AEB Business Quarterly
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Dear Readers,
I would like to welcome you to the Winter 2012–2013 edition of the AEB Business Quarterly, which is devoted to the Insurance and Pensions industry. Th e Russian insurance market is one of the fastest growing in the world. It has expanded rapidly over the past few years on the back of regulatory developments, government support, economic growth and rising income levels. According to industry researchers, it will maintain its rate of growth for the foreseeable future. Although there might be a limited demand for insurance products in the short term because of the continuing global economic crisis, the market has strong growth potential in the medium term as real incomes recover. Th e Top 10 players in the Russian market are expected to concentrate market share even further, continuing a trend which started to gain momentum some time ago. Executives attribute headline growth mainly to general economic expansion, which may not be too strong in the near future as Russia’s GDP is forecast to increase by less than 4%. As of 31 May, 546 organizations were registered in the Uniform State Register of Insurance Entities. But as there were 607 companies on the register last year, this represents a reduction of almost 10%. Th e top 10 insurance companies earned 64% of the market's premiums in Q1 2012. Th e gross volume of insurance benefi ts in Q1 2012 came to £1.5 bn. Despite economic uncertainty, the insurance and pensions industry in Russia has growth potential and we are looking enthusiastically to the future. Th is edition of AEB Business Quarterly will describe the Insurance and Pensions industries in Russia in more detail. Discus- sion of topics like reinsurance, pensions, voluntary medical insurance, D&O and motor insurance will provide you with a clear insight into these aspects of Russia’s insurance sector.
I wish you all the best ahead!
Dr. Frank Schauff Chief Executive Offi cer Th e Association of European Businesses
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AEB BUSINESS QUARTERLY • Winter 2012 2
AEB BUSINESS QUARTERLY, Winter 2012 CEO Letter Introductory words from Dr. Frank Schauff , Chief Executive Offi cer of the Association of European Businesses 1 The Russian Insurance and Pensions Market Introduction and General Overview The Russian Insurance and Pensions Market: Russia’s Pensions Industry, p. 13 an introduction Alexander Lorenz, Chairman of the Council, Raiff eisen Pension Fund, Chairman of the AEB Insurance and Pensions Committee 4 Insurance in Russia 2012: legal insight into facts and trends Leonid Zubarev, Partner; Eugenia Bantikova, Associate, CMS 6 Russian and foreign models of direct insurance: similarities and diff erences Maria Malkovskaya, General Director, Intouch Insurance 9 Reinsurance as a part of the Russian insurance market today Dr. Capitolina Tourbina, Director of Russia Representative offi ce,
General Reinsurance AG, a Berkshire Hathaway company 11 Partnership for Modernisation Conference , pg. 27
Russia's Pensions Industry: quo vadis? Alexander Lorenz, Chairman of the Council, Raiff eisen Pension Fund, Chairman of the AEB Insurance and Pensions Committee 13 The VMI market in Russia: trends, problems and prospects Hakan Danielsson, CEO of OJSC IC Allianz 15 Changes in the vehicle insurance market HR isues and trends in the insurance industry, p. 25 Malyarenko Daria, Senior Seсialist, Corporate Motor Insurance Departament, Rosgosstrakh Ltd 16 D&O evolution: lessons to learn Andrey Panov, Vice-president, CJSC Chartis 18 Life: ready, steady… go! Mikhail Sosnin, First Vice President, MetLife Alico Russia 20 The middle market segment in Russia: an insurance broker’s perspective Alexander Protoklitov, Country Manager, MAI Insurance Brokers 22 HR issues and trends in the insurance industry Changes in the vehicle insurance market, pg. 16 Elena Novoselova, Director, Coleman Services St. Petersburg 25
AEB BUSINESS QUARTERLY • Winter 2012 3
Association of European Businesses
Board Bantsekina, Olga (Deputy Chairman) Becker, Christian Hartmann, Reiner (Chairman) Hellevig, Jon Ketting, Jeroen Munnings, Roger (First Deputy Chairman) Pegorier, Philippe Sakuler, Gerald (Deputy Chairman, Treasurer) Vertanen, Vesa
IV International Conference “Customs and business: international and regional aspects of cooperation – 2012”, pg. 29 Council of National Representation Austria – Dietmar Fellner Belgium – Tikhon Evdokimov AEB Updates Denmark – Aage V. Nielsen Networking 27 France – Luc Charreyre Germany – Michael Harms Committee Updates 29 Greece – Stefanos Vafeidis Member News 32 Hungary – Sandor Rethi Appointments 35 Iceland – Ingolfur Skulason Italy – Costante Marengo New Members 37 Ireland – Declan O’Sullivan Lithuania – Julius Salenekas Montenegro – Luka Nikčević Netherlands – Lodewijk Schlingemann Poland – Karolina Skrobotowicz Spain – Alina Simonyan Sweden – Frederik Svensson Switzerland – Michael Roedter Turkey – Ali Tunc Can UK – Don Scott (Chairman)
Auditing Commission Koschier Marco (Chairman) Roman Semiletov Gerard Uijtendaal
AEB CEO Dr. Frank Schauff Briefi ng by Michel Barnier, European Commissioner for Internal Market and Services, pg. 28
Publication name/Наименование издания: AEB Business Quarterly Cost/Цена: Distributed free of charge/Бесплатно All copyrighted images are taken from Katerina Grekova, magazine/ Ежеквартальное деловое издание АССОЦИАЦИИ Publisher’s address/Адрес издателя, редакции: www.shutterstock.com and www.dreamstime.com/Фотографии: ЕВРОПЕЙСКОГО БИЗНЕСА 16, bld. 3, Krasnoproletarskaya str.,, 127473, Moscow, Russia/ Екатерина Грекова, www.shutterstock.com, www.dreamstime.com Published by/Учредитель: Non-profi t making partnership Россия, 127473, г. Москва, ул. Краснопролетарская, д. 16, стр. 3 The opinions and comments expressed here are those of the "Association of European Businesses"/Некоммерческое партнерство Printed by/Типография: MEDIACOM, Stolovy per. 6, 121069, Moscow, authors and do not necessarily refl ect those of the Non-profi t "АССОЦИАЦИЯ ЕВРОПЕЙСКОГО БИЗНЕСА" Russia/«МЕДИАКОМ», Россия, 121069, Москва, Столовый пер., д. 6 Chief Editor/Главный редактор: J. Bendel/Бендель Ю. Э. The AEB Business Quarterly is registered with Rosohrancultura, making partnership "Association of European Businesses"/ Publication volume and number/Номер выпуска: 4 (27), 2012 Certifi cate registration ПИ № ФС77-24457/СМИ " Ежеквартальное Мнения/комментарии авторов могут не совпадать с мнениями/ Released date/Дата выхода в свет: December 17, 2012/17 декабря 2012 г. издание АЕБ" Зарегистрировано в Росохранкультуре, свидетельство комментариями учредителя публикации, Некоммерческого Circulation/Тираж: 16,000 copies /16 000 экз. о регистрации ПИ № ФС77-24457 партнерства "АССОЦИАЦИЯ ЕВРОПЕЙСКОГО БИЗНЕСА"
AEB BUSINESS QUARTERLY • Winter 2012 4 THE RUSSIAN INSURANCE AND PENSIONS MARKET: AN INTRODUCTION Alexander Lorenz, Chairman of the Council, Raiff eisen Pension Fund, Chairman of the AEB Insurance and Pensions Committee like to take this opportunity to thank reform the operating and regulatory everyone who has contributed to this environment for the Russian insurance magazine: the authors, the AEB publish- sector. Th ese initiatives range from a ing team and also the advertisers. streamlining of the process of online insurance (driven by the Russian Min- The insurance market istry of Finance) to a review of the law First, let’s have a look at the overall on insurance, and making insurance market statistics. According to the Rus- fraud a criminal off ence. Over time sian insurance regulatory authority, the these initiatives should have a positive market trends are as follows for the eff ect on the market. In what follows, Dear readers, past 2 years: we look at these matters in more detail Both the life and non-life insurance (please see the CMS article on page 6). As there is not much English language sectors showed strong growth rates content on the Russian insurance and from 2010 to 2012 on the back of a New distribution channels pension sectors, we hope that you will still-expanding Russian economy and Th e distribution landscape for insur- fi nd this issue of the AEB quarterly a increasing penetration/use of insur- ance products remains highly geared useful guide to the current status of ance. As such, penetration of insurance towards third-party distribution part- these important industries. in the economy, as a proportion of GDP, ners such as banks, car-dealers and Th e last quarterly on insurance and is continuously increasing, although it travel agents. Under these arrange- pensions was published only two years will still take years before this indicator ments, insurance companies are often ago, in the summer of 2010, a period will be comparable to western markets. in a weak position, which allows the marked by heightened uncertainty, Currently the penetration rate for Rus- distribution partner to charge excessive especially in fi nancial services. Since sia stands at 1.2%, compared to an EU commissions. Th is will in future lead to then, many new developments have average of 8.2%. insurers trying to develop distribution taken place in the Russian insurance In what follows I would like to high- models that incur lower commissions and pension sectors. As in the last issue, light the main trends for the market so as to break the dependence on car we have again tried to give you a good going forward. dealers, etc. A key role here could be overview of the current insurance, rein- played by the internet. With internet surance, insurance brokerage and pen- New legislation penetration in Russia growing strongly sion industries in Russia, with articles by Th e Russian government is currently (Russia now has more users than any respected industry experts. I would also introducing a number of initiatives to European nation) the internet is becom- ing much more important in terms of Insurance premium (H1 2010 – H1 2012, mln RUB) service functions and distribution.
400000 Total insurance Consolidation and possible state Non Life insurance dominance
Life insurance 412423
390383 A major market consolidation is tak- 300000 ing place in insurance, driven by new
333528 capital requirements, depleted bal- 318807
285778 ance sheets and intense competition. 200000 276825 Th is is leading to an exit of weaker +23% +23% and technologically less effi cient play- +17% +15% ers, and a fall in the number of insur- 100000 ers from the current total of 480. Th e 14721 8953 main benefi ciaries of this trend are the +64% +50% 22040 top 30 players, who continue to build 0 market share. Also, in the future we H1 2010 H1 2011 H1 2012 expect state-owned entities to play a Sources: FCSM, research of Raiff eisen Life much greater role. Russian state-related
AEB BUSINESS QUARTERLY • Winter 2012 5
Life Insurance top player premium dynamics GWP, H1 2012, Hl 2011, mln RUB
3000
2500
2000
1500
1000
500 0 ALICO ROSGOSSTRAKH ZHIZN RUSSKIY STANDART STRAKHOVANIE RENESSANS ZHIZN ALFA STRAKHOVANIE- ZHIZN SOGAZ-ZHIZN ALLIANZ ZHIZN ROSNO) (incl. SogeCaP CIV LIFE RAIFFEISEN- LIFE GENERALI-PPF Chulpan-Jizn Ingosstrah- Zhizn ROSSIJA DISKONT H1 2011 1782 1992 1229 350 1505 1415 896 941 754 519 606 405 188 267 286 H1 2012 2771 2415 2316 2306 2209 1703 1489 1392 1081 786 780 411 320 262 218 % 155% 121% 188% 659% 147% 120% 166% 148% 143% 151% 129% 101% 170% 98% 76% Source: Russian insurance regulator FSFR, Raiff eisen Life insurers such as SOGAZ and Transneft prominent western players, such as Life insurance Insurance, and also State-owned banks ING Life and FORTIS, after 2008 has Th e Russian life insurance market has such as Sberbank and VTB, are already been a stark reminder that Russia is a been developing dynamically over the visibly increasing their presence in the diffi cult market to conquer, and that last two years – albeit from very low lev- insurance market by utilising their rela- poorly designed entry strategies can els. One of the main drivers in life insur- tionship with government, their strong lead to costly write-off s in times of ance continues to be “bancassurance”, balance sheets and also their commer- global fl ight from risk. Another reason which is the sale of insurance products cial banking infrastructure to sell and is the valuation expectations of Russian via banks. Th is segment has, howev- cross-sell insurance products. owners of insurance companies, often er, had some serious legal challenges combined with a highly non-trans- recently, especially from regional anti- Foreign investment parent business set-up and corporate monopoly authorities. Many insurers Foreign investment in the Russian ownership structure. While Russia was and banks, both local and foreign, have insurance sector remains subdued. Th e formally accepted into the WTO this had high penalties imposed for various lack of interest from abroad is partly August, which will have some major forms of alleged mis-selling. Th ese issues due to the current global uncertain- legal consequences for the local insur- have largely been resolved, and have ty, which has reduced risk appetite ance market (e.g. lifting the 49% restric- now lead to many insurers and banks amongst global insurance operators. tion), there is little to be expected in improving their sales procedures so as Th e “head-over-heels” exit of several terms of immediate FDI. not to run any further risk in this area. Th e table above shows the top 20 life Life Insurance market (H1 2010 – H1 2012, mln RUB) insurance players, of which the top 18 all recorded signifi cant growth rates. Th e 25000 strongest performers were Renaissance Life, Russian Standard Insurance and Premium Allianz Life. In future it can be expected Claim payment 20000 that life insurance players affi liated with large state banks will enter the top 10, and later take leading positions by using 15000 their parent company’s distribution channels (e.g. Sberbank insurance).
10000 Pensions 22040 Th e Russian pensions industry contin-
14721 ues to demonstrate very strong growth
5000 3622 rates in terms of assets under manage- 8953 2740 ment, but there are some potential 5771 legal changes that might signifi cantly 0 aff ect that market in the mandatory H1 2010 H1 2011 H1 2012 second pillar sector. Please see our pen- Sources: FCSM, research of Raiff eisen Life sion article on page 13.
