Ralph Mucerino Chief Distribution Officer Senior Vice President Global Commercial Insurance June 18, 2012 Strategies for Global Growth IIS 2012
Ralph MucerinoChief Distribution OfficerSenior Vice President Global Commercial Insurance
June 18, 2012
Strategies for Global GrowthIIS 2012
2
Macro GDP Trends
Source: Bain & Company: The Great Eight Trillion Dollar Trends. International Monetary Fund; Bain MTG Analysis, 2011Note: All values shown in 2010 US dollars at fixed exchange rates. Per Bain report, world GDP expected to be ~90T in 2020
GDP Growth Driver2010–2020 Contribution to Global GDP Growth
(Total = $27T)
Next BillionConsumers
Energy, Natural Resources, Commodities, Infrastructure
Social Infrastructure / Human Capital
Other
AdvancedEconomies
Dev
elo
pin
g C
ou
ntr
ies
Nearly 60% of GDP growth over the next decade will come from developing world macro-drivers and by 2020, developing economies will account for more than 50%
of world GDP
$11
$1
$2
$3
$10
$0 $5 $10 $15
3
The next billion consumers – Consumer, SME, DM
0
20
40
60
80
100%
Asia-Pacific
Indonesia
India
China
Other APAC
Philippines
Vietnam
971M
Non-APAC
USA
Ukraine
Brazil
Pakistan
Egypt
Other MidEast
All
other
Other
LatAm
Nigeria
Mexico
292M
Total =
1.3B
1.3 bn new consumers (HH income > $5K) generated in this decade
Real GDP per capita progression(USD thousands)
$11
$4 $3 $1
$32
$15
$9 $5
$3
$39
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Brazil China Indonesia India Select Advanced
Economies
2010
2020
3%CAGR
8%CAGR 5%
CAGR 12%CAGR
2%CAGR
(1)
F
In the coming decade 37% of global demand will be driven by consumer spending and the new middle class in developing markets
Source: Euromonitor, Bain MTG Analysis 2011. Notes: (1) Simple average of US, Japan, and UK
4
Global Growth Opportunity
Source: 2010 GDP and 2011–2020 Non-Life Premium CAGR per Business Monitor International data and includes health insurance premiums. 2010 Non-Life Penetration per AIG Global Economics and is consumer lines and commercial lines premiums as a percentage of GDP
Size denotes $1T in 2010 GDP Chartis Growth Countries
Unmet Insurance Needs
Gro
wth
Po
tential
2010 Non-Life Insurance Penetration
Brazil
China Indonesia
Mexico
Turkey
Colombia
UAE
Vietnam
India
U.S.
UK
JapanGermany
France
(5%)
0%
5%
10%
15%
20%
25%
0% 2% 4% 6% 8%
Asia and Latin America represent the highest growth opportunity areas over the coming decade, based on high GDP growth and low insurance penetration
No
n-L
ife P
rem
ium
Gro
wth
(C
AG
R 2
011
– 2
02
0)
5
Brazil
Brazil
Brazil
Brazil
China
China Brazil
China Colombia
Colombia
Indonesia
Indonesia Mexico
Mexico
Mexico
Turkey
Turkey
Turkey
0%
10%
20%
30%
40%
50%
60%
0% 20% 40% 60% 80% 100%
2016
RAP
Spr
ead
2011 - 2016 NPW CAGR
Key Growth Economies Profit DriversRelative Growth vs Profitability – By Country and By Line
A&H TraditionalCommercial
SpecialtyCommercial
Auto ConsumerAll Other
= $100mm of 2016 NPW
(1)
Notes: (1) Currently, foreign insurers are excluded from the Chinese auto market; therefore, 2011-2016 NPW CAGR is not meaningful. For illustrative purposes, 2011 – 2016 NPW CAGR is set to 100%. Internal forecasts of MTPL rule change in 4Q 2012 with auto premiums written starting 1Q 2013 and growing to $156 mm of 2016 NPW.
