Strategies for Global Growth
IIS 2012
Ralph Mucerino
Chief Distribution Officer
Senior Vice President
Global Commercial Insurance
June 18, 2012
Macro GDP Trends
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
2010–2020 Contribution to Global GDP Growth
(Total = $27T)
GDP Growth Driver
$10
Developing Countries
Next Billion
Consumers
Energy, Natural Resources,
Commodities, Infrastructure
Social Infrastructure /
Human Capital
$3
$2
Other
$1
Advanced
Economies
$11
$0
$5
$10
$15
Source: Bain & Company: The Great Eight Trillion Dollar Trends. International Monetary Fund; Bain MTG Analysis, 2011
Note: All values shown in 2010 US dollars at fixed exchange rates. Per Bain report, world GDP expected to be ~90T in 2020
2
The next billion consumers – Consumer, SME, DM
In the coming decade 37% of global demand will be driven by consumer spending
and the new middle class in developing markets
1.3 bn new consumers (HH income > $5K)
generated in this decade
Real GDP per capita progression
(USD thousands)
2%
CAGR
$45
$40
2010 F
$35
2020
$30
$25
$32
3%
CAGR
$20
$15
$39
$15
8%
CAGR
$11
$9
$10
$4
$5
5%
CAGR
$3
12%
CAGR
$5
$0
$3
$1
(1)
Brazil
Source: Euromonitor, Bain MTG Analysis 2011. Notes: (1) Simple average of US, Japan, and UK
China
Indonesia
India
Select
Advanced
Economies
3
Global Growth Opportunity
Asia and Latin America represent the highest growth opportunity areas over the
coming decade, based on high GDP growth and low insurance penetration
Unmet Insurance Needs
Non-Life Premium Growth (CAGR 2011 – 2020)
25%
Vietnam
20%
Turkey
Brazil Colombia
10%
UAE
U.S.
Mexico
UK
5%
France
Germany
Japan
0%
8%
(5%)
Indonesia
China
15%
Growth Potential
India
6%
4%
2%
0%
2010 Non-Life Insurance Penetration
Size denotes $1T in 2010 GDP
Chartis Growth Countries
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
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Key Growth Economies Profit Drivers
Relative Growth vs Profitability – By Country and By Line
60%
= $100mm of 2016 NPW
*Products with < $50 mm 2016 NPW excluded from Chart*
50%
Indonesia
Chartis Products Strategy
A&H
Traditional
Commercial
Specialty
Commercial
(1)
Auto
Consumer
All Other
Brazil
40%
Increasing Profitability (2016)
2016 RAP Spread
Mexico
Turkey
30%
ChinaBrazil
Brazil
Turkey
Colombia
20%
Mexico
Brazil
Indonesia
Colombia
(1)
China
Mexico
Brazil
10%
China
Turkey
0%
0%
20%
40%
60%
80%
100%
5-Year
Premium
Growth
2011
- 2016 NPW
CAGR
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.
5
China
6
China P&C Insurance Market Overview
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
2009 Total GPW: US$44Bn
China P&C Insurance Market GPW(3)
$160
$144
$140
$119
US$Bn
$120
$97
$100
$60
$40
$44
0.4%
0.2%
$20
$0
1.0%
0.6%
$59
$35
1.2%
0.8%
$79
$80
1.4%
% of GDP
$171
$180
20
2008
0.0%
2009
2010
P&C GPW
2011P 2012P 2013P 2014P 2015P
Penetration
(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
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Chartis China Strategic Initiatives
Key strategies have been built to meet the market opportunities
Opportunities:
 485 million internet users in 2011 (1)
 Middle class: 700 million by 2020
 Auto market size: 150 million vehicles by 2015 (2)
 Travel market: 15% CAGR
 In 2010, net FDI inflows US$106 billion with a growth rate
of 17.4%(2)
 ODI $59 billion USD in 2010 (3)
(1) Source: China 2011, June CNNIC report. (2) Source: Ministry of Industry and Information Technology of China. (3) Source: China Ministry of
Commerce
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Brazil
9
Brazil Overview
Brazil’s insurance market is maturing and more balanced than other SBE countries
due to commodities and infrastructure. It is heavily dominated by banking groups,
often partnering with foreign global insurance groups, who distribute via bank and
agency channels
Brazilian
Brazilian Insurance
Market*Insurance
Revenue – Market
41% of the Market is Auto
Consumer Lines (Auto)
(Ex-Auto)
Auto
Comercial Lines
Commercial
Lines
US$ billion
CAGR = 12.4 %
59
53
47
CAGR = 11,6 %
42
27
37
24
33
19
21
23
26
11
7
9
11
7
4
7
4
8
9
4
2006
2007
2008
22
28
12
15
17
19
17
20
22
13
15
11
12
5
5
6
7
7
8
9
10
2009
2010
2011
2012
2013
2014
2015
2016
*Market excludes pensions
Source: Susep. *Consumer + Commercial Lines, 7/10 – 6/11
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Chartis Brazil Strategic Initiatives
Opportunities:
 Mobile phone users: 110M
 Internet users: 74M
 2010 GDP Growth: 6.5%
 Host of 2016 Olympic Games
 Host of 2014 World Cup
 Over $1T planned investments to 2020
 Population of ~191M people and middle class ~50% by 2015
Source: eMarketers and IBGE 2010
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Mexico
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Mexico P&C Insurance Market Overview
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
Mexico P&C Insurance Market GPW (USD 000’s)(1)
CAGR 2008-2010
6.7%
1.4%
CAGR 2011-2015
9.5%
$11,719
12,000
$10,674
$10,178
USD Millions
10,000
8,000
$8,904
$7,484
$6,568
3,524
2,825
1.0%
$8,155
6,784
6,477
6,000
$9,739
4,579
4,017
5,220
5,951
0.8%
0.6%
4,000
2,000
1.2%
0.4%
3,701
3,960
4,138
4,324
4,519
4,722
4,935
3,743
2008
2009
2010
2011 P
2012 P
2013 P
2014 P
2015 P
-
Penetration Rate % GDP
14,000
0.2%
0.0%
Auto
Non Auto
Penetration
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
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Chartis Mexico Strategic Initiatives
Opportunities:
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)
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