AEB BUSINESS QUARTERLY • Winter 2012 6 INSURANCE IN RUSSIA 2012: LEGAL INSIGHT INTO FACTS AND TRENDS Leonid Zubarev, Partner; Eugenia Bantikova, Associate, CMS The summer On Compulsory Insurance of Carriers’ fl ood in the south Liability for Damage to Life, Health and of Russia, at Property of Passengers will come into Krymsk, showed force on 1 January 20135. how prompt and And fi nally, by the end of the year, eff ective the indus- the strategy for the insurance market, try’s response which was adopted in 2008, will have could be to social- expired. Th e two versions of new strat- ly resonant events, egy up to 2020 were developed by the and that it has the insurance market (approved by the All- FACTS capacity to back up its Russian Insurers Union)6 and by the 2012 is coming to an end and now it’s commitments to the state. It also revealed government. time for us to take a look at what hap- how low the penetration of voluntary Th e story of the year would not be pened in the Russian insurance market insurance in this country is. complete without mentioning numer- during the year, and what is still in store Th en, in August, Russia was fi nally ous legislative initiatives and drafts sub- for market participants. fi nished with the WTO accession pro- mitted to, and heard by, the State Duma Every season of this expiring year cess.3 Th is event may well come to be before and during 2012. was marked by a signifi cant event seen as a turning point for the insurance Amending of the core law of the (or sometimes, events) for the insur- sector in Russia, after a 9-year transition industry, the Law On the Organisation ance market. Th e year began with period, although today the consequenc- of Insurance Business in the Russian Fed- signifi cantly increased minimal capi- es of Russia’s commitments under the eration, is still the most burning issue on tal requirements for insurers and the Accession protocol cannot be foreseen. the agenda. Th e fi rst package of amend- introduction of a new line of compul- While the streets were being cov- ments (2010)7 to this law was aimed sory insurance business: owners’ liabil- ered with autumn leaves, the coverage at improving the fi nancial stability and ity for hazardous industrial facilities.1 of an insurer’s own funds and the place- transparency of insurance market par- Th ese two events were followed by ment of insurance reserves became sub- ticipants. the spring shower of unprecedented ject to new regulatory requirements.4 Th e second package (2011)8 advocat- fi nes which were imposed by the Fed- Although the new capital management ed the necessity to update insurance leg- eral Service for Financial Supervision regulations introduced by the Ministry islation in accordance with international (FSFM) on insurance companies, and of Finance did not come as a surprise– standards and suggested quite a number the long-lasting negotiations between unlike the consumer protection issue– of controversial provisions: from classifi - the market and the regulators (both the timing of the introduction of the cation of the insurance lines of business FSFM and the Ministry of Finance) regulations (during the third quarter of (insurance classes) to restrictive reinsur- regarding the new system of penalties the fi nancial year) was not typical. ance regulations. Th e two drafts were that has to be applied to insurers. In mid-September another law on supposed to be merged in 2012, but this Later, in the summer the consumers the introduction of additional compul- has not happened so far. of insurance services were granted a sory insurance was enacted. Th e Law Meanwhile some additional draft higher level of rights protection, as the amendments to the law were suggest- Supreme Court ruled that the provi- the Protection of Consumer Rights” as of 28 sions of the law on Consumer Protec- June 2012. 5 Th e Law on Compulsory Insurance of Carriers tion Rights should be applied to prop- 3 Th e Law On Ratifi cation of the Protocol on Liability for Damage Caused to Life, Health 2 Accession of the Russian Federation to the and Property of Passengers and On the Pro- erty insurance relationships. Marrakesh Agreement Establishing World cedure of Compensation of Such Damages Trade Organisation No.126-FZ as of 21 July Caused During the Carriage of Passengers by 1 Th e Law On Compulsory Insurance of Lia- 2012. the Underground Railway No.67-FZ as of 14 bility of an Owner of a Hazardous Facility 4 Orders of the Ministry of Finance of the Rus- September 2012 for Harm Caused by an Accident at a Hazard- sian Federation No. 100n On Adopting the 6 Th e Strategy approved by All-Insurers Union ous Facility No. 225-FZ as of 27 July 2010 came Procedure for Insurers to Invest Insurance is available on the association’s web-site: http:// into force on 1 January 2012. Reserves as of 02 July 2012 and No.101n On www.ins-union.ru/rus/news/bcc/2020 2 Decree No.17 of the Plenum of the Supreme Approving the Requirements for the Com- 7 Th e Draft Law No.391338-5 is available on the Court of the Russian Federation “On Court position and Structure of Assets Accepted to web-site of the State Duma Review of Civil Cases Involving Disputes on Cover Insurers’ Own Capital as of 02 July 2012 8 Details of the draft 2
AEB BUSINESS QUARTERLY • Winter 2012 7 ed: on the improvement of licensing TRENDS Introduction of new compulsory and monitoring of insurance compa- Th e changes in the insurance industry lines of insurance is regarded as one of nies and brokers (Ministry of Finance) that have taken place during the year, main ways of increasing the demand and on the increase in the permitted and the draft legislation which is pro- for insurance. And we may expect the quota on foreign capital (FSFM) up to posed, illustrate some important trends introduction of new compulsory lines 50%. It is most likely that these drafts in the market’s development. in the future, although the Ministry of won’t be the last ones this year, as the First of all, it has to be admitted Finance, in its draft strategy for insur- regulators’ and insurers’ ambition is that compared with the other BRIC ance market development 2020, states now not only to improve the current nations – Brazil, India and China – that any compulsory insurance is a lim- legislation, but also to adjust it to the Russia has much the smallest insurance itation of rights of business and popula- current demand for innovative tech- market.11 At the same time, the number tion to freely dispose of their property, nologies in insurance, i.e. sales of insur- of insurers remains excessive, although and therefore the concept of manda- ance policies via the internet. the increased minimal capital require- tory coverage should not be abused. Th ere are also draft laws on the ments have stimulated consolidation of Th e regulators promote other long- agenda introducing the insurance rates the market. term drivers for the improvement of corridor for compulsory motor third- Insurance penetration is still very insurance penetration, such as the cred- party liability insurance (CMTPL), low, and the recent example of Krymsk, ibility of insurance business, which can mutual insurance of civil liability of real discussed above, is a sad confi rmation be enhanced by improvement of its estate developers9, projects for agricul- of this fact. Insurers reported that the fi nancial stability and transparency. Th e ture insurance, and amendments to the disaster didn’t result in numerous insur- increase of minimal capital require- Criminal Code of Russian Federation ance claims, because the share of prop- ments, and the introduction of new reg- that defi ne insurance fraud as a special erty covered was very low, yet the losses ulations on the placement of insurance type of fraud.10 suff ered by the local population and reserves and insurer’s own funds, seem businesses were signifi cant. to have been the fi rst action points of the plan. Now better standards of fi nan- 9 Th e Draft law No.63332-6 is available of the web-site of the State Duma 11 A.M. Best Special Report: Russia’s Insurance cial reporting and greater scrutiny of 10 Th e Draft law No.53700-6 is available of the Revolution Begins to Gain Pace: http://www3. the insurance sector are expected, once web-site of the State Duma ambest.com Advertising
AEB BUSINESS QUARTERLY • Winter 2012 8 the transition to IFRS is completed12 While many of the issues concern- and reform of the insurance regulator IT has to be admitted that compared ing the development of the insurance has been carried out. with the other BRIC nations – Brazil, market put the market participants and Financial stability and transparency India and China – Russia has by far the regulators on “opposite sides of the seem also to be, and actually should the smallest insurance market. barricades” in the negotiation process, be, the main targets of the new sys- there seems to be at least one point tem of liability for insurance businesses. which unites them: online insurance Penalties for non-compliance with the ment that before the reform is fi nalised, sales. A series of discussions on this requirements of insurance legislation all the pros and cons will be considered. topic is being held within the profes- are being developed currently. Another key point for the develop- sional insurance community, as well Th e need for further reformation of ment of the market is comprehensive as within the Ministry of Finance. the insurance regulator seems also to be disclosure of information by the insur- And there is hope that the struggle for understood. In October 2012 the gov- ers, and adequate consumer protec- innovations will become a long-term ernment announced plans to continue tion. trend, and the relations connected with reforming the system of regulation of Th ese concepts are supported by online insurance will soon cease to be a the fi nancial markets. It was suggested the draft legislation, as well as by recent legislative terra incognita. that FSFM, which absorbed the Federal court practice (i.e. the ruling of the Th e changes and trends discussed Service for Insurance supervision in Supreme Court mentioned above). We above show that the insurance mar- 2011, should now itself become a part should note that while in theory the ket is developing gradually. Further of the fi nancial mega-regulator over- concept of protection of consumers of active development is essential for this seen by the Central Bank of Russia. No insurance services in Russia is sound, in country, which is aiming to become fi nal decision has been taken about the practice a balance of interests between an international fi nancial hub, and a future of the regulator and, fortunately, the insurance business and its consum- better place to live and do business in. it has been admitted by the govern- ers is currently hard to achieve, not We believe that the insurance industry, least because of the apparently irrec- the government and its agencies should 12 According to Article 8 (2) of the Law On Con- oncilable claims philosophies of the solidated Financial Statements No.208-FZ as work more closely together in order to of 27 July 2010 transition should be completed parties. Th ere is still a lot to be done in create a stable, competitive and trans- by year 2015. this sphere. parent insurance market.
AEB BUSINESS QUARTERLY • Winter 2012 9 RUSSIAN AND FOREIGN MODELS OF DIRECT INSURANCE: SIMILARITIES AND DIFFERENCES Maria Malkovskaya, General Director, Intouch Insurance
middleman is cut out, together with ization was descending on the public of all the associated additional costs, spi- what insurance was actually all about, ralling commission payments and the why they should purchase it, the ben- bureaucracy of having to deal with a efi ts and security/peace of mind it can third party rather than directly with the bring and, again most importantly, how insurer (who naturally is best placed to easy it all could be to organize. Insur- provide advice and guidance on the ance started to emerge from the repu- most appropriate product and service tation of being something shrouded in they are able to off er). incomprehensible jargon, inaccessibil- Th at is not to say that the initial ity and apathy, to being something fresh journey was trouble-free. Th ere was and new–a rebirth if you like. great resistance from the intermedi- Much has naturally developed since t is now over 25 years since the advent ated community who naturally had then, and the somewhat raw approach of direct insurance in the UK, which their traditional client-base to protect. of a quarter of a century ago is now is widely recognized as the birthplace Th is often manifested itself in some more sophisticated. Dedicated call cen- of a concept that has revolutionized dubious and unfounded allegations. tres naturally remain at the core of the Ithe way in which insurance products Th ere was also a cultural hurdle to operational concept. Th ey are generally are marketed and purchased. “Revo- overcome with prospective clients. Th e available 24 hours a day, 365 days a year lutionized” is not an overstatement. high street broker was where families for the client. A single call (to a free- Th e expansion of the direct model in had traditionally purchased insurance, phone number) is all that is required to Western Europe, and globally, has been often with door-to-door representa- arrange policy cover. Whilst in the early phenomenal over the last two decades, tives. Why should this change? Th e days, product off erings were largely and it continues to go from strength to answer is simple: the essence of direct limited to such personal insurances strength, not only through the appear- insurance has been, from its very earli- as motor, household and travel, now a ance of newly-formed direct businesses est days, that of speed, simplicity, con- whole wealth of alternative products is but with most major, traditionally-inter- venience and value for money. Th is available, including personal accident, mediated insurers also joining the fray is the driving principle by which the health, credit card, pet and, in recent and creating in-house, often distinctly public were engaged 25 years ago, and times, business insurance (including branded, direct operations. it continue to be so to this day. shop, offi ce, mini fl eet, contractor etc) Th e RSA Insurance Group, based and much more. Th e concept has is not in the UK and one of the leading global The essence of direct insurance has only attractive to the individual private insurers, is a case in point. A company been, from its very earliest days, client but is proving of great interest to with a 300-year tradition of transact- that of speed, simplicity, conve- the business community as well. ing intermediated business launched nience and value for money. I mentioned that simplicity is one its award-winning direct brand, MORE the key attributes that we, in the direct TH>N in 2001, which has been rec- Initially, direct insurance in Europe world, can off er. Th e internet, working in ognized by Th e Insurance Times, a lea- was sold through dedicated call cen- tandem with the telephone, has brought ding UK insurance journal, as provid- tres, with internet capability only grad- that simplicity to new, higher levels. Cli- ing the “best quote and buy process in ually becoming an active force. Confi - ents who prefer direct human interac- the motor insurance industry”. Intouch dent, powerful advertising, emphasiz- tion naturally can, and always will, have Insurance, whose parent company is ing the principles I have mentioned, that opportunity through call centre RSA Insurance Group, is dedicated to fl ooded the consumer market, while operations. However European experi- bringing this wealth of expertise, and the press interest and public debates added ence has shown how the internet has ini- benefi ts that the direct model can off er, to the general curiosity about this total- tiated the second wave of the revolution to the Russian consumer. ly unknown concept. Insurance was within the insurance industry, and with Why has the direct model proved suddenly becoming exciting and, more direct insurance in particular. Prospec- to be so successful in Europe? Yes, the importantly, understood. A true real- tive clients can review the whole range
AEB BUSINESS QUARTERLY • Winter 2012 10 of products and services on-line and claims notifi cation and settlement, market. Yes, there are diff erences in Rus- purchase them with no more that than which is the most testing and stressful sia in terms of legislative and regulatory clicks or touches on the device of their time for a client. demands which shape how the direct choice (PC, Android, iPhone etc). On- I mentioned simplicity and ease. model can develop and prosper. Gener- line chat is available throughout to pro- At no other time does a client need or ally there is less awareness, and cultural vide all necessary guidance. In a world expect this more than in the event of acceptance, of insurance and indeed of where the pace of technological advance a claim. Th e direct model is uniquely internet shopping. However the concept is breathtaking, those who wish to be placed to provide a superlative ser- remains sound and the ultimate ideal serious players in the insurance market vice, allowing on-line registration and and benefi ts are there to be had for those must anticipate the future because the the ability to track a claim all the way prepared to break the mould. customer expects nothing less. through to settlement with automated We, in the direct insurance busi- Th e European experience has made updates, through email and SMS. Th is ness must be determined to break that one thing clear: the customer is and is where the client sees and under- mould, and deliver the European level rightly should be at the centre of a stands the real value of their insurer. of service and benefi t that the direct direct insurer’s strategy. Th at strategy In their moment of need, their insurer model has proven it can bring. Th e cus- should be focused on not only gaining is there for them and has provided the tomer must remain at the centre of our the confi dence of the client to purchase necessary capability and tools the cli- focus. Our guiding principles remain the policy initially, but also on retain- ent requires for the experience to be as clear: speed, simplicity, convenience ing that client, renewal after renewal. painless as possible. For that you will and value for money. We must con- Direct insurance is not purely a sales earn the loyalty and trust of your client, tinue to adopt our unique, innovative mechanism; it provides the full pack- something no advertising campaign approach and introduce to Russia mar- age to satisfy the client’s needs through can deliver so eff ectively. ket-leading technological solutions. the whole duration of the contract. In Russia, the advent of the direct Though Russia currently lags On-line servicing of policies (amend- model has naturally come somewhat behind, the creativity and innovative ments, additions, etc) is the norm, with later that in Europe, but we are, however, capability of our market puts us in an automated renewal procedures based treading the same path. Th e unique bene- excellent position to achieve that which on the concept of utmost good faith fi ts and attractiveness of the direct model our European neighbours have wit- in terms of material disclosures and is as relevant in Russia as it is in any other nessed, and perhaps much more.
AEB BUSINESS QUARTERLY • Winter 2012 11 REINSURANCE AS A PART OF THE RUSSIAN INSURANCE MARKET TODAY Dr. Capitolina Tourbina, Director of Russia Representative offi ce, General Reinsurance AG, a Berkshire Hathaway company A reinsurance contract is indepen- helps indirectly to improve the balance dent of the original insurance policy, sheet of the Russian insurer. Among but at the same time one can hardly the major players in the Russian rein- imagine a reinsurance contact working surance market are some well-known except in relation to the insurance busi- names in the international reinsurance ness covered by the direct insurer. world, such as Lloyds (UK), SCOR Reinsurance as a kind of fi nancial (France), Hanover Re (Germany), service has its own price, which is based Munich Re (Germany), Swiss Re (Swit- on the capital available in the reinsur- zerland), Berkshire Hathaway (USA). ance market and on supply and demand Th e importance of foreign reinsur- there. By its nature, reinsurance is a ance for the development of the life einsurance became a professional cross-border business which involves insurance sector in Russia, including business in the middle of 19th cen- risk transfer from one country to anoth- mortgage insurance, should be obvi- tury, when in Cologne in 1846 the er. It can be considered as indirect cap- ous. In addition to vital capital, Rus- fi rst professional reinsurance com- italization of the domestic insurance sian companies can get technical and Rpany was established (known today as market. In all cases, except so-called underwriting support and know-how, General Reinsurance AG). In the subse- quasi-reinsurance (which is, in eff ect, a giving them the ability to develop new quent 150 years, reinsurance developed form of money laundering), reinsurance lines of business (like critical illness as an important market for the risk tak- payments should be viewed as fi nancial insurance), and actuarial back-up. ing, off ering a wide range of services in service payments abroad, but never as Cross-border reinsurance contracts diff erent forms. capital movement. have been allowed by Russian insurance Th e special character of reinsur- Th is form of indirect market capi- legislation since the new insurance law ance–an independent legal basis, dif- talization allows direct insurers to grow was adopted in 1992, but depending ferent market players and signifi cant further and to maintain reliable sol- on the fi nancial stability of the foreign cross-border operations–distinguished vency, while at the same time providing reinsurer. Recent changes to the rules “reinsurance” as a special type of insur- sound guarantees in the event of losses on the permitted asset placement to ance service, regulated by multi-country under direct insurance policies. Th is cover technical provisions mandated integration agreements (such as EC or guarantee under Russian regulation equal individual shares for foreign and NAFTA) or, in a diff erent way, by the has a much higher credit rating than Russian reinsurers (for both the maxi- WTO. As Russia became a WTO mem- any other asset available to the Russian mum is 25% of the unearned premium ber this year, it will positively infl uenced insurance company, including its own reserve). Th e diff erence is still in force reinsurance market development for share capital. for the total share of the foreign rein- foreign insurers, and at the same time Since the insurance market started surers vs Russians’ (30% against 50%) will help to abolish unnecessary dis- to evolve in Russia in the early 1990s, in the non-life insurance. Th e same criminatory limitations in market access it has kept in close touch with foreign discrimination is in force in the life for foreign reinsurers. reinsurers. All the major market players operations (10% against 20%). Economically, reinsurance means have treaties covering property, con- Th ese types of discriminatory limi- a transaction in which the reinsur- struction, marine and aviation risks, tation can frustrate Russian insurers er agrees to pay its share of the loss with high limits, signed with foreign who wish to buy reinsurance cover in occurred under a direct insurance con- players. Th is automatic reinsurance foreign markets directly, and lead to tract between an insurance company capacity can reach 40-150 million USD unnecessary increases in the transac- and a policyholder. Th at is why reinsur- (or Euros), and it allows Russian com- tion costs or reinsurance placements ance is an independent entrepreneur- panies to sign direct insurance con- with companies having much lower ial activity within the wider insurance tracts for large industrial and com- credit ratings. fi eld, and uses diff erent rules for con- mercial risks, knowing they are backed At the same time, such limitations tracts between insurance companies up by the strong fi nancial standing of are not applicable to the foreign rein- and reinsurers, in particular if they are a foreign partner. Usually the credit surer’s share in loss reserves. It is well registered in the diff erent states. rating of these partners is higher than known that foreign reinsurers cover A level from Standard and Poor’s), and all major losses in the Russian insur-
AEB BUSINESS QUARTERLY • Winter 2012 12 ance market, for example more than higher than BBB (Standard and Poor’s), however, support the other view, that 200 million USD for the damages at or equal from the other international payments to foreign claimants should Sayano-Shushenskaya hydro-electric rating agencies. Th is is why Russian not be subject to the additional profi t power station. companies face serious diffi culties in tax on the transaction. Th is contradic- According to recent statistics, Rus- doing business abroad. tion leads to uncertainty in the expecta- sian insurers pay for foreign reinsurance Russian companies are limited tions of foreign partners in insurance approximately 15.6% of total premi- in their capacity and capital, and this and reinsurance agreements, and cre- ums (taken without compulsory health increases the diffi culties. As a result, most ates a risk of potential tax exposure to insurance). Th is is a little lower than the of the risks they accept are extremely dif- the extent of 20% of the payment. In fi gure for more developed markets. Of fi cult and quite often have been refused foreign insurance tax practice this con- this amount, reinsurance payments to in other markets by other reinsurers. tradiction is solved by the clarifi cation foreign reinsurers represent over 61%. Nevertheless, since Russia became a full of the tax implication of foreign insur- For marine, aviation and large industrial member of the WTO it can help Rus- ance claim payments. risk insurance, the share of foreign rein- sian players get easier access to foreign Reinsurance depends on available surance is much higher. Competition markets and compete for business. Also, capital and the underwriting of risks among foreign players is fi erce, so Rus- special privileges could be granted to under reinsurance and direct insurance sian insurers get good prices and terms Russian companies in the new Eurasian contracts. As the Russian insurance for most direct insurance business. economic zone if the steps to build up business faces more complicated and Developing foreign commercial harmonized insurance legislation bear less easily quantifi able risks, the regu- connections, the Russian reinsurance fruit. lator will be forced to develop more companies are trying to increase their Lack of clarity in the tax regime straight-forward risk management pro- attractiveness to developing markets applied to payments to foreign part- cesses for insurance companies. such as the CIS, Middle East, Africa ners under reinsurance contracts can And as policyholders are keen to or Asia. In most countries, following be a serious obstacle in off ering reinsur- obtain reliable insurance cover, the role the recommendations of the Interna- ance by Russian companies. Russian of professional reinsurance is increas- tional Association of Insurance Com- tax regulation considers reinsurance (or ing, and foreign reinsurers have proved missioners, national regulations require insurance) claims payments to foreign their knowledge, experience and foreign reinsurers to have a credit rating receivers as taxable income. Th e courts, soundness.
AEB BUSINESS QUARTERLY • Winter 2012 13 RUSSIA'S PENSIONS INDUSTRY: QUO VADIS? Alexander Lorenz, Chairman of the Council, Raiff eisen Pension Fund, Chairman of the AEB Insurance and Pensions Committee ■ A fully-funded fi rst pillar where the market has grown signifi cantly in social security payments by employ- recent years. As we can see from the ers fund pensions paid out to pen- graph below, the pensions industry has sioners, a so-called Pay-As-You-Go experienced very strong growth rates, (PAYG) system. especially since 2009, which is largely ■ A second, also fully-funded, pillar based on growth in the second pillar. where a smaller part of social secu- Th e table on the next page shows rity taxes (currently 6%) are paid into the main players in the pension mar- individual accounts at the state pen- ket. So far, few foreign players have sion fund. Employees born during or been present, leaving the market to be Pensions after 1967 are entitled to such indi- dominated by larger Russian industrial Dark clouds are hanging over the Rus- vidual accounts. Th ese accounts can or banking groups. sian pensions industry as planned gov- then be contracted out of the state ernment reforms put in jeopardy the pension fund to private operators The planned reforms entire pensions industry, as well as Rus- (non-state pension funds and asset Th e government’s main problem is that sia’s ambitions to become an interna- management companies). the state pension fund of Russia is run- tional fi nancial centre. ■ A third, voluntary pillar which ning an ever-increasing defi cit, which At the time of writing, a heated involves companies and individuals has now reached a staggering RUB debate is taking place amongst Russian signing pension savings contracts 875 bn or 1.7% of Russia’s annual GDP. government agencies on how to reform with non-state pension funds, and Th is defi cit has largely been caused the current pension system. It seems making voluntary contributions. by the fact that many employers were that the government could in the near Most of the assets accumulated under paying cash salaries (“in an envelope”) future dramatically change the operat- the third pillar have been within so- throughout the 1990s, thereby avoiding ing platform of the local second pillar called “captive” funds established by having to pay social security contribu- market. large Russian industrial conglomer- tions. By way of background: in 2002 ates (GazProm, etc.). Offi cial salaries and corresponding the Russian government introduced a While there have been some struc- social security payments were much three-pillar pension system as follows: tural issues with this three-pillar set-up, lower than required to fi nance ade-
Changes of 2nd Pillar Assets & 3rd Pillar Assets, mln RUB
1500000 1 290 430
1200000 3rd Pillar 1 094 100 2rd Pillar
900000 798 620
641 540
600000 499 645 498 438 558 348 415 193 393 786 279 371 300000 169 792 155 352 77 168 35541 0 2006 9964 26756 0 2004 2005 2006 2007 2008 2009 2010 2011 H1 2012 Sources: FCSM, research of Raiff eisen Pension Fund
AEB BUSINESS QUARTERLY • Winter 2012 14
quate pensions. With Vladimir Putin’s possibly 2014, but then contributions ■ First, it is unlikely that employees continued focus on increasing pen- will be brought down to 2%, most likely will opt to make voluntary contribu- sions above infl ation, this has lead to on a matching basis with the 2% state tions, not least because the govern- a very precarious situation at the state contribution only being applicable to ment will have lost any remaining pension fund. employees who make voluntary con- credibility on pension policy should One way to alleviate the problem tributions. it implement the planned changes. would be to increase the pensionable Th ese new developments are very Future pensions would once again be age, but for political reasons this is con- unfortunate. As mentioned above, over more dependent on the state ensur- sidered an option of last resort. Several the last 2-3 years we have been witness- ing an adequate pension level. As government agencies have therefore ing a major surge in the sale of second such, the main eff ect of the 2002 pen- tabled a number of proposals which, pillar pension products. In 2011/2012 sion reform, namely to create a sys- to various degrees, reduce the current we have seen the very successful entry tem that allows employees to create second pillar. Th ey range from scrap- of new distribution channels into the their own savings related to their sal- ping the fully-funded part altogether to 2nd Pillar market such as mobile phone ary (called “defi ned contributions”), reducing the contributions to the sec- retailers (Svyaznoy) and large Rus- would be lost. ond pillar from 6% to 2% of payroll, to sian insurers (Rossgostrakh). Th is has ■ Operators will make large invest- only including higher earners into the increased competition in the market ments in the distribution of OPS fully-funded part. Probably the most and is helping with the overall promo- assets as long as the system is still painful suggested change is to make the tion of pension products amongst the based on 6%, which will drive up second pillar entirely voluntary, i.e. the general public. commissions paid to distribution state matches voluntary contributions But what is happening now seems to partners. Once the system moves to by employees who decide to make con- be an open attack on a business model 2% or less, operators will stop invest- tributions out of their nett salary. that many operators have invested a lot of ing. Th ey will “freeze” their business All these proposals are highly contro- money and human capital in since 2002. and focus on managing the assets versial and have been criticised by many To back-track now and water down the they have already accumulated. Russian analysts and politicians. It is reforms just a few years after introduc- ■ A more fundamental eff ect will be suggested that these measures will only tion appears half-hearted. More over, it to reduce the amount of long-term temporarily alleviate the problem of an strongly undermines the little trust that capital available for the local capital under-funded state pension system, and has been built up between government, markets. Th is will be important as that they will destroy the low level of the relevant operators and the general it is sorely needed for new fi nancial trust that is left in the general public as public. It seems especially misplaced in instruments such as infrastructure far as the state’s attitude towards retire- terms of longer-term government poli- bonds. Recent reports have indicated ment savings is concerned. cy, given that the relief to the state pen- that over a 15-year time horizon, Pundits expect the following sce- sion fund will only be temporary. second pillar assets could be 50% nario as the most likely outcome: no We project that the expected lower if the government introduces changes will be made during 2013 and changed will have the following eff ect: the planned changes. We are hopeful that the govern- Industry leaders by AuM, H1 2012 vs H1 2011, RUB k ment will not back-track on its pen- 350000 sion reforms and kill off what has now become a viable business for many 310840
348791 operators. Th is would do tremendous 300000 harm for Russia’s eff orts to foster much needed long-term savings, and infl ict 250000 235968 irreparable damage on Russia’s ambi- H1 2011 tions to make Moscow an internation- H1 2012
200000 194656 al fi nancial centre. For that, foreign investment is badly needed. We would recommend that the Rus- 150000 sian government stays committed to its second pillar reforms as introduced in 100000 93798 2002 and tackles the defi cit in the state
62977 pension fund by other means, including 58928 55066 46489 42097 39764 an increase of the pensionable age. Th is 50000 33580 33634 25211 23889 19733 20777
15698 seems feasible, especially with female 0 employees for whom a retirement age of 55 seems outdated, especially when Blago- Nikel Khanty- NPFE Gazfond Norilsky Sberbank Transneft Mansiyskiy considering demographic realities (e.g. sostoyaniye Lukoil GarantNeftegarant life expectancy for women is much Sources: FCSM, research of Raiff eisen Pension Fund higher than for men in Russia).
AEB BUSINESS QUARTERLY • Winter 2012 15 THE VMI MARKET IN RUSSIA: TRENDS, PROBLEMS AND PROSPECTS Hakan Danielsson, CEO of OJSC IC Allianz economy. Th e more people that are which does. Th e second reason is that employed, the healthier the economy employers want their people to come is, and the more companies buy VMI back to work as soon as possible if they for their employees. Th e other strong are sick. In most markets this trend driver of VMI market growth is medi- is marked. Employers are becoming cal cost infl ation. But this factor is not more and more interested in not only only a key driver of market develop- treating their employees when they are ment but also a signifi cant problem ill but in preventing them falling ill in because the cost of medical services is the fi rst place. Th ere is a mutual inter- already very high. If it increases further, est: the employer doesn’t want you to VMI products will become so expen- be off work and you don’t want to be sive that customers will not buy them. sick. Insurers try to satisfy this demand he medical insurance system in How to deal with this problem? by organizing vaccination, precaution- Russia, which comprises obligato- First of all, insurers together with clin- ary medical examinations and other ry and voluntary insurance, forms ics should try to deliver services more preventive services. To date, this has a really good base for the success- effi ciently. Some companies build their not been very common in Russia, but it fulT interaction of the state and pri- own clinics; others prefer to be profes- will surely come soon. vate insurance companies. Many other sional purchasers of medical services. But how can we tempt people to more developed countries struggle to I personally think that it is better not buy medical insurance policies indi- fi nd a comparable solution and still to have your own clinics. Th ere is an vidually? In my view this can best have problems with private fi nancing argument for having some so you can be done by cooperation between the of healthcare, which seems not to be a benchmark, and deliver some extra state, the employer and the insurance big issue here. services to special customers, and also company. Corporate insurance is a But whichever country you sell so that you can understand the cost very effi cient method. Of course you medical insurance in, it is always a real structure. But I think that insurance have unemployed people or people challenge to make it profi table. Accord- companies do better when they do not working on a part-time basis, like free- ing to experts, the average loss ratio in own clinics or auto-repair workshops lancers, and there is a need for an effi - the Russian voluntary medical insur- because they are such diff erent busi- cient solution for them. Still I see few ance (VMI) market for the fi rst half of nesses and need a diff erent style of prospects for a broad usage of VMI 2012 was about 88%. If we also take into management. I would probably not be paid for by individuals. But I don’t see consideration acquisition and business a very successful manager of a clinic that it as a problem, so long as people expenses, we will see that as a whole, because I do not have medical training. are mostly covered by corporate insu- VMI is a loss-making segment of the To run a garage you must understand rance. market here, even though it brings in a motor engineering. Th ese are is not Overall, I would say that since I lot of premium income. perfect analogies, but in principle the have a very positive view on economic In my opinion, in Russia it loses a problems are comparable. growth in Russia, I believe that the little more here than in other countries Another issue it that an insurance VMI business will grow here too. Th at simply because there are no deductibles. company which has its own clinic faces could be helped by changes in legisla- So there is no real mechanism for keep- the problem of insuffi cient workload tion. Every step forward in voluntary ing medical costs down. Th is will come when clients have been used to the insurance means less stress on the state sooner or later. But currently no one clinics they visited previously and are budget, so there is a mutual interest in wants to introduce them because the not so eager to change. expanding voluntary, privately fi nanced market is not used to the idea, and you Corporate VMI still has a much insurance. Consequently, there should risk losing your customers. Th ere are bigger market share than individual be room for tax relief, so that you could also some technical challenges with co- VMI. Why do employers buy medi- fully or partly deduct the premium you payment, and possibly also some legisla- cal insurance for their employees? pay either for health or for pension tive hindrances. But it will be good when Th ere are two reasons. One is to be insurance. Th e state could do more in it comes, as it will improve the system. competitive as an employer. Often you its own interest. Nonetheless, the foun- Th e growth of the VMI market is can attract staff only if you off er VMI, dation of the VMI system in Russia is closely connected to the growth of the otherwise they will chose a company solid, and the future is bright.
AEB BUSINESS QUARTERLY • Winter 2012 16 CHANGES IN THE VEHICLE INSURANCE MARKET Malyarenko Daria, Senior Speсialist, Corporate Motor Insurance Departament, Rosgosstrakh Ltd market average. Below the market aver- ing component wear) and design pro- age is the second dozen companies: cedures for life and health damage. those involved in premium collection, Th is is all aimed at a more realistic regional insurers and companies that level of compensation. Th ese changes collect premiums through legal entities to the law will most likely lead to an – non-insurance intermediaries. increase in CTPI rates (the fi rst and last From the viewpoint of both vehicle CTPI rate increasing was made as of insurance and other insurance develop- 13.07.2011 according to Governmental ment trends, the main sales channel is Decree No. 574, eff ective 28.07.2011). insurance intermediaries, namely bro- Experts believe it is necessary to he article will describe the cur- kers and agents. Insurance intermedi- increase the life and health liability rent changes in the vehicle insur- aries as the main selling channel have from 160,000 roubles to 500,000 rou- ance market, issues of compulsory found a secure place in the world mar- bles, and property liability from 120,000 third-party insurance for owners ket, and are now becoming increasingly roubles to 200,000 roubles. Th e above- ofT vehicles (CTPI), further changes popular in Russia. According to data mentioned law amendments should in technical inspection procedures, from the Federal Agency for Financial decrease the number of cases that do changes in CTPI and CASCO rates, Markets, published on the FAFM web- not come within the coverage from sales channels, profi tability changes, as site, as of 30 September 2012 the list 3.5% to 0.4%. Th is measure is also nec- well as those to bank insurance and the of licensed insurance brokers in Russia essary to cover the cost of a car repair government scrapping program. includes 180 intermediaries. to the innocent party without recourse Currently, the Russian insurance Vehicle insurance is one of the most to court proceedings. market is in fl ux. Globalisation is mak- developed and popular types of insur- Yet another current key aspect of ing a dramatic impact, resulting in the ance on the world market. Companies vehicle insurance is the issue of chang- emergence of a large number of foreign off er a wide range of services, create ing to a new procedure for technical insurers and the setting-up of joint new insurance products and put a lot of inspections, and for writing CTPI poli- insurance companies. Moreover, merg- eff ort into market development. In the cies. On 1 January 2012 amendments ers and take-overs are continuing even opinion of informed experts, the best to the Federal Law as of 1 July 2011 among Russian insurers. Presently, companies to buy a CASCO policy from No. 170-FZ On Technical Inspection of over 600 companies are operating in are the major companies having a signifi - Vehicles and On Making Revisions to this sector. Th e biggest market share cant authorized stock. Th ese insurance Certain Legislative Acts of the Russian belongs to the reputable, well-known companies off er a variety of CASCO Federation (further, No. 170-FZ) came companies. Th e rating agency, Expert policies, have extensive branch networks, into force. RA, says that according to the data and well-tested loss-settlement and reim- Under the new Technical Inspec- of the fi rst half year 2012, the top fi ve bursement procedures. tion rules the client must submit an positions are still held by such com- Vehicle insurance is an important eff ective TI card within six months of panies as IC ROSGOSSTRAKH, IG component of the social system in Rus- the date of signing a CTPI policy. 30 July SOGAZ, Ingosstrakh Group of Com- sia, partly because state policy obliges 2012 was the date of enactment of new panies, OSAO RESO-Garantiya, and all car owners to buy CTPI policies. revisions, which imply that the obligato- Insurance Group Alfastrakhovanie. Th e payout levels have long remained ry technical inspection document, con- According to Expert RA estimates, fi xed. Th at often covered the damage, taining a warranty of fi tness of a vehicle, the leading companies are highly profi t- but not always with the result that shall be the diagnostic chart rather than able. Th eir earnings are about twice the many insurance companies bore signif- the technical inspection card. A TI card market average, viz. 4.6 against 2.5% for icant losses resulting from CTPI policy should be eff ective at the time of signing the 1st half year of 2012. Companies payouts. Many insurers are convinced a CTPI policy and must be issued earlier specialising in direct sales are also quite the law will soon be amended again. than July 30, 2012., or a chart issued no profi table (3.4 %). In spite of extremely Th e Ministry of Finance has drafted later than that date. high commissions, the profi tability of amendments to the law on CTPI and Further amendments to the law on companies that collect premiums using included the concept of compensating CTPI have also been drafted. Th ey physical agents (2.9 %) also exceeds the the real cost of a car repair (exclud- will tie CTPI to technical inspection
AEB BUSINESS QUARTERLY • Winter 2012 17 and require that, starting on 1 January of competitive market players should becomes mandatory. In the conditions 2013, the insurer should check against be decisive, or a certain general system of the predicted growth of consumers’ the UAIS TO database that the car of guarantee funds should be set up. welfare and automotive industry devel- owner has a TI card and immediately However, if an insurance company is opment, that off ers a greater number enter data on the policy sold to the AIS doing the voluntary CASCO insurance of aff ordable and attractive models, the CTPI database. Th is implies that, to sell business responsibly, then it should annual vehicle insurance market is pre- a CTPI policy, the insurer should use incur liabilities independently. Setting dicted to grow by roughly 40 %. the internet twice. Th is can complicate up third structures, which will collect Th e well-known program of state the process of concluding CTPI poli- money from all insurers to incur com- subsidy for vehicle scrapping has been cies. Th e Ministry of Finance intends mon liabilities, is logical only if com- completed. Th e Ministry of Industry to resolve this issue by giving insurers pulsory insurance is introduced by the and Trade discontinued distribution 15 days for these operations. state. Setting up collective guarantee of certifi cates under this program and Th e introduction of the TI system funds contradicts the market business published an offi cial press release on to the CTPI insurance procedure is still model. this occasion. It stated that during the in progress, although with a high prior- Th e issue of CASCO cost is cur- last 16 months the program gave out ity. Th e impression is that this system rently a pressing one, with the insur- 600,000 certifi cates, and the govern- was composed for creating another fi eld ance premium depending on many fac- ment spent 30 billion roubles. for competition among insurers rather tors. Th e voluntary vehicle insurance Th is program had been launched than for setting up a convenient mecha- policy rate is based on an insurance to assist the domestic car industry. nism for car owners. Certainly, there risk appraisal. Of course in general the And, one must say, it was a success. It is no doubt that a vehicle should be client is focused on the cost of the boosted the sales of AvtoVAZ automo- technically serviceable and that citizens service. However, recently the quality biles, Russia’s major domestic vehicle- should insure their property and poten- of services off ered has begun to attract producer. In the opinion of experts, tial liabilities. Th is situation should be more and more of the clients’ attention: completion of the scrapping program regularised soon, though no-one knows the service component that Insurers should not aff ect sales in the Russian yet how this will be achieved. Will it be off er, and satisfaction with the qual- market because in 2011 there was no in the same way as it was done world- ity of reimbursement. Th at is the rea- excitement about the scrapping pro- wide by decoupling technical inspec- son why Insurers prefer an individual gram, and growth of demand was the tion from CTPI, or otherwise? approach to each client, especially if the result of commercial sales. Hence, ter- Returning to the matter of volun- matter concerns the voluntary vehicle mination of the program should have tary insurance, it is noteworthy that insurance on machines owned by cor- no adverse impact on vehicle insur- CASCO policies, which are not obliga- porate entities. ance. tory, are quite popular among custom- Bank insurance is an interesting To summarise the above-men- ers. At the present times there are two part of the vehicle insurance market. In tioned: one should emphasise that a inter-related initiatives that are being spite of the vague economic situation distinctive feature of the vehicle insur- discussed in the context of regulating and restrictions imposed by legislation, ance in 2012 was withdrawal of sev- voluntary vehicle insurance: creating the bank insurance market is growing. eral small companies from the market, guarantee funds, and standardizing the Soon it will embrace new niches and which failed to compete with major CASCO insurance service. will introduce new ways of cooperation corporations. Expert opinion sug- In the opinion of the Insurers, between banks and insurers. When gests that the entire Russian vehicle there should be a single development new cars are bought on credit, taking insurance market will soon be divided model: either competition and liability out a CASCO policy for such clients among several major market players who will impose their terms and con- ditions. During the next year or two the vehicle insurance market will be sup- posed to develop and improve the ser- vices. Dumping will continue, but in the opinion of players in the vehicle insurance market price-cutting itself will not abate though its methods might change. Customers are becoming more aware of the quality of service that the insurance companies off er. Th e major trends also include adjustment of the CTPI law and improving the interac- tion between such systems as technical inspection and CTPI.