*Products with < $50 mm 2016 NPW excluded from Chart*
(1)
Incr
easi
ng
Pro
fita
bili
ty (
2016
)
5-Year Premium Growth
Chartis Products Strategy
7
$35$44
$59
$79
$97
$119
$144
$171
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2008 2009 2010 2011P 2012P 2013P 2014P 2015P
US
$Bn
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
% o
f G
DP
China P&C Insurance Market GPW(3)
(1) 2010 CIRC Year Book for 2009 data of auto and non-auto breakdown; 2010 FY data not available until CYE 2011 (2) CIRC statistics 2010 (3) Historical GPW from CIRC statistics; projected GPW by AIG Global Economics (4) CIRC 2010 Report on Insurance Intermediary Market; Definitions: Sideline agent-part-time agent not involved in the insurance sales (e.g. banks, travel, post-office, railway, auto dealer); Captive Agent-company employees; Corporate Agent-professional insurance agent company
China is a heavily concentrated auto (72%) dominated insurance market growing rapidly due to internal consumption, exports and infrastructure, with minimal foreign presence (~1%). It relies heavily on agency distribution and is highly regulated
China P&C Insurance Market Overview
20
P&C GPW Penetration
2009 Total GPW: US$44Bn
30%
8
Key strategies have been built to meet the market opportunities
Chartis China Strategic Initiatives
Opportunities:
485 million internet users in 2011 (1)
Travel market: 15% CAGR
Auto market size: 150 million vehicles by 2015 (2)
Middle class: 700 million by 2020
(1) Source: China 2011, June CNNIC report. (2) Source: Ministry of Industry and Information Technology of China. (3) Source: China Ministry of Commerce
In 2010, net FDI inflows US$106 billion with a growth rate of 17.4%(2)
ODI $59 billion USD in 2010 (3)
10
Brazil’s insurance market is maturing and more balanced than other SBE countries due to commodities and infrastructure. It is heavily dominated by banking groups, often partnering with foreign global insurance groups, who distribute via bank and agency channels
Brazil Overview
4 4 4 5 5 6 7 7 8 9 10 7 7 8 9 11 12 13 15 17 20
22
7 9 1111
1215
1719
2224
27
19 21 23
26 28
33 37
42 47
53
59
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
US$ billion
Brazilian Insurance Market
Consumer Lines (- Auto) Auto Comercial Lines
CAGR = 11,6 %
CAGR = 12.4 %
Brazilian Insurance Market* Revenue – 41% of the Market is Auto
*Market excludes pensions
Source: Susep. *Consumer + Commercial Lines, 7/10 – 6/11
(Ex-Auto) Commercial Lines
11
Opportunities:
Chartis Brazil Strategic Initiatives
Mobile phone users: 110M
Internet users: 74M
2010 GDP Growth: 6.5%
Over $1T planned investments to 2020
Population of ~191M people and middle class ~50% by 2015
Host of 2014 World Cup
Host of 2016 Olympic Games
Source: eMarketers and IBGE 2010
13
3,743 3,701 3,960 4,138 4,324 4,519 4,722 4,935
2,825
6,477
3,5244,017
4,5795,220
5,9516,784
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2008 2009 2010 2011 P 2012 P 2013 P 2014 P 2015 P
US
D M
illi
on
s
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
Pen
etra
tio
n R
ate
% G
DP
Auto Non Auto Penetration
$11,719$10,674
$9,739$8,904
$8,155$7,484
$10,178
$6,568
CAGR 2008-2010 6.7%
CAGR 2011-2015 9.5%
Mexico P&C Insurance Market GPW (USD 000’s)(1)
Mexico P&C Insurance Market Overview
Source: Insurance Market from AMIS (Asociación Mexicana de Instituciones de Seguros 2010). GDP figures from World Bank. Distribution Channel breakdown per AXCO 2011 Mexico non-life report. (1) Includes one-time Pemex contract
Mexico is a fragmented auto (53%) dominated insurance market, with close links and correlation to the US GDP, with strong foreign and bank presence which relies heavily on brokers and agents
14
Chartis Mexico Strategic Initiatives
Total insurance market is $20Bn (P&C $7.4Bn) Expected to grow 4% annually
Highly effective and well regarded local Regulator
GDP growth expected of 5% on 2011 and 4.5% on 2012
Growing Middle Class (31% of total population of 112.3)
Government improving infrastructure making Mexico more attractive for foreign direct investment
10 year Internet user growth 600% (35M on 2010)
Opportunities: