with FAs and Agents reinforced by dynamic management of client position throughout life time New generation of product to support the new service model

83 (1) minimum rate guaranteed at the end of the contract, w/o yearly consolidation New product range to support Wealth Planning Pension Protection Flexible annual premium products combining traditional with unit linked component Annual premium traditional products with the new non-cliquet option (1) Products bundling personal risk protection and savings April 04 April 04 Product to cover dread disease 2nd Half 04 Investments Products based on total return philosophy, backed with a Multi-manager approach Single premium traditional products with the new non-cliquet option Investment products backed with hedge funds and Private equity funds 2nd Half 04

84 Conclusion In the last 3 years Ras has worked to develop its current multi-channel strategy Having achieved a strong market positioning, Ras can now focus its growth on the higher value segments Product innovation and services approach to clients will be further levers to reach 3-year plan new business targets

85 Direct channel: Critical mass in place, now quick growth can be translated into attractive returns Alessandro Santoliquido Capital Market Day Milan, 3 February 2004

86 Direct channel in and Genialloyd positioning

87 Genialloyd: a strategic channel for Ras Direct channel remains a high growth segment and allows the Group to access a new client segment Genialloyd is the Group innovation lab, and develops best practices to be applied within the Group Genialloyd is the business unit with the highest potential return Evolution of Genialloyd First stage - less than 250,000 clients: develop from start-up to break-even Second stage - from 250,000 to 700,000 : Deliver returns through important growth rates Third stage - over 700,000: Exploit possible evolution of direct channel and continue to deliver on risk capital in P+C returns Beyond 2006

88 Direct channel potential 2000 data - Motor business Direct channel mkt shares in Europe Expected evolution in Start-up Development Consolidation 46% 38% 38% 38% 8-10% 15-20% 35 19% France UK Holland Spain Germany % E 2015E Phone/ internet Direct branches Banks Source:Am Best, Financial statements, McKinsey, Genialloyd estimate

89 Genialloyd positioning 2002 data - Motor Mkt shares on direct channel 28% Growth rate ranking Highest growth company in 2002 (also likely in 2003) 26% 20% Genialloyd 60% 17% Linear 45% 54% in % Zuritel Direct Line (1) Genertel 22% 40% 35% DirectLine Genertel Genialloyd Linear Zuritel Avg. = 39% Source: Financial statements and Politecnico di Milano data (1) Direct line + Royal International

90 Genialloyd leadership in Internet 2002 data Ranking first in Internet channel among insurers Total Direct Channel in 100% = 135 mln Euro 31% Genialloyd Leader in e- commerce in including all sectors E-commerce turnover in 100%= 700 mln Euro 6% Genialloyd Source: Politecnico di Milano

91 First stage: investments in growth Mln euro - Direct Business Net Investments from RAS: 58 mln euro since 1996 GPW CAGR % 170 # of policies (/000) CAGR % % +60% +54% Internet YoY Growth rate % 34% 37% 27% % +51% +37%

92 First stage: profitability achieved Strong improvement of combined ratio, thanks to economies of scale and better underwriting Cash flows: last capital injection in 2001 Positive net earnings already achieved in 2002 (one year ahead of plan) Combined ratio and cost ratio % E Net profit mln euro

93 Genialloyd outlook

94 Genialloyd new phase: delivering results Mln euro - Direct Business Levers to increase profitability: Investment in growth to push volumes Expected Volumes CAGR 03/ % Leverage cost structure to reduce combined ratio Highly selective portfolio Client-centric company 2003E Combined ratio 03/ E

95 Cost structure leverage Economies of Scale of direct business in Expense ratio 45% Genialloyd 2003 expense ratio 19.1% Traditional channel 30% 25% 20% Direct channel competitive advantage 15% 100, , , ,000 Number of Policies 700,000

96 Lever to reduce cost ratio % on earned premiums New contracts Renewals Avg Cost ratio Variable costs on new contracts Variable costs on renewals

97 Portfolio selection Higher flexibility to change tariffs, better underwriting information to achieve more effective pricing strategy compared with traditional companies (i.e. information on price elasticity) Highly differentiated tariffs - not necessarily cheaper - with a flexible and customised offer (combining different risk coverage) 84% of policies in Northern Tight underwriting control process, totally automated

98 Source: Databank 2003 Strong client orientation High-quality client base with a clear propensity to use technology High client retention rate (88% of clients renew contract) Highest level of automation in processes/services Highly motivated and skilled personnel and sophisticated quantitative skills 2003 Databank survey - Overall Customer Satisfaction Index (CSI) Genialloyd Linear Genertel Direct Line 86.7 Avg traditional company

99 Genialloyd option value for the future Direct Channel in is still underdeveloped Client behaviour in motor insurance market still very passive: 80% don t ask for a quotation when policy expires Potential cross-selling is still to be exploited Beyond the actual Genialloyd value there is also an option value for the future