AEB BUSINESS QUARTERLY • Winter 2012 18 D&O EVOLUTION: LESSONS TO LEARN Andrey Panov, Vice-president, CJSC Chartis 10% of large corporations had them, considered only partially the responsi- and this fi gure rose to 70-80% in the bility of the director, while part of the 1970s. A similar trend occurred in liability always fell on the company and Europe. But insurers discovered that did not necessitate a payout. After that the more policies they sold, the more case, insurers realized that they had money they lost. At the peak, there been insuring a greater risk than they were ten insurers off ering D&O, but had thought, and that premiums were by 1985 this number had dwindled to therefore too low. three: Lloyds, Chubb and AIG. Th e Th e second major event was the departure of key players from the mar- adoption in the U.S. of the Private Secu- ket caused a chain reaction. When the rities Litigation Reform Act in 1995. time came to renew policies, the premi- Th is act was intended to limit the num- ore and more Russian compa- ums had increased by as much as 200%. ber of questionable claims fi led against nies are taking interest in direc- Franchise deductibles increased signifi - corporations so as to encourage parties tors’ and offi cers’ liability insur- cantly; coverage was limited; and the to settle out of court those claims in ance (D&O). To give readers average limit of liability was cut in half. which the cost of legal defense would Man idea of the current status of D&O By the 1990s, prices for D&O had be signifi cantly higher than the size of insurance in Russia today, and identify increased so much that this type of the claim. Th ese claims were essentially potential areas of its development, it insurance had become worth off ering a form of blackmail. might be helpful to look at the his- again, and many companies that had Th e Wall Street Journal once ran an tory of D&O and the events that have left the market in the 1980s came back. entertaining story about a certain Mr. had a signifi cant impact on how it has New players like ACE and XL entered Hutchens who had fi led more than 30 evolved. the market. securities claims against various com- During the Great Depression of the Two unrelated events occurred panies. Many agreed to settle out of 1930s, the U.S. Congress passed two during that period had a signifi cant court. Th e amounts he obtained were important laws: the Securities Act of impact on the evolution of D&O insur- nett income, since he had never owned 1933 and the Investment Act of 1934. ance. Th e fi rst one was Nordstrom’s shares in any of the companies. Addi- Th ese laws established personal liability lawsuit against its insurer Chubb. Th is tionally, his overhead was minimal. His of directors for missteps, and forbade was the fi rst time in the history of rent was covered by the government companies to reimburse directors for D&O that a court ruled that a direc- since he was serving time in federal losses. In response to the emergence tor was fully liable, and ordered the prison for tax fraud. of a new risk group, Lloyds of London insurer to reimburse 100% of the loss. Th e adoption of this law led to a began to off er an insurance product Prior to that, nearly every claim was reduction in the number of fi led secu- called Personal Finance Protection. However, contrary to expectations, it did not catch on. It sank into obscurity in the subsequent decade. In the 1940s and ’50s, the U.S. Congress passed a series of laws that allowed corporations to sign indemnifi - cation agreements with their directors. Such agreements began to be recorded in fi nancial statements as additional commitments, and companies began looking for all manner of ways to elim- inate this risk. Insurers remembered the almost-forgotten Lloyds of London Personal Finance Protection product, updated it somewhat and launched it on the market as D&O insurance. Th e number of D&O insurance policies purchased in the United States began to rise in the mid-1950s. In 1965,
AEB BUSINESS QUARTERLY • Winter 2012 19 rities claims from 220 in 1994 to 122 A number of lessons can be learned Sooner or later, Russian companies in 1996. D&O insurers welcomed this from this short historical overview. First will begin to see D&O insurance as a new trend. Insurers’ appetite for D&O of all, the fact that D&O insurance went reliable way to protect their balance increased signifi cantly, and premiums through various cycles in its develop- sheets and directors. began to fall as competition increased. ment clearly shows that buyers should Prices fell 50% in a space of fi ve years. not choose an insurer based on price It was against this background that Most Russian companies purchase alone. History is littered with mediocre the fi rst D&O policy was issued in Rus- D&O insurance for their directors companies that off er D&O insurance sia in 1996. An insurance contract was when they do an IPO on a foreign for a time and then leave the business. concluded between VimpelCom and stock exchanges. However, more and In Russia, prices for D&O have hit bot- the Russian subsidiary of AIG. more companies that don’t want to tom. Th e accumulated premiums are Today, the standard D&O policy face the risks associated with foreign estimated at $40-50 million, which on consists of three sections: Coverage jurisdictions have begun to think about average is the limit of liability on two ‘A’ reimburses directors directly when getting it. What motivates them is the policies. In other words, just two major the company cannot make such a pay- passage of stricter laws on directors’ insurance claims would be enough to out (for example, when it cannot do so liability. Suffi ce it to mention several put all the players out of business. Th is by law, or due to bankruptcy). Cove- recent legislative acts: the amendments is a very alarming situation. rage ‘B’ provides for reimbursement to the RF Federal Law “On Insolvency Another lesson is that, sooner or of the company after it indemnifi es and Bankruptcy” of 28 April 2009, the later, Russian companies will begin to its directors, and Coverage ‘C” only second anti-monopoly package of laws see D&O insurance as a reliable way to applies to securities claims against the adopted in October 2009, the draft law protect their balance sheets and direc- company. “On Amendments to Certain Legis- tors. D&O should be purchased prior Th e main function of a D&O insur- lative Acts of the Russian Federation to a company’s IPO. Russian directors ance policy is to protect the company’s Regarding the Prosecution of Company are already personally liable, and bear balance sheet. Having one allows a com- Management Board Members,” adopt- the associated risks. Judicial practice with pany to hire top-notch directors and ed on the fi rst reading, and fi nally, the such claims exists in Russia. In just the last resolve disputes and confl icts between UK Bribery Act, which came into force two years, Russian directors have been shareholders in a civilized manner. on 1 July 2010. forced to pay more than RUR 5 bn. Advertising
AEB BUSINESS QUARTERLY • Winter 2012 20 LIFE: READY, STEADY… GO! Mikhail Sosnin, First Vice President, MetLife Alico Russia In fact, only a few hundred thou- the social situation and creating jobs. Of sand people in Russia have life insur- course, it does very little of any of these. ance policies with some saving compo- Still, though tiny, the market has nent. Th is equates to around 0.1%-0.2% been growing quite rapidly since the of the population. In money terms, the crisis: by 43% in 2010, and 54% in 2011. whole life insurance industry in Russia Th e growth in the fi rst half of 2012 is microscopic, accounting for 0.06% of is estimated at over 50%, too. So, is it GDP, which is one twentieth of the pro- on the right track fi nally? If the sector portion in Eastern Europe, and one six- continued to grow at this rate for the tieth of that in the other G20 countries. next 10 years, it would become 50-60 At this scale, life insurance doesn’t times larger than today, and reach the play the role it should as a component “right” level. t’s hard to sell life insurance in Russia. of the country’s wider fi nancial system. But this is not so simple. Th ough Few people put long term fi nancial It should be creating a long-term, non- growth today is rapid, it is mainly driv- planning at the top of their range speculative source of internal invest- en by banks which sell life insurance of priorities. Most people prefer to ment capital. to protect consumer loans (so called Ispend what they have here and now – By contrast, in Europe, the total “credit life insurance”). Th is is just a new cars, travelling, consumption. Yes, life insurance investment portfolio is by-product of the rebound in credit it takes eff ort to think in terms of a 20-30 about 6 trillion Euros, which exceeds volumes after the crisis, and is not sus- year time horizon, and to avoid usual investments by either pension funds or tainable (loans have grown by more train of thought that “infl ation is going investment companies. Life insurance than 40% during last 12 months but this to kill any savings”, or “Russia is not a should also play its part in attracting trend is unlikely to continue indefi nite- country where you can plan anything”. private investors to economy, stabilizing ly). Actually, banks are the only driver of
Penetration Level of Life Insurance in Central and Eastern Europe Countries (CEE) 2,0 1,86 1,82 1,7 1,66 1,58 Russia: 0.06% Average by GDP 1,5 CEE: 1.31% BRIC: 2.57% G-20: 4.06% (without Russia)
1,0
0,71 0,54 0,5 0,39 0,31 0,3 0,3 0,3 0,29 0,28
0,08 0,08 0,06 0,02 0,0 Russia Latvia Latvia Serbia Poland Croa a Estonia Kosovo Albania Slovakia Bulgaria Hungary Slovenia Romania Lithuania Macedonia Montenegro Czech Republic
Source: ARIA Bosnia-Herzegovina
AEB BUSINESS QUARTERLY • Winter 2012 21 the life insurance market now. Growth Third: change the regulations Fifth: promote life insurance as part of this channel in the fi rst half of 2012 to allow unit-linked insurance. In of the state’s program to improve the was +113% compared with the previous many countries unit-linked insurance fi nancial literacy of the population. year (more than double), while agent became a driver of market growth And fi nally: all strategies propose a and broker business was fl at, and cor- when they were introduced. Th is type set of extra controls over the life insur- porate sales actually fell, by about 17%. of insurance allows clients to decide ance business. Th is is very important So what can be done to sustain this individually about the level of risk they if the market is to remain healthy. But pace and encourage life insurance to are ready to accept, and then to link any additional controls should be in become one of the key components of their insurance policy with the assets harmony with the stimulation mea- the economy, as it should be? they prefer. With such products, the sures described above, and should In 2012, this question has been policy terms should be so clear that a be introduced gradually as the mar- addressed by many people. Th ree strat- policyholder can readily tell what part ket develops. Such control measures egies for market development have of his investment bears the investment might include mandatory certifi cation been produced: the fi rst by the Life risk, and what part is guaranteed in of insurance agents, the creation of Insurers Association (LIA); the sec- any eventuality. Recently the market compensation funds and the obligatory ond by All-Russia Insurers Association has started to off er a limited range of usage of custodian services to control (ARIA); and the third by the Ministry such products (with full capital protec- insurers’ asset allocation. of Finance (for the whole insurance tion as required by regulation), and So the strategy is there, and it ought to market, including life insurance). Inter- there has been a healthy demand from allow the market to start the engine. Th e estingly, there is no great diff erence in clients. In fact, the sales level is already minimum goal is to reach $200-300 of life the assessments of the problem and the higher than that of other types of sav- insurance premium per capita per annum suggested remedies. Th at consensus ing insurance, and they continue grow- by 2020, representing 1.5–2% of GDP. should make decisions easy. Th ere are ing rapidly. So ready, steady… Th e next step now is diff erences in scale, though. Th e most Fourth: introduce new investment to have a road-map, and then to start ambitious goals are in the ARIA strat- tools for life insurers linked to long- executing the strategy step by step. If all egy: to reach a life insurance market term national infrastructure projects this is done, life insurance should become size of 2.7 trillion roubles by 2020 (77 (such as transport infrastructure, pub- a major driver for the whole insurance times more than 2011). lic utilities sector etc) market in the near future. Go! How do these bodies propose to achieve this result? Th e measures are clear. First, a tax incentive. For individ- uals: no personal tax should be with- held from premiums invested in life insurance (and this should be made easy: the employer should not deduct the tax for you). For corporates: no social tax should be withheld from money spent purchasing life insurance for employees. For distributors of life insurance: no VAT should be levied on commissions. Th e second measure is to include life insurers in the country’s pensions system. Lifetime pension payments (to retired persons) is a function that should be handed over to life insurers who will bear the so-called longevity risk. Th is works as follows: a pension fund accu- mulates money during the accumula- tion period, and then (when a person retires) purchases a life annuity from a life insurance company that becomes responsible for providing the benefi ts to the pensioner over the remainder of his or her lifetime. Alternatively, life insurers could participate in obligatory pension insurance in Russia, meaning that they would be equally eligible to administer
obligatory saving contributions. Advertising
AEB BUSINESS QUARTERLY • Winter 2012 22 THE MIDDLE MARKET SEGMENT IN RUSSIA: AN INSURANCE BROKER’S PERSPECTIVE Alexander Protoklitov, Country Manager, MAI Insurance Brokers
porting it. Th e Russian economic situa- ■ limited budgets; tion is more complicated. Even though ■ being privately owned, Russian the basic economic reforms were shareholders treat insurance with a launched here more than 20 years ago, certain caution. Th is generally coin- our middle market business remains in cides with a negative approach to, the “grey” zone, being not fully trans- and perception of, insurance (as well parent and clear, especially for foreign as other fi nancial services); investors. Th is concerns various sec- ■ most insurance-related costs are not tors but mainly the retail and whole- tax-deductible in Russia, unlike West- sale trades (in most branches), pharma, ern countries (exceptions concern logistics, the services industry, etc. I am only compulsory classes of insurance not going to touch upon the reasons and property damage insurance cov- t is not a secret that the so-called for this situation, but undoubtedly this ers) and are paid for out of company middle market segment in modern drawn-out process aff ects a compa- profi ts. economies is treated by the service ny’s approach to risk management and industry as a mostly stable category insurance. Th e middle market situation The problem is that in Russia most Iof clients. No doubt the same applies diff ers dramatically from large domes- corporate clients are not accustomed to the corporate clients of the insur- tic corporations, which have become to using broker services. ance sector where such customers are quite powerful and experienced buy- considered the most attractive ones for ers of insurance services within recent insurance companies and brokers. Th e years in Russia, implementing more In reality, the basic insurance which reasons are obvious: in theory such cli- and more often Western approaches, is purchased by middle market busi- ents should form the basis of their port- including the use of professional insur- nesses applies to pledged property folios, making them more balanced ance brokers and consultants, risk- owned by this type of client. In this (unlike large corporate clients where mapping, etc. case, banks dictate to their borrow- the risk of loss is crucial). In practice In general we can say that most ers what cover has to be purchased, such companies prefer to build their Russian companies from the middle and very often name the providers. relations with fi nancial services provid- market segment are not active buyers Th e client applying to borrow money ers on a long-terms basis. Th is applies of insurance for the following reasons: is obliged to secure such cover, often not only to insurance but to other sectors as well, such as banks, leasing companies, logistics providers etc. And what are the key diff erentia- tors of the middle market? Th ere is no unique approach, and key parameters can vary. It could be company’s annual turnover or sales (usually not more than EUR 250 mln), its headcount (usu- ally 500 – 1000 employees) or even size of its capitalization. Generally, assign- ment of a particular company to this segment is rather subjective. But it is clear that Fortune 500-list companies are not included. In the case of Russia, this issue is as vague as the defi nition of the “Russian middle class”. In principle, middle market busi- ness in most countries forms the basis of the economy, and every state should be interested in promoting and sup-
AEB BUSINESS QUARTERLY • Winter 2012 23 not delving into contract details, but segment. Th is is treated as an addi- Russia? Most companies use a central- accepting terms and conditions which tional expense, with unclear benefi ts ized approach where all risk manage- may not fully protect their interests for employers. Th eir policy on social ment and insurances are negotiated at from potential risks. benefi ts packages still seriously diff ers head offi ce level, and local subsidiaries At the same time, insuring property from the approach of international for most of insurance lines just follow in Russia recently became one of the companies operating in Russia. corporate policy and guidelines. Such key drivers of the commercial insur- companies are active insurance buyers ance market and is treated by insurance There were 175 registered insurance in Russia, and in some sense can even be providers as the most attractive and brokers in Russia as of June 2012 – treated as pioneers in this area. Usually important line of business (due to rela- which is not a small number . there is no need for insurance providers tively low loss ratios). For this reason, or brokers to explain them the necessity they try to expand and strengthen their of each type of cover as these clients relations with various banking institu- It is also important to mention prefer to have fi nancial guarantees in tions by paying large and sometimes one key feature of the Russian client’s force covering their principal risks. We excessive commissions. In its turn, this perception of insurance. A substantial can even say that to some extent the type of insurance contract is mostly proportion supposes that each ruble/ local corporate insurance market (at arranged directly, without an insurance dollar/euro they spend on insurance least its leaders) has developed under broker’s involvement. Usually after should be returned to them in claims the infl uence of such clients and their signing such policies, the clients’ share- payments. Th is is due to the fact they requests. Th is particularly concerns the holders and management forget about do not consider insurance as a long- various employee benefi ts programs other risks and the assets which they term risk transfer instrument, by which which have become popular in Russia could potentially protect. Th ey just see they could have a clean loss history for, in recent years, like Voluntary Medical no need for it. let’s say, nine years, with a major loss insurance or Accident and Life. We face very similar approach with occurring in the tenth year. Investing in Does all the above mean that the 3rd party liability insurance. It is well protection of their assets is not a prior- situation with domestic middle market known that in the Western markets, ity for them. business is negative and has no possi- liability insurance and its various types And how does the situation dif- bilities for improvement? Th at it is not (general, employer’s, product, pro- fer for Western companies working in the case in all. fessional, etc.) are well developed. In Russia, despite the fact that the liabil- ity insurance market has shown solid growth recently, not many domestic MAI – Insurance Brokers Ltd. companies are aware of its availability, or even existence. At best they may buy the general liability cover which is required by their landlord in the case of rented premises. Of course, we cannot avoid here mentioning compulsory classes of insurance, especially in recent legisla- tion on dangerous industrial objects. With all its positive consequences and its social role, we should clearly under- stand that the adoption of mandatory classes (which became key drivers of insurance market growth, in particular MTPL/OSAGO) does not contribute to the popularization of insurance in the minds of either domestic business or private individuals. Unfortunately, the vast majority of consumers treat Your insurance consultant and risk advisor in Russia such insurance as an additional tax, and Property Liability Motor Employee Benefi ts Cargo Construction Banks and Trade credits risks do not fully understand its benefi ts. MAI Insurance brokers Ltd. The same approach generally 11A, bldg. 1, Seleznevskaya street, applies to the various employee benefi t 3rd fl oor, Moscow, Russia, 127473 insurance programs, which are widely +7 495 684 32 33, [email protected] purchased by Western companies in Croatia • Czech Republic • Estonia • Hungary • Latvia • Lithuania • Poland • Russia but rarely requested by most Romania • Slovak Republic • Russia • Ukraine • Georgia • Albania
Russian clients in the middle market Advertising
AEB BUSINESS QUARTERLY • Winter 2012 24
Undoubtedly, in this rather specifi c and complicated process with its own A bank client applying to borrow situation, the role of the professional specifi c features. Nevertheless it has money is obliged to secure such insurance broker/consultant becomes shown signs of growth in recent years, cover, often not delving into con- crucial. Th e problem is that in Russia and become more popular with corpo- tract details, but accepting terms most corporate clients are not accus- rate clients (including the middle mar- and conditions which may not fully tomed to using broker services. Mainly, ket segment). It is specifi cally required protect their interests from poten- their general approach is rather con- in the case of complicated insurance tial risks. servative and skeptical, and varies products (construction, marine cargo, only when they are off ered some sort trade credits, business interruption of fi nancial advisor or intermediary. the broker from the insurance agent (a and others) and for products where (I would say that this is the general part-time representative of an insurance benchmarking for consumers is impor- Russian approach to fi nancial sector company whose main task is to sell only tant. In the latter case, corporate clients intermediaries.) Th e situation becomes insurance products to the client). Th e increasingly seem to see more benefi ts more complicated when we talk about forthcoming amendments to the Federal of utilizing professional brokers acting imputed insurance, such as the insur- Law “On organization of insurance sec- as wholesale buyers on the insurance ance of pledged property in favour of a tor in the Russian Federation” does not market. In turn, this enables corporate lender or bank. leave much space for the broker should clients to get more attractive off ers At the same time, there were 175 the so-called “Scandinavian model” than they might get when acting on registered insurance brokers in Rus- be adopted here (meaning that insur- their own, as well as professional advice sia as of June 2012 – which is not a ance brokers can generate income only on sophisticated insurance issues. small number . However, the number of through fees paid by their clients). Obvi- At the same time, we cannot deny licensed insurance companies is signifi - ously if such a concept is introduced, it that the current situation in Russia has cantly higher, being 556 (in June 2012). will not contribute to broker develop- changed from the period when most In Western countries this proportional ment in Russia, where most corporate clients could not diff erentiate between relationship is the opposite. clients skimp on insurance and are not brokers and insurers. Overall, we can Th e uncertain legal status of the willing to pay extra fees to the broker, look with a certain optimism at the insurance broker/intermediary in Rus- even when they clearly understand what medium term, and regard brokers in sia also brings a certain complexity to added value their services bring. Russia as active participants in insur- the way business is conducted. Current Certainly, the development of insur- ance operations and an integral part of legislation does not clearly diff erentiate ance broking in Russia has been a long the fi nancial services industry.
AEB BUSINESS QUARTERLY • Winter 2012 25 HR ISSUES AND TRENDS IN THE INSURANCE INDUSTRY Elena Novoselova, Director, Coleman Services St. Petersburg policies, assess risks, and settle claims. zational departments, as well as for some Th ose tasks are performed by staff with positions in marketing and advertising. a background in insurance. In impor- Th e main job of the HR department tant cases, the front offi ce employees is to facilitate communications between have an area of specialization, such as all structural elements of an insurance car insurance, voluntary health insur- company and its employees. As with ance, property or cargo insurance. the HR market in general, the insurance Th e key players in the front offi ce sector is facing a shortage of skilled man- section are agents and sale manag- power. Th e shortage is brought about ers. Non-experts see little diff erence by a lack of specialists in certain areas of between these two roles. However, insurance; this group constitutes 36% of there is one. An insurance agent's pri- the personnel in demand. nsurance is one of the most dynamic mary job is to generate business for Despite the boom in the insurance sectors in a modern economy. Th ere the company on a commission basis. market in the past 10-15 years, there is are two main factors to consider An agent manages his/her own time still a high demand for qualifi ed person- when selecting an insurance compa- and prioritizes his/her workload. He or nel with the relevant educational back- Iny. While individual clients cite the com- she is often employed by several insur- ground and expertise. pany’s reputation as the primary one, for ance companies. An agent does not As the industry continues to expand, corporate clients the most important have fi xed working hours or a salary. and insurance companies continue to considerations are the company’s reli- As a rule, such people are not full-time grow, the problem becomes even more ability and stability. Th e competence of employees of a single company. acute. Under conditions of a booming the staff is considered secondary by both A sales person is a full-time member market, the companies that are able to categories. of staff who adheres to corporate rules off er not just the best prices but, what As with any business, people are the and standards and is committed to the is more important, the best level of cus- biggest asset of an insurance company. team. Such employees are directly inter- tomer service, will win customers’ loy- Th e nature of the insurance business ested in the success of their department alty. Th at is why, apart from other factors necessitates specifi c personnel qualifi ca- and the company as a whole. Typically, such as the introduction of new insur- tions. Th ose are, fi rst of all, professional the compensation package of a sales per- ance products and services through their skills and knowledge in the specifi c areas son includes a fi xed salary and a commis- partners (such as banks and clinics), the of insurance. For example, many experts sion calculated as a percentage of premi- highest importance is attached to the in voluntary health insurance have two um receipts, or a bonus based upon the professional level of the staff . Th is is a degrees, in economics and medicine; achievement of sales targets. Th e market key factor that clients consider when tak- experts in the insurance of industrial is now shifting its focus from agents to ing a decision to sign a contract with a property have both an economic and a sales managers. Successful candidates for company, and to renew it when the initial technical educational background. Th e a position as sales manager should have a insurance period is over. appearance of new insurance products proven track record in sales, higher edu- Car insurance specialists are in the calls for a broader range of knowledge. cation and, the most important thing, highest demand. Hopes that were pinned Insurance company employees are excellent interpersonal skills. on the introduction of motor third party grouped into functional departments Th e back offi ce consists of seve- liability insurance (“OSAGO”) have been according to their job descriptions. ral departments that are not directly justifi ed: the car insurance market is Th ey are divided into two groups: front involved in the process of insurance. Back growing steadily, and the relevant quali- offi ce and back offi ce. offi ce personnel generally handle the fi ed specialists are highly sought after. Front offi ce staff are involved in the administrative aspects of the business. Also, the industry is facing a shortage process of insurance. Some of them are Th ese include the fi nance, accounting, of experienced underwriters – offi cers responsible for sales of policies. Th ough administration, marketing, advertising whose job is to evaluate the risks. Because the majority of such employees may not and PR departments. For the majority the system of insurance risk evaluation have previous work experience in insur- of back offi ce staff , previous work expe- is underdeveloped in Russia, and edu- ance, they are often successful in sales. rience in insurance is preferred rather cational establishments do not provide Th e front offi ce also includes than essential. Experience is particularly training for such specialists, fi nding suit- departments that develop insurance important for the fi nancial and organi- able candidates is a real challenge for an
AEB BUSINESS QUARTERLY • Winter 2012 26 insurance company. Th e process might But recently the situation has changed. job interviews to identify and assess the take quite some time. Nowadays, insurance companies pay candidates’ professional and personal How is the industry addressing this more attention to qualifi ed personnel skills. Th e process results in the selec- problem? Today the employer’s focus has and insurance agents, a tendency which tion of two or three fi nalists, whose shifted towards candidates – profession- is most clearly revealed in the policy of profi les are submitted to the client. als in their fi eld. Th is shift brought about motivating employees. Th e situation is somewhat diff erent changes in the HR policies of the lead- Personnel enjoy a comprehensive with entry-level recruitment. For such ing insurance companies. As they con- compensation package which matches personnel, insurance companies prefer tinue to suff er from a personnel shortage, that of senior managers. In general, one to do their own recruitment. How- employers seem to understand the need can say that companies’ policies towards ever, in the event of mass recruitment to invest time and eff ort in staff training. employee motivation are well balanced, projects (e.g. due to expansion plans or Th ey believe that this kind of investment with the focus on employees’ remunera- the opening of a new regional offi ce), will pay for itself. tion and training. Within the industry, companies may resort to the services of Nowadays, companies regularly orga- salary levels are high and competitive. recruitment agencies. In such cases, the nize sector-specifi c industrial training for Competition for customers forces most suitable candidates are selected their qualifi ed personnel, and business insurance companies to approach the as a result of team-work or group tests and managerial skills training programs recruitment of employees at all levels, (working environment simulations). for senior and middle managers. Th e from top-level to entry-level managers, Experience has shown that the main human resources defi cit has forced HR with great caution. To fi ll senior man- requirements for candidates in the insur- managers to think about their personnel agement positions, companies usually ance sector are a sound knowledge of reserve. Even two or three years ago, just commission recruitment agencies that the market as well as analytical and fore- a few entry-level managers were eligible specialize in the insurance and fi nan- casting skills. Knowledge of the English for external training programs, whereas cial sectors. language is a major advantage (and some- nowadays companies attach a greater Th e agency is given a profi le of an times a must), as there are now quite a few signifi cance to identifying and devel- ideal candidate, which is then used for foreign companies present in the market. oping the potential of their employees. initial screening of applicants. As quali- Experts predict that due to the grow- Th is concerns both training and reten- fi ed candidates are extremely valuable, ing business of foreign and Russian oper- tion of personnel. In the past, HR man- the consultant needs to use all avail- ators, the expansion of agent networks, agers were more focused on providing able tools, e.g. direct search, database and a diversifi cation of services off ered, training and development opportunities and job engines search, etc., to fi nd the the industry’s personnel shortage will for senior and middle-level managers. right candidate. Recruiters carry out continue to increase. THE AEB CONFERENCE CENTRE IS AVAILABLE FOR YOUR MEETINGS AND CONFERENCES
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AEB BUSINESS QUARTERLY • Winter 2012 27 NETWORKING
L-R: Joerg Bongartz, Deutsche Bank, AEB Banking Committee Chairman; Sergey Sinkevich, Moscow Exchange Group; Stuart Lawson, Ernst & Young, Russia & CIS, AEB Finance &Investments Committee Chairman
Briefi ng by Sergey Sinkevich On October 24th, 2012 a briefi ng by Sergey Sinkevich,
Participants at the Partnership for Modernisation Conference Managing Director, Primary Market and Globalization, Partnership for Modernisation Conference Moscow Exchange Group, On October 12th, 2012 AEB experts participated as speakers was held at the AEB Con- Sergey Sinkevich, Managing Director, Primary and moderated a session at the Partnership for Modernisa- ference Center. Th e briefi ng Market and Globalization, Moscow Exchange tion Conference, organized by the Delegation of the Euro- was named “Russian Capital Group pean Union to Russia and the Ministry of Economic Devel- Market: Press the Reset Button” and was dedicated to the new opment. Participants of the conference discussed invest- opportunities Russian Capital Market provides to the compa- ments into modernization, trade and investment, regulatory nies in various business industries. Th e event was chaired by environment, approximation of standardization systems and Joerg Bongartz, Chairman of the Board, Deutsche Bank, AEB technical regulations of Russia and the EU, cooperation in the Banking Committee Chairman and Stuart Lawson, Executive areas of the rule of law, small and medium business support, Director, Senior Advisor, Ernst & Young, Russia & CIS, AEB education and training. Finance &Investments Committee Chairman.
L-R: Dirk Vantyghem, Director of International Aff airs, Eurochambres; Fernando M. Valenzuela, Ambassador, Head of the Delegation of the EU to Russia; Gunnar Wiegand, Director of Russia, Eastern Neighbourhood, Central Asia & OSCE, European External Action Service Event’s participants
Meeting with the Delegation of the European Parliament Committee on International Trade, headed by the Committee On October 29th, 2012 the AEB Board and Chairmen of the AEB Banking, Customs and Transport, Energy Effi ciency, Machine Building & Engineer- ing, Retail Trade committees had a Lunch Meeting with the Delegation of the European Parliament Committee on International Trade, headed by the Committee Chairman Mr. L-R: Ruslan Kokarev, AEB COO; Jeroen Ketting, Lighthouse Russia BV, Chairman of the AEB Energy Effi ciency Committee, Member of the AEB Board; Joerg Bongartz, Vital Moreira. Th e participants Deutsche Bank, Chairman of the AEB Banking Committee; Dmitry Cheltsov, TNT Express Worldwide (CIS), Chairman of the AEB Customs and Transport Committee, discussed Russian investment Guillaume Durand, Trade Aff airs Manager, Delegation of the European Union to the Russian Federation
AEB BUSINESS QUARTERLY • Winter 2012 28
L-R: Erwin Trinkl, Metro Group, Chairman of the AEB Retail Trade Committee; Jon Hellevig, Awara Group, L-R: Bernd Lange, Member of the European Parliament Committee on International Trade; Inese Vaidere, Member of the AEB Board; Philippe Pegorier, Alstom, Chairman of the AEB Machine Building & Engineering European Parliament Committee on International Trade; Vital Moreira, Chair of the European Parliament Committee, Member of the AEB Board Committee on International Trade climate, business environment and EU-Russia relations. Th e AEB the situation with intellectual property rights and public procure- members gave their views on development of the automotive, ment. Th e AEB Board once again raised concerns about the EU- banking, machine building and retail industries, challenges for Russia visa dialogue and highlighted the importance of a visa-free small and medium-sized enterprises, discussed customs issues, regime between Russia and the EU for business.
International Forum "Building Automation and Energy Effi ciency" On November 7th, 2012 the Interna- tional Forum "Building Automation and Energy Effi ciency" took place in the framework of Interlight Moscow 2012 powered by light + building. Th e forum was co-organised by the Association of European Businesses and Messe Frankfurt and provided an overview of the building automation industry in connection with energy effi ciency, its Participants of the forum development prospects, problems and Siemens, Drees & Sommer, Bayer, Legrand Group Russia, Schneider Electric, possible solutions. Presentations were Somfy and АЕСОМ. Th e Forum was moderated by Jeroen Ketting, Managing delivered by acknowledged speakers Director, Lighthouse Russia BV, AEB Board member and Christophe Vicic, COO, from Lindab S.A, KNX Russia, Gira, Jones Lang LaSalle, Chairman of the AEB Real Estate Committee.
Briefi ng with Michel Barnier, European Commissioner for Internal Market and Services
L-R: H. E. Fernando M. Valenzuela, Ambassador, Head of the EU Delegation to Russia; Frank Schauff , AEB CEO; Philippe Pegorier, Alstom, Member of the AEB Board; Michel Barnier, European Commissioner for Olga Bantsekina, Coleman, Deputy Chairman of the AEB Board; Michel Barnier, European Commissioner for Internal Market and Services; Gerald Sakuler, BENE RUS, Internal Market and Services Deputy Chairman of the AEB Board On 15th November, 2012, the members of the Association of European Businesses met with Michel Barnier, European Com- missioner for Internal Market and Services, during his visit to Moscow. Th e briefi ng was dedicated to the Banking Union, economic and budgetary integration: a stronger Europe for a solid strategic partnership with Russia. Th e event was co-chaired by H. E. Fernando M. Valenzuela, Ambassador, Head of the EU Delegation to Russia, Olga Bantsekina, Deputy Chairman of the AEB Board, Gerald Sakuler, Deputy Chairman of the AEB Board, Philippe Pegorier, Member of the AEB Board and Frank Schauff , AEB Chief Executive Offi cer.
AEB BUSINESS QUARTERLY • Winter 2012 29 AEB COMMITTEE UPDATES Crop Protection Committee (CPC) Container Management Scheme Project One of the priority orientations of the AEB CPC is establish- ing Container Management Scheme (CMS) in Russia. CPC is working on implementation of the pilot project dedicated to set up CMS in Russia, supported by the European Crop Protection Association (ECPA) and the Government of the Voronezh Region. On the 25th of October, 2012 the Memorandum of Coop- eration to Implement the Container Management Scheme Frank Schauff , AEB CEO, and Alexey Gordeyev, Governor of the Voronezh Region Voronezh (CMS) Pilot Project in the Voronezh Region was signed by the Russian Union of Crop Protection Products (CPP) Manu- A.Spivakov, Deputy Chairman of the Administration of the facturers. Initiative of the CMS Pilot Project belongs to the Voronezh Region, Head of the Department for Agribusiness international and Russian CPP manufacturers and is aimed of the Voronezh Region. Th e Memorandum was preliminary to set up CMS in the Voronezh Region with country-wide signed by F. Schauff , the AEB CEO, and A.Uskov, President of expansion later as appropriate. AEB Participation in the Annual Events of the European Crop Protection Association 13–16 November GR Manager of the Crop Protection Committee (СPC), Tatiana Belousovich, participated in an event on Malta organized by the European Crop Protection Association (ECPA): the fi nal meeting of the European associations networking and the Annual Conference “Meeting legislative and stewardship challenges”. Since November 2009 the AEB has been an ECPA associate member. Th e AEB was mentioned as a positive example in connection with the CPC initiative on the Pilot Project for the collecting and recycling of waste CPP containers in Voronezh region that will start in 2013. Th e CPC anti-counterfeiting activities were also supported and appreciated during the European associations’ networking meeting. Customs and transport committee IV International Conference “Customs and business: international and regional aspects of cooperation – 2012” On October 23, 2012 Reiner Hart- aninov, Head of the Federal Customs Th ese mainly relate to such signifi cant mann, Chairman of AEB Board, gave a Service. events as the entry of the Russian Fed- speech at the IV International Confer- Mr. Hartmann emphasized certain eration into the World Trade Organiza- ence “Customs and business: interna- most signifi cant positive examples of tion. Another equally important event tional and regional aspects of coopera- cooperation, which confi rm effi cient was the establishment of the Customs tion – 2012”, which is organized on an collaboration of the AEB and Federal Union (CU) and deeper integration of annual basis by the Federal Customs Customs Services, and other public the Eurasian Economic Community Service of Russia on the eve of Cus- authorities of the Russian Federation. countries within the Customs Union. toms Offi cer Day. Th e Conference was He underlined that recently the Mr. Cheltsov, Chairman of the AEB opened Mr. Medvedev, Head of the Russian customs law and practices Customs and Transport Committee Russian Government, and by Mr. Beli- have been subject to visible changes. spoke at the round table "Customs and
Reiner Hartmann, Chairman of the AEB Board The RF Prime Minister Dmitry Medvedev addressed Conference participants
AEB BUSINESS QUARTERLY • Winter 2012 30
Administration: Foreign Investments the Russian economy. Legal Committee in the Russian Economy”, which was Dmitry talked about the implemen- organized by the Federal Customs Ser- tation of the Road Map “On Customs Public-private partnership vice within the Customs Conference Administration improvement”, and working group formed and Customs Exposition. amendments to the Russian Code of Th e AEB Legal committee has set up Dmitry Cheltsov raised the impor- Administration offences, inclusion/ a working group on development of tant subject of customs regulation, exclusion of the customs brokers in the Russian legislation on Public-Private implementation of which will facilitate customs registry, customs declaration Partnerships (PPPs). Th e experts on the fl ow of the foreign investments into correction after goods release. the working group prepared a table of amendments to the Draft Law on PPP, HR Committee which has been sent to the Ministry of Economic Development. Th e consul- Seventh Annual Meeting with the Labour Inspection tations are scheduled for November On October 26th Head of Moscow Labour 2012. Inspection, Mikhail Malyuga, spoke to AEB Th e experts of the AEB LC Work- members during an Open Event on major ing group on development of the Fed- issues of labour law and its application. Th e eral Law # 57 on Strategic Investments meeting was a regular meeting that HR Com- is preparing the AEB amendments to mittee organized for AEB members. Mikhail, the Federal Law 57. together with Salan’s Partner Maria Ryzh- kova, delivered presentations followed by a Migration Committee L-R: Julia Borozdna, Deputy Chairwoman, HR’s Labour Law Sub-Committee; Evgeny Reyzman, Chairman, HR’s Labour question and answer session. Th e meeting Law Sub-Committee was attended by over 80 members of AEB. Meeting With Moscow Government On October 5th, 2012 Mr. Alexan- der Kirillin, Head of the Labour and Employment Department, Moscow Government, was a guest speaker at the AEB Migration committee meet- ing. Th e main issue discussed was a full or partial annulment of the required 2013 quota of AEB companies. In the end, the AEB Migration Committee agreed with the Moscow Government on a positive resolution L-R: Marina Ryzhkova, Salans; Mikhail Malyuga, Head of Moscow Labour Inspection; Olga Bantsekina, Chairwoman, Human Resources Committee with regards to the existing problems related to 2013 quota. At the request IP Committee of the Moscow Government, the AEB sent a list of companies which have Working Group on Parallel Import formed received a notifi cation regarding quota A working group on parallel imports was set up within the AEB IP Committee in rejection for 2013 from the Intergov- October 2012. ernmental Commission on foreign Denis Khabarov, Chairman of the AEB working group on parallel import, took employees’ recruitment. Th e applica- part in the Anti-Counterfeit Conference, which was held on October 22, 2012. tion letters on quotas for 2013 of the Mr. Khabarov clearly presented the business position against the legalisation of AEB members will be reconsidered in parallel imports, introducing international practice in evidence. January 2013.
Small and Medium-sized Enterprises Committee Open event “Sharing SMEs experience with outsourcing: challenges and opportunities”
On October 26th, 2012 the AEB Small and Medium-sized Enterprises Committee held an open event “Shar- ing SMEs experience with outsourc- ing: challenges and opportunities”. Th is Alex Medlock, Deputy Chairman of the SME Speaker–Yury Serzhantov, Managing Director, АLBIS PLASTIC, ООО; Committee, Regional Director, TMF-Group, Russia brought together outsourcing provid- L-R: Alexey Prisyazhnyuk, General Director, Prisyazhnyuk Investment Group; Orlin offi ce ers and companies using their services. Efremov, CEO, Manutan, Chairman of the AEB SME Committee
AEB BUSINESS QUARTERLY • Winter 2012 31
Th e key topics were: choice of a provider, out- staffi ng, HR and payroll administration, outsourcing of IT, and legal and logistics services. Th e speakers talked about positive aspects of outsourcing as well as its weaknesses and the peculiarities specifi c to Rus- sian business environment. Th e audience and speakers agreed that there is great potential for outsourcing L-R: Ekaterina Borushkova, Head of Payroll Services, ТМF Russia; Yuri Serzhantov, Managing Director, АLBIS development and growth within the SME sector in PLASTIC, ООО; Olga Balandinskaya, Deputy General Director, Coleman Services; Alexey Prisyazhnyuk, General general. Th e event was sponsored by TMF-Group. Director, Prisyazhnyuk Investment Group South Regional Committee Workshop “Utilities connections, permitting and industrial construction in Krasnodar region” On 6th November 2012 South Regional Committee together Krasnodar. with the Association of Industrial Parks held a meeting Th e participants discussed procedures involved in con- titled “Utilities connections, permitting and industrial con- necting to the main utility networks: gas, electricity, water struction in Krasnodar region”. Th e event gathered repre- and wastewater disposal. Speakers shared their views and sentatives of industrial companies successfully operating in experiences of doing business in Kuban and other Rus- Krasnodar for almost 20 years and investors who are going sian regions. Th ey also provided analyses of key challenges to locate their production facilities in that region. Repre- and success factors of the Krasnodar regional economic sentatives of Cargill, Seimens, Nestle Kuban, Philip Morris and business environment. Th e audience received a lot of Kuban, Claas and other AEB South regional committee practical advice and the most up-to-date information on members participated in this event at the Rimar Hotel, the issues. Career Days in Krasnodar Th e AEB South regional committee together with the kers from companies such as Cargill, Claas, Siemens, Philip noncommercial partnership “Center for strategical analysis Morris Kuban presented their investment projects, told about and regional development” held Career Days at the leading their training courses and post-graduate programs. Specialists Kuban higher educational institutions. On 15th November from Ernst and Young, PwC, OTP-Bank, Advocates Bureau- 2012 Career Days took place at the Kuban State University Yug and KrasnodarEXPO described career opportunities for and Kuban State University of Technology. present-day students inside and outside Krasnodar region. During the event, representatives of international com- Th e event was highly appreciated by all participants. Stu- panies operating in the Krasnodar region met students and dents and administrators from the universities had a chance explained tp them how to build a career in an international to learn about the requirements of business of applicants. company. Experts from Ancor and Adecco analyzed current Business representatives saw a signifi cant interest in wor- trends at the labor market and gave practical advice. Spea- king at international companies. Taxation Committee Business breakfast dedicated to practical aspects of Transfer Pricing On October 30th, 2012 the AEB Taxation Committee organized a business breakfast dedicated to practical aspects of Transfer Pricing. Transfer pricing has became a hot topic in Russia in view of the new Transfer Pricing Law which came into force on 1 January 2012. Th e meeting was chaired by Dr. Alina Lavrentieva, AEB Taxation Committee Chairwoman. Experts from PwC, Baker & McKenzie, Ernst & Young, Peugeot Citroen (Russia), Pepeliaev Group, together with rep- resentatives of the RF Ministry of Finance and Federal Tax Service discussed issues related to the preparation of controlled transaction notifi cations and transfer pricing documentation. Over 80 representatives of AEB member companies attended this event.
L-R: Nadezhda Kuzmina, RF Ministry of Finance; Maxim Maximov, Ernst & Young; Ksenia Litvinova, L-R: Svetlana Stroykova, PwC; Dr. Alina Lavrentieva, PwC, AEB Taxation Committee Chairwoman; Pepeliaev Group; Maria Kostenko, Baker & McKenzie; Vladimir Golishevsky, Federal Tax Service; Svetlana Vladimir Golishevsky, Federal Tax Service Stroykova, PwC; Dr. Alina Lavrentieva, PwC, AEB Taxation Committee Chairwoman
AEB BUSINESS QUARTERLY • Winter 2012 32
ness with the real sector, as well as the current state of, and forecast changes to, lease portfolios, the fi nancing of leasing MEMBER NEWS operations, threats to the development of companies, etc. Th e main sources of fi nancing leasing operations are Alinga Consulting commercial bank loans, with asset shares usually less than Alinga Consulting organized a seminar on November 8th 5%. In the next two years 60% of respondents would like to discuss major changes in Russian legislation which will to attract foreign funding. Th e most attractive industries aff ect all spheres of business in 2012 and 2013. Alinga also for leasing companies are the least risky ones: oil and gas, addressed issues relevant to companies with foreign capital. energy, rail and road transport. Good fi nancial conditions Visitors learned about VAT procedures for transactions and transparency of operations are the most important within the Customs Union which came into eff ect October requirements for lessees. Representatives of leasing compa- 1, 2012, and what changes would be implemented by the nies that own about 56% of the total lease portfolio among new accounting law, starting in 2013. Alinga also informed survey participants are optimistic about the future and the participants about the most problematic issues related to expect 39–50% portfolio growth by the end of 2012. income tax for highly qualifi ed foreign specialists and gave important information on hiring foreign employees. Managers of BDO Russia in Top-1000 Russian Managers list Several top-managers of BDO Russia were named in the “Top-100 Russian Managers” – annual ranking of the news- paper “Kommersant”. Each of them was named among the top ten: ■ Andrey Dubinsky, the most professional top managers; ■ Svetlana Karpukhina, the most professional HR director; ■ Irina Bazileva, the most professional marketing director; ■ Michael Feldman, the most professional director for pub- lic and corporate relations. "Top 1000 Russian Managers" is a joint project of the newspaper "Kommersant" and the Association of Russian Managers (AMR) that aims to identify the most profes- sional managers and leaders in their respective industries BDO Russia and functional areas over the year. BDO Russia acted as a general partner of the 20th anniversary of SAP in Russia EGO Translating Company BDO Russia acted as a general partner of the 20th anniver- Think global, act local sary of SAP in Russia, which was held on 18 October 2012 Th e EGO Translating Company has launched industry- in Federation Tower, Moscow City. oriented foreign language training and intercultural com- In his speech to the participants, Bogdan Kotsovsky, munication programmes to assist international companies head of the System Integration and Business Advisory working in Russia. department of BDO Russia, stressed that during twenty Inna Savelieva, PhD, Head of EGO Translating Universi- years of work in the Russian market, SAP's progress has ty, introduces the new project: “Th ese programs are designed been marked by achievements that cannot be overstated. to accommodate any specifi c needs of our customers like "I am extremely happy about the choice of the partner German for engineers in oil and gas industry or KPI design our company made 20 years ago, allowing SAP, then just a for HR specialists. All course materials include professional newcomer to the Russian market, a huge potential that later glossaries and specialised texts for reading comprehension turned into a common future for our companies. At that tasks. Intercultural communication programmes are also time, a new Russian economy was in its infancy, and now we off ered to facilitate expatriates with their integration to Rus- can say that SAP was closely involved in its birth, putting in sian culture and society or help HR specialists with manag- a strong immune system of the best management technolo- ing multi-national staff . Our company provides a full range gies," Mr. Kotsovsky said. of linguistic services including cross-cultural management. As part of the ceremony, BDO Russia as a partner of SAP Th e latter not only promotes eff ective communication with in Russia congratulated a number of companies for which your current and prospective partners, but also improves the most ambitious and important projects have been internal communication at any level within your company.” implemented – TNK-BP, FC TVEL and NLMK. Jones Lang LaSalle "Leasing safely" – BDO Russia’s market research Jones Lang LaSalle sets up a new business line BDO Russia has published a recent survey dedicated to Jones Lang LaSalle sets up a new business line within the Russia’s leasing market. Senior managers and experts from company’s retail department – the launch of the Retail Ten- 38 leasing companies, including major market players, ant Representation function aims to maximize the effi ciency participated in the research. We studied terms and condi- of the company’s retail services and to complete the Retail tions based on which the leasing companies do their busi- Department's overall structure.
AEB BUSINESS QUARTERLY • Winter 2012 33
Th e new team is to represent the interests of national and ■ JW Marriott Sochi Golf Resort, Russia international retailers in Russia and the CIS, driving and sup- ■ Courtyard by Marriott Sochi Plaza Hotel, Russia porting the clients regional expansion and helping those who ■ Krasnoyarsk Marriott Hotel, Russia are not present in the Russian market to enter it successfully. ■ Voronezh Marriott Hotel, Russia Th e Tenant Representation team provides a full range of space ■ Moscow Marriott Novy Arbat Hotel, Russia planning and leasing services, tailor-made for each concrete Marriott International operates six brands across Russia retailer. Th e service scope includes expansion strategy devel- and the CIS: the Ritz-Carlton, JW Marriott, Marriott Hotels opment, new markets entry strategy development, search & Resorts, Renaissance Hotels, Courtyard by Marriott and for sites and locations, competitive analysis, retail marketing Marriott Executive Apartments. research and lease and sale transactional support. Th e Retail Tenant Representation team is led by Vladi- mir Aleksandrovskiy. Goltsblat BLP Goltsblat BLP advised the Eurasian Development Bank Goltsblat BLP, the Russian Practice of Berwin Leighton Pais- ner (BLP), has successfully completed a project providing legal support for a transaction involving acquisition by the Eurasian Development Bank of 9.10% of the shares in the authorised capital of ZAO Verkhnekamskaya Kaliynaya Kompaniya, a subsidiary of the Akron Group, which is implementing a project to develop the Talitskiy sector of the Verkhnekamsk deposit of potassium and magnesium salts in the Perm Terri- MetLife Alico tory. Th e transaction was worth about USD 100 m. MetLife Alico was assigned A++ by “Expert RA” Th e other investors, apart from the Eurasian Develop- MetLife Alico (ZAO “ALICO Insurance Company”) was ment Bank, are GK Vnesheconombank and ZAO Raif- assigned with A++ rating by “Expert RA” rating agency. Th e feisenbank. Th e total aggregate investment by the Eurasian rating implies “Extremely High Level of Reliability” with a Development Bank, GK Vnesheconombank and ZAO Raif- rating prognosis described as “stable”, which indicates a high feisenbank in the authorised capital of ZAO Verkhneka- probability of the rating retention in the medium-term. mskaya Kaliynaya Kompaniya amounted to approximately MetLife Alico is the leader of the Russian life insurance USD 405 m. In addition, GK Vnesheconombank is to pro- market providing life, accident and health insurance prod- vide fi nancing in the form of a USD 1.1 bn credit facility. ucts and services to more than 1 million individual clients Th e investments raised will be used to fi nance construc- and 900 international and Russian corporates. tion of Talitskiy GOK. Among the positive factors which infl uenced such a Within the scope of the project, Goltsblat BLP advised high rating assignment is a good solvency margin index, a the Eurasian Development Bank on matters of Russian and high return on equity, high investment liquidity, diversifi ca- English law associated with the structuring of, and prepara- tion and reliability indices, as well as high insurance portfo- tion for, the binding documents on the deal. lio diversifi cation. Th e assignment of the rating to MetLife Alico is very MARRIOTT important for business development with the existing and Marriott to grow Russia and CIS portfolio by over 50 percent potential corporate and individual client base of the com- to more than 30 hotels by 2015 pany, as well as with its partners. It proves once again the Leading global hotel operator, Marriott International Inc. company’s fi nancial stability and capability to fulfi ll its com- (NYSE: MAR), is on track to double its portfolio in Europe mitments to clients, partners and shareholders. from 40,000 rooms to 80,000 by 2015. Marriott is fueling much of its growth in Europe with a strong focus on new MetLife with an honorable status of an offi cial sponsor of the development in Russia & the CIS, and today announced it Bolshoi for the next 3 years will grow its existing portfolio in the region by more than 50 Just before the opening of a new 237th theater season, percent to more than 30 hotels open by 2015. MetLife Inc. and the State Academic Bolshoi Th eater of Marriott International currently operates 19 hotels in Russia signed a new partnership contract, which endows Russia & the CIS across six lodging brands and has commit- MetLife with the honorable status of an offi cial sponsor of ted itself to opening an additional 11 hotels over the next the Bolshoi for the next 3 years. three years including: In Russia, MetLife Inc. is represented by MetLife Alico ■ Th e Ritz-Carlton Almaty, Kazakhstan (ZAO “ALICO Insurance Company”), a leader of the Rus- ■ Krasnodar Marriott Hotel, Russia sian life insurance market providing life, accident and health ■ Tsaghkadzor Marriott Hotel, Armenia insurance products and serviced to more than 1 million indi- ■ Baku Marriott Amburan Beach Resort, Azerbaijan vidual clients and 900 international and Russian corporates. ■ Renaissance Kiev Hotel, Ukraine Th e MetLife-Bolshoi partnership began in 2011 uniting ■ Marriott Krasnaya Polyana Hotel, Russia a giant of the American insurance business and one from
AEB BUSINESS QUARTERLY • Winter 2012 34 the Russian art world. “United by common values” is the slogan of the partnership, which emphasizes the magnitude of both enterprises, their long history, solid traditions and aspiration for perfection. Pepeliaev Group The Lawyer ranks Pepeliaev Group as 2012 Best Law Firm in Russia and CIS Th e Lawyer, the authoritative international legal publication, has ranked Pepeliaev Group as 2012 Best Law Firm: Russia and the CIS. Every year Th e Lawyer, as one of the world’s most respected legal publications, selects the best law fi rms that have earned recognition in the international community in the Konzept Moscow salon in March) caused a successful and whose professional skills and competence have been start to sales in this country. noted by their clients and colleagues. Th e independent jury Th e collection is presented in the gallery as a detached choosing the winners in each category includes the heads of island, an area in the house that allows privacy and relax- legal departments in household name companies, as well as ation. Th e space includes several functional areas: beauty, heads of law fi rms. Apart from feedback of the market play- wellness and basic needs. Each area provides cozy detach- ers, the experts take account of fi rms’ successful projects, ment and at the same time preserves a feeling of openness. their quality of services and customer care standards. Th e series is distinguished by its state-of-the-art technology Th e Lawyer’s experts have noted the excellent perfor- solutions: the functional division of a bathroom, exclusive mance of Pepeliaev Group’s lawyers in such important decoration of fl oors and walls, exquisite lighting and luxuri- projects as the FIFA project, which involved drafting the ous materials with the unsurpassed style of Giorgio Armani. laws and subordinate legislation for hosting and staging External minimalism of the conception is combined with the 2018 football World Cup, and the Shtokman project, maximum convenience, because the island is supposed to which involved providing legal support for development be designed by into account the smallest peculiarities. of oil deposits. Th e lawyers were also commended for their Th e opening presentation was arranged in the sol- involvement in expert committees improving Russian leg- emn and austere style of Armani: the program opened islation and a number of advisory projects where advice with the number “Walking-sticks” by “Style” ballet-show in was provided to international pharmaceutical and logistic the corporate black-and-white palette. Following welcome companies on M&A matters. speeches delivered by leaders of Roca and DOM-Laverna, “We are proud that Th e Lawyer’s experts and jury recog- the presentation of the spring-summer clothes collection nised the expertise, professional skills and competence of our was conducted in the special lounge area to familiarize lawyers who have been involved in international projects”, architects and designers with the Armani/Roca artistic said Sergey Pepeliaev, Pepeliaev Group’s Managing Partner. philosophy.
RH PARTNERS Roca presented solutions for public places at the exhibition RH PARTNERS expands activity to Ukraine “Hotel. Equipment and Technologies (PIR 2012)” RH PARTNERS is proud to announce that Ukraine has Roca demonstrated solutions for bathrooms in public places expanded the geography of the clients of RH PARTNERS’ at the exhibition for hotel business professionals: “Hotel. Executive Search Department. Th e successful completion Equipment and Technologies 2012”. of the project for the company “Richel” and our current Th e exhibition annually brings together the owners of cooperation with “Immochan Ukraine” make a good start- hotel and travel business, developers, architects, designers, ing point in this rapidly growing and promising market. We representatives of public authorities, mass-media, special- intend to develop long-term and fruitful partnership with ists in the HoReCa industry. “Hotel” off ers a comprehensive Ukrainian companies in the future. program of events for exhibitors and visitors. Roca The fi rst exclusive Armani/Roca showroom in Saint-Petersburg Roca in Russia, in collaboration with DOM-Laverna store chain, for the fi rst time in Saint-Petersburg conducted a presentation of an Armani/Roca collection for designers and architects, and also familiarized visitors with the his- tory of both brands and demonstrated special features in functionality and design. Th e event was held in the gallery of bathrooms in the River House trade center. Th e opening of the second showroom of this exclusive conception (the fi rst exhibition island had started to work
AEB BUSINESS QUARTERLY • Winter 2012 35 APPOINTMENTS Baltschug Kempinski Moscow Alessandro Redaelli appointed General Manager of the Hotel Nikol’skaya Kempinski Moscow Alessandro Redaelli has been appointed General Manager of the Hotel Nikol’skaya Kempinski Moscow, the new 5-star proper- ty in the centre of the Russian capital, being reconstructed at this moment for Kempins- ki Hotels, the oldest European luxury hotel Th e project department of Roca in Russia actively carries operator. Located in a prime historical loca- on business both in Russian and in the international market. tion, the opening of the hotel is planned for the end of 2012, Th e Roca and Laufen brand products equip important pub- and Alessandro will be in charge of 211 rooms and suites, lic places in the country, such as cultural and historical ones as well as 5 gourmet restaurants and bars, an exclusive reju- (Bolshoi Th eatre in Moscow), sports facilities, including the venating spa, and multiple state-of-the-art conference Students Games in Kazan, large hotels, airports, including faci lities. Sheremetyevo, business centers, trade centers, restaurants, In July 2011 Alessandro Redaelli headed the signifi cant residences and other public areas. opening of the fi rst Kempinski resort in Russia and the third Th e exhibition space of Roca showed recessed and coun- hotel in the country operated by Kempinski – Kempinski tertop wash-basins of diff erent models, including Urban, Grand Hotel Gelendzhik on the Black Sea coast. Alessandro known by pictures of the world famous cities, and Urbi, came to Russia from Switzerland where he was leading for designed by Carlo Urbinati. Solutions for hotel bathrooms two years the Hotel de la Paix in Geneva, for Concorde were included in the Meridian collection. Hotels & Resorts. Before coming to Switzerland, Alessandro Laufen, a premium Swiss brand, also presented wash- held the position of Group General Manager for Boscolo basins of diff erent types; and in addition to it, the Palace Luxury Hotels at the same time maintaining his post of series with recognizable cut washbasin which can be adapt- General Manager for the fl agship Boscolo Hotel Exedra ed to the required size right at the plant. A part of the exhibi- Rome. tion space exposed Laufen Pro collection with solutions for space-saving bathrooms. CMS Both trademarks presented the models of urinals and The Moscow offi ce of CMS international law fi rm announced partitions for public places of convenience. Specialists also the appointment of Anton Bankovskiy as counsel. paid attention to the solid surface washbasin, Richmond, as “Anton Bankovsky joined our fi rm, bringing part of the Aquaton brand. his strong background in advising clients on At the exhibition Roca Group showed the collections intellectual property matters, and was that embody comprehensive ideas for the interior decora- therefore appointed as the head of our intel- tion of bathrooms in the public areas, such as hotels and lectual property practice,” Jean-François residences. Marquaire, Managing Partner of CMS, Rus- sia, commented on the appointment. “In Russia Consulting addition to his work as counsel, Anton is an attorney-at-law 10 Years: Simple Structures – Simply Success and a patent attorney of the Russian Federation. Th e deci- We are delighted to be celebrating 10 years of assisting sive factors for this appointment were Anton’s qualifi ca- Western investors enter and operate on the markets in Rus- tions coupled with his education and long-term profes- sia and its neighboring countries. sional experience”. We start with the registration of your company, then take Anton has been advising clients on all IP matters, includ- over the accounting, fi nancial reporting and tax compliance, ing representation of clients before courts in IP related dis- implement IT solutions and ERP structures, provide fully putes and in campaigns against counterfeit goods. equipped offi ce space and recruit experts in accounting for Before joining CMS, Russia, Anton Bankovskiy was a our clients. Our slogan SIMPLE STRUCTURES – SIMPLY counsel to the intellectual property and TMT practice of SUCCESS has helped our clients and ourselves to success- another well-known international law fi rm. Some of his fully grow and maintain an overview of their investment. most noteworthy projects include representation of major We are now working for clients not only in Russia, but multinational companies operating in food, consumer, hi also in Belarus, Ukraine, Poland and Kazakhstan. tech and pharmaceutical industry sectors. We are proud that we are now serving over 500 West- Anton Bankovskiy obtained a degree in international ern companies and we would like to express a very sincere law from the Moscow State Institute for International Rela- THANK YOU to our clients as well as to our more than 300 tions (MGIMO), and holds a PhD degree in law. He is fl uent employees for their contribution to this success. in English, French and German.
AEB BUSINESS QUARTERLY • Winter 2012 36
Jones Lang LaSalle Most recently, Konstantin Goriainov held the position of Jones Lang LaSalle has announced a new Russian Retail general manager at two Moscow Holiday Inn hotels, totaling department structure more than 600 guest rooms. Due to his strong leadership Jones Lang LaSalle has announced a new qualities, coupled with a notable background, Konstantin Russian Retail department structure which helped both properties to achieve the highest possible will further strengthen one of the company’s occupancy and revenue. With over 19 years of hospitality key business lines. 25 retail experts have experience Konstantin has held several key positions with joined Jones Lang LaSalle in Moscow from many internationally recognized hotel companies, including Colliers International, under the leadership Marriott International and Lotte Hotels & Resorts, Korean of Tatyana Kluchinskaya. luxury chain of hotels. As well as Shopping Centers Leasing Agency and High Commenting on his new appointment Konstantin said: Street Retail Unit, the reinforced retail department will “Hilton Moscow Leningradskaya has held a leading posi- include two new business lines: Retail Tenant Representa- tions for several years in the Moscow hospitality market. tion and Concept Development. Our aim now is to keep up the famous international image Tatyana Kluchinskaya has worked in the retail business of Hilton Hotels & Resorts; develop its corporate and tour for 13 years. From 1999 to 2006 she worked for the Daev and travel databases; and provide our guests with more vari- Plaza Group as Head of the Project Development and ety of high class services.” Implementation Department, where she led the Europark Mall and Moscow Hotel multifunctional complex project. MetLife Alico In 2006 Tatyana joined Colliers International, fi rst as Dep- First vice president of MetLife Alico uty Head, Retail Department, and then since April, 2008 as Mikhail Sosnin is appointed the First vice Head of Retail Department and Regional Director. president of MetLife Alico (ZAO “ALICO Tatyana’s portfolio, of over 1 mln. sq. m., consists of the Insurance Company”). biggest retail projects in Russia, including Golden Babylon In his new role Mikhail will focus on the Rostokino, Centralnyi Detskiy Mir (iconic kids store in cen- development of strategy & planning, mar- tre of Moscow), River Mall, M5 Mall, etc. Tatyana’s client list keting, R&D, product marketing & devel- includes Hals Development, Patero Development, PPF and opment, PR & communications, business other development companies. quality & customer centricity. Mikhail has been with MetLife Alico since 2005 join- Jones Lang LaSalle to Expand its Shopping Centres Leasing ing the company as COO. On December, 1, 2010 he was Agency appointed a Vice-President while preserving his COO busi- Jones Lang LaSalle announces a new ness responsibilities. appointment in the Retail Department. Before joining MetLife Alico Mikhail worked with Tatyana Malyanova joins the company as Accenture Consulting Company, Russia. Mikhail holds Head of Shopping Centres Leasing Agency. MBA from American Institute of Economy and Business. Tatyana’s experience in commercial real estate is more than nine years. In 2003–2009 Pepeliaev Group she worked for Colliers International, rising Pepeliaev Group Bolsters its Banking and Finance Practice from the position of Consultant, Retail Department to Associ- Igor Marmalidi has joined Pepeliaev Group ate Director. as partner and head of Banking and Finance In 2010–2011, holding the position of Retail Director in Practice. Prior to joining Pepeliaev Group, Hals-Development, Tatyana was responsible for the market- Igor has served for 14 years as Head of the ing and leasing of SEC Leto in St Petersburg and Centralnyi Legal Department of Citibank providing Detskiy Mir in the centre of Moscow. legal support for Citibank’s businesses in Prior to joining Jones Lang LaSalle she worked in Col- Russia, Ukraine and Kazakhstan. liers International as Director of Retail Agency. Her port- He graduated from the International Law Faculty of folio includes SEC RIO Sevastopolskiy in Moscow, SEC the Moscow State Institute for International Relations and Krasnyi Kit (Moscow Region, Mytishchi), SC Kolco (Kazan) received a Master of Laws Degree (LLM) at Case Western and SEC Greenwich (Ekaterinburg). Reserve University (USA). Before joining Citibank, Igor spent several years working as a lawyer at Russian and Hilton Moscow Leningradskaya international law fi rms in Moscow and New York City. He Konstantin Goriainov Named General Manager of Hilton is licensed to practice law in the State of New York, USA. Moscow Leningradskaya Igor has twenty years of experience of advising clients on a Hilton Moscow Leningradskaya announced wide range of legal matters in relation to major projects in the the appointment of Konstantin Goriainov as banking sector; banking and securities markets regulations; the general manager of the hotel. In his new commercial, corporate and fi nance law; structuring of interna- role, Konstantin will oversee all areas of the tional fi nancial and investment transactions; securities issuance distinguished 273-room hotel, which is the and trading. He has extensive experience in currency control fi rst Hilton property in Russia. issues and dispute resolution involving fi nancial institutions.
AEB BUSINESS QUARTERLY • Winter 2012 37
ters and also includes representative offi ces in 36 cities around Russia and Ukraine. Since 2011, Cesar Satellite has NEW MEMBERS been a partner of Securitas, a large international security holding company. Cesar Satellite has a wide customer base Ассоциация Association of Regional Telecom exceeding 95,000 people. Региональных Операторов Operators One of the company’s priority lines of business is par- Связи Th e Association of Regional Telecom ticipation in implementing the ERA GLONASS project in Operators was founded in 1995 and Russia. has extensive experience in assisting its members to build relationships with the government. Th e Association also Era-Power has notable achievements in cooperation with the regulator, Era-Power is a Russian-Danish com- promoting legislation in the interest of market players. Th e pany that introduces Danish tech- majority of Association members are daughter companies nology to the energy effi ciency market in Russia, Ukraine, of Western holdings. Belarus and Kazakhstan. Th e company is dedicated to the manufacturing and sale of a soot removing system for solid Bellerage and liquid fuel boilers. Th e product is called Aerovit. Being a member of International Aerovit is based on a high-pressure and short-pulse Accounting and Audit Network (I2AN) Bellerage can pro- pneumatic impulse system. With the use of compressed vide its clients with a wide range of outsourcing, consulting air, removal of all deposits and build-up inside boilers and and auditing solutions in Europe, US and Asia markets. Our heat exchangers is achieved eff ectively. Th is ensures lifelong world-wide team of more than 50 partners and 500 employ- unaff ected effi ciency in the convective section of the boiler ees is fully dedicated to rendering professional services of and/or economizer, maintaining their purity and eliminat- the highest quality standards. ing maintenance downtime. Th e technology and materials Bellerage started its operations in CIS in 1999 and used to manufacture Aerovit's valve components protect acquired its local expertise through hundreds of successfully the installation from overheating. Th is allows it to operate delivered projects in various industries. at high temperatures and in harsh environments with mini- Bellerage provides Complex Business-Support Solu- mum maintenance. tions: Cost savings from the addition of Aerovit to any boiler ■ Financial Outsourcing and Consulting can be forecasted at 10% for fuel and near 100% for cleaning. ■ Payroll & HR Administration, Outstaffi ng Complete investment capital recovery can be expected in as ■ Tax & Legal Advisory and Litigation short as one heating season. Th e system's operating life can ■ Immigration & Registration extend to as much as 20 years. ■ IT Support ■ Audit, Transformation & Consolidation Freight Village Kaluga ■ Accounting Recovery and Restatement Freight Village Kaluga JSC (FVK) is an inte- Business Trend gral part of the “Industrial park of Vorsino” located alongside Business Trend is a multi-profi le inspection and the M3 Moscow-Kiev, 67 km from the MKAD and 20km expert organization, which provides project from the new Moscow administrative border. With its technical and inspection support, quality con- 500ha, FVK off ers multimodal transport infrastructure cov- trol and acceptance of equipment for oil and gas industry ering road, rail and air cargo. Th e concept and equipment since 1991. of the rail terminal allows for a trans-shipment handling Business Trend specializes mainly in performing quality volume equal to 1.300 TEU/day. It features a B+ class offi ce control and acceptance procedures for pipes, pipeline fi t- building with a Customs center capable of eff ectuating over tings and metallic structures at manufacturing plants. 400 declarations/shift, a container yard, a truck stop, A class Business Trend performs quality control and acceptance warehouses complex and a B+ class business park with 3* procedures on orders of leading oil and gas companies – hotel and related services. FVK is aimed at logistics intensive consumers and manufacturers of tubular goods. Gazprom industries, trans-shipment intensive trade and distribution has been one of the largest customer of Business Trend and related logistics service providers. since 2003. Business Trend performs its activities on the territory of FutureToday the Russian Federation and the European Union. FutureToday is the leading Russian employers branding and graduate Cesar Satellite recruitment agency. All thanks to our wonderful clients. So Th e Cesar Satellite Group is the we just want to use this opportunity to thank them again. A leader in Russia’s market for telematics services and a major very warm thank you goes to… Bacardi, Bain & Company, nationwide operator of an integrated security network Beeline, British American Tobacco, Castrol, Coca-Cola, based on the PERSON-CAR-HOME concept. Th e Cesar Credit Suisse, Deloitte, Ernst&Young, Ferrero, IKEA, InBev, Satellite nationwide chain consists of fi ve monitoring cen- John Deere, Johnson & Johnson, JTI, KPMG, L’Oreal,
AEB BUSINESS QUARTERLY • Winter 2012 38
LVMH, Microsoft, Nestle, Nielsen, Pernod Ricard, Philip main business operations from the key solutions in both Morris International, PricewaterhouseCoopers, Promsvyaz- offl ine and online retail. bank, Rosatom, Rushydro, Sberbank, Severstal, Sibur, Tele2, Th e Boston Consulting Group, Unilever, Uniqlo, Volvo, Parallels Yandex, Yota and many others! Th ank you! Parallels is a global leader in hosting and Cloud services Holdsway enablement, and desktop virtualization software. Th e legal consulting company LLC Parallels enables service providers of all sizes to quickly "Holdsway" was founded in 2006. Its prime activity focuses launch and profi tably deliver the widest range of hosting and on investment advice and support, covering direct and Cloud services for small and medium businesses (SMBs). portfolio investments, providing fi nancial institutions with a More than 5,000 service providers rely on Parallels to deliver variety of legal services on corporate and tax consulting, and Cloud services to more than 10 million SMBs in 125 countries. protecting intellectual property rights. Th e sphere of profes- Th e second business unit, Desktop Virtualization, makes sional interest of the company also includes monitoring and it easy for businesses of all sizes, and for consumers, to run analysis of legislation in diff erent branches of law. any technology they need on a variety of platforms without Currently the company employs 30 well-educated and compromise. More than three million people worldwide experienced lawyers possessing competitive professional skills. rely on Parallels Desktop for Mac to run Windows and Mac Our clients are credit and fi nancial institutions, indus- applications side-by-side on a Mac without rebooting. trial, energy and construction enterprises, medical and com- merce companies, innovation research and consulting fi rms Th omson Reuters and organizations. In particular large Russian and foreign Th omson Reuters is the companies and banks, operating within and outside Russia, world’s leading source of have profi ted from our services. Europeans are among them. intelligent information for businesses and professionals. We LLC "Holdsway" is expanding the range of its activities combine industry expertise with innovative technology to through strengthening of the specialised servicing of small deliver critical information to leading decision makers in the and medium-sized legal entities and individuals, as well as fi nancial, legal, tax and accounting, scientifi c, healthcare and providing complex legal assistance to large clients. media markets, powered by the world’s most trusted news organization. Th e headquarters is in New-York. We employ Lidings approximately 60,000 people and operate in over 100 coun- Since 2006, Lidings Law Firm has tries. been the leading legal advisor in the Th omson Reuters shares are listed on the Toronto Stock Russian market providing unparal- Exchange (TSX: TRI) and the New York Stock Exchange leled legal advice to over 200 interna- (NYSE: TRI). tional companies operating in Russia and the CIS on a wide range of business and legal matters. Unilever Over 90% of the fi rm’s clients are multinational com- In 2012 Unilever is celebrating its 20th panies and corporations. We advise market leaders, inter- anniversary in the Russian market. national investors, representatives of medium and large Th e Unilever portfolio in Russia includes global businesses interested in entering the Russian and CIS such popular brands as Calve mayonnaise, markets and in actively implementing a variety of business sauces and ketchups, Hellmann’s mayon- and commercial projects in Russia. naise, Baltimor mayonnaise, ketchups and vinegar, Vostoch- niy gurman ketchup and dressings, Knorr savory products, M.Video Rama spreads, Crème Bonjour dairy cream alternatives, M.Video is one of the largest European Pyshka baking margarine, ice cream brands Magnat, San consumer electronics retail chains with the Cremo, Torzhestvo, Ekzo, Cornetto and others, Beseda, revenue up to €2,7 billion and an annual sales growth of over Brooke Bond and Lipton teas, as well as shampoos Sunsilk, 23% a year (9 months 2012 results). Total number of stores Clear vita ABE and TIGI, shampoos and cosmetics Timotei, amounted to 281 in more than 120 Russian cities. Headcount Dove, Black Purl, Pure Line etc., Rexona and Axe deo prod- equals to approx. 17,000. Corporate sales per 1 sq meter ucts, home cleaning products Domestos, Glorix, Cif and Sun. amounted to €7300, that is one of the highest results in Europe. Currently, Unilever has 8 manufacturing centers in Rus- Since 2007 M.Video has been the one and only public sia, including a margarine plant in Moscow, a tea factory non-food retailer in Russia. Corporate shares are traded on in St. Petersburg, perfumes and cosmetics factories in St. the RTS and MICEX stock exchanges (Ticker MVID). Th e Petersburg and Yekaterinburg, a food savory plant in Tula main stakeholders are the founders of M.Video, Alexander and ice cream plants in Tula and Omsk. Th e company has Tynkovan, Mikhail Tynkovan, Pavel Breev. been constantly expanding its manufacturing facilities in Since 2011, the company has been widely implement- order to meet growing demand for its products from Rus- ing the Omni-Channel strategy that includes integration sian consumers. Th e company's investment in the Russian of diff erent sales channels and creation of the unique shop economy has exceeded 2 billion euro. It currently employs experience for its customers with the combination of the approximately 8000 people.
AEB BUSINESS QUARTERLY • Winter 2012 ASSOCIATION njǝǝǚǢǔnjǢǔǫ OF EUROPEAN BUSINESSES ǑǎǜǚǛǑǕǝǖǚǏǚ ǍǔǓǙǑǝnj Russian Federation, Ul. Krasnoproletarskaya 16, bld. 3 Российская Федерация, 127473, Москва, 127473 Moscow, Russian Federation ул. Краснопролетарская, 16, строение 3 Tel.: +7 (495) 234 27 64. Fax: +7 (495) 234 28 07 Тел.: +7 (495) 234 27 64. Факс: +7 (495) 234 28 07 [email protected]. http://www.aebrus.ru [email protected]. http://www.aebrus.ru
AEB MEMBERSHIP APPLICATION FORM / ǓnjǫǎǗǑǙǔǑ HA ǣǗǑǙǝǞǎǚ njǑǍ Please fill out the Application Form in CAPITAL letters, sign it and fax it: 234 28 07/ Заполните заявление печатными буквами и пришлите по факсу 234 28 07 Calendar year / Календарный год: 2013 (Please check the appropriate box/boxes / Укажите соответствующий год/года)
Name of your AEB Contact / ǎǬȄDZ ǶǺǹǾǬǶǾǹǺDZ ǷǴȂǺ Ǯ njǑǍ: ______
1. COMPANY / ǝǎǑǐǑǙǔǫ ǚ ǖǚǘǛnjǙǔǔ Company Name in full, according to company charter. (Individual applicants: please indicate the company for which you work / Название компании в соответствии с уставом. (Для индивидуальных членов – название компании, в которой работает заявитель):
Legal Address (and Postal Address, INN / KPP / ИНН/КПП: if different from Legal Address) / Юридический и фактический адрес, Phone Number / Номер телефона: Fax Number / Номер факса: если он отличается от юридического:
Website Address / Страница в интернете:
2. CATEGORY / ǖnjǞǑǏǚǜǔǫ: THE CATEGORY IS DETERMINED ACCORDING TO THE COMPANY’S WORLD TURNOVER Company’s world-wide turnover Please indicate your AEB Category / Мировой оборот AEB Membership Fee / Отметьте категорию (euro per annum) / Членский взнос в АЕБ компании (евро в год)
SPONSORSHIP / Спонсорство – 10,000 euro/евро
CATEGORY A / Категория А >500 million/миллионов 6,300 euro/евро
CATEGORY B / Категория Б 50–499 million/миллионов 3,800 euro/евро
CATEGORY C / Категория С 1–49 million/миллионов 2,200 euro/евро
CATEGORY D / Категория Д <1 million/миллионов 800 euro/евро
INDIVIDUAL (EU/EFTA citizens only)/ Индивидуальное (только для граждан Евросоюза/ЕАСТ) – 800 euro/евро
Any non-EU / non-EFTA Legal Entities applying to become Associate Members must be endorsed by two Ordinary Members (AEB members that are Legal Entities registered in an EU / EFTA member state or Individual Members – EU/EFTA citizens) in writing/ Заявление любого юридического лица из страны, не входящей в Евросоюз/ЕАСТ, и желающего стать членом АЕБ, должно быть письменно подтверждено двумя членами АЕБ (юридическими лицами, зарегистрированными в Евросоюзе/ЕАСТ, или индивидуальными членами – гражданами Евросоюза/ЕАСТ)
Individual AEB Membership is restricted to EU / EFTA member state citizens, who are not employed by a company registered in an EU / EFTA member state / К рассмотрению принимаются заявления на индивидуальное членство от граждан Евросоюза/ЕАСТ, работающих в компаниях, страна происхождения которых не входит в Евросоюз/ЕАСТ
Please bear in mind that all applications are subject to the AEB Executive Board approval / Все заявления утверждаются Правлением АЕБ
3. CONTACT PERSON / INDIVIDUAL MEMBER / ǖǚǙǞnjǖǞǙǚǑ ǗǔǢǚ / ǔǙǐǔǎǔǐǟnjǗǨǙǧǕ ǣǗǑǙ
Title, First Name, Surname / Ф.И.О:
Position in Company / Должность:
E-mail Address / Адрес эл. почты: 4. COUNTRY OF ORIGIN / ǝǞǜnjǙnj ǛǜǚǔǝǡǚǒǐǑǙǔǫ
А. For a company / Компаниям: Please specify COMPANY’S country of origin / Указать страну происхождения компании1
or B. For an individual applicant / Индивидуальным заявителям: Please specify the country, of which you hold CITIZENSHIP / Указать гражданство
Please note that only EU / EFTA members can serve on the Executive Board and the Council of National Representatives/ Внимание! В Совет национальных представителей и Правление могут быть избраны члены, представляющие страны Евросоюза или ЕАСТ.
Please fill in either A or B below/ Заполните только графу А или В
5. COMPANY DETAILS / ǔǙǠǚǜǘnjǢǔǫ ǚ ǖǚǘǛnjǙǔǔ
Company present in Russia since: ______/ Компания присутствует на российском рынке с:______г.
Company activities/ Primary / Secondary / Деятельность компании Основная: Второстепенная:
Please do not include this in
Company turnover (euro)/ In Russia / Worldwide / the AEB Member Database/ Не Оборот компании (в Евро) в России: в мире: включайте это в справочник АЕБ
Please do not include this in
Number of employees/ In Russia / Worldwide / the AEB Member Database/ Не Количество сотрудников в России: в мире: включайте это в справочник АЕБ
Please briefly describe your company’s activities (for inclusion in the AEB Database and in the AEB Newsletter) / Краткое описание деятельности Вашей компании (для включения в базу данных АЕБ и публикаций АЕБ)
6. HOW DID YOU LEARN ABOUT THE AEB / ǖnjǖ ǎǧ ǟǓǙnjǗǔ ǚǍ njǑǍ?
Personal Contact / Личный контакт Internet / Интернет
Media / СМИ Event / Мероприятие
Advertising Source / Реклама: ______Other / Другой:______
Signature of Authorised Representative of Applicant Signature of Authorised Representative of the AEB / Company / Подпись уполномоченного лица заявителя: Подпись Руководителя АЕБ:
______
______Date/Дата: Date/Дата:
1 Location of a parent company or of the main shareholder/ Местонахождение головной конторы или основного учредителя. EVENTS CALENDAR
Moscow
Date Event Location
14 December 2012 Training “KPI of professional development for AEB Conference Centre managers and employees”
19 December 2012 AEB End of the Year Tax Forum Ararat Park Hyatt
14-15 January 2013 Training “B2B Marketing” AEB Conference Centre
15 January 2013 AEB AMC Annual Press Conference tbc
22 January 2013 AEB Polish Euroreception (for top management of Residence of the Polish AEB member companies only) Embassy
25 January 2013 Training “Payroll budget – from simple to complex” AEB Conference Centre
January/February 2013, tbc AEB Annual Pensions Conference AEB Conference Centre
January/February 2013, tbc AEB Sponsor Event organised with Ruukki AEB Conference Centre Construction
January/February 2013, tbc AEB Sponsor Event organised with "Strana Detey" Premises of “Strana Detey”
4-5 February 2013 Training “Finance for Non-Financial Managers: AEB Conference Centre Financial Picture of Business for top-managers”
14 February 2013 Presentation of the Northern Caucausus Federal tbc District
28 February 2013 AEB Annual Customs Conference tbc
4 March 2013 Training “Eff ective Business Reporting Techniques” AEB Conference Centre
27-29 March 2013 Training “Development Technologies: Coaching for AEB Conference Centre Beginners”
18 April 2013 AEB Annual General Meeting Swissôtel Conference Centre
Saint Petersburg
Date Event Location
4 April 2013 Th e Fourth Northern Dimension Forum Sokos Hotel Olympia Garden
Please note that dates of events as well as venues can be changed! For updated information please visit the AEB website: www.aebrus.ru and www.aeb-training.ru Contact: Ekaterina Ostrikova, AEB Events Coordinator, Tel: + 7 495 234 27 64 (ext. 127) Advertising