BANCASSURANCE By Jean Louis PIQUET April 14 th

BANCASSURANCE By Jean Louis PIQUET April 14 th, 2005 hannover life re ®

BANCASSURANCE Introduction Products How to sell ? Why entering into ? à Started in the 70's à Take off in the 80's, with the development of unit linked product and saving products Advantages European overview The way to BA Key of success Potential risks The Future 2 hannover life re ®

BANCASSURANCE Introduction Products BANCASSURANCE MARKET SHARE (Life Insurance) 1993 1996 1999 Collected Bancassurance Traditional Insurance Company 51 % 49 % 59 % 41 % 60 % 40 % 61 % 39 % 62 % 38 % Reserves Bancassurance Traditional Insurance Company 44 % 56 % 53 % 47 % 57 % 43 % 59 % 41 % 60 % 40 % How to sell ? Why entering into ? Advantages European overview The way to BA 2002 2003 (Forecast) Key of success Potential risks The Future hannover life re ®

BANCASSURANCE Introduction TOP TEN INSURANCE GROUP IN 2003 (Premium in Md EUR) WW Products France Life Non Life Axa 71. 6 10. 9 4. 6 CNP 19. 5 17. 2 1. 4 Why entering into ? AGF 16. 5 5. 3 4. 3 Advantages GROUPAMA 12. 9 3. 6 6. 9 PREDICA / PACIFICA 11. 4 10. 7 European overview GENERALI France 9. 6 6. 1 3. 4 The way to BA BNP Paribas Assurance 9. 3 6. 6 0. 0 Sogecap 5. 9 5. 7 0. 0 ACM 4. 9 3. 7 1. 2 UAF 4. 5 3. 9 0. 2 How to sell ? Key of success Potential risks Source FFSA The Future hannover life re ®

BANCASSURANCE Introduction But what is Bancassurance? Introduction Products • French Term How to sell ? • Standardized Mass Product Why entering into ? • Easy to understand / easy to sell Advantages • Limited guarantee European overview • Sold though a bank distribution channel The way to BA Key of success Potential risks The Future 5 hannover life re ®

BANCASSURANCE Introduction Products How to sell ? Why entering into ? Advantages à Products What kind of products ? - Mainly life products that can be broken down in 3 categories. Financial and repayment products. Depositors products. Simple standardized package products European overview The way to BA Key of success Potential risks The Future 6 hannover life re ®

BANCASSURANCE Ø Products Personal accident Introduction Products Ø Credit Insurance How to sell ? Why entering into ? Ø Mortgages / Mortgage Endowments Advantages European overview Ø Estate management The way to BA Key of success Ø Group pension plan / asset management Potential risks The Future 7 hannover life re ®

BANCASSURANCE Products, Training and Profit Introduction Products How to sell ? Why entering into ? Advantages European overview The way to BA Key of success Potential risks The Future 8 hannover life re ®

BANCASSURANCE Introduction How to sell ? Ø Bank network (branches, local office), Ø Direct and mail, Ø ATMS, Ø Telebanking, Ø World wide web. Products How to sell ? Why entering into ? Advantages European overview The way to BA Key of success Potential risks The Future 9 hannover life re ®

BANCASSURANCE Introduction à Why ? Bancassurance : why? Products How to sell ? Why entering into ? Advantages European overview The way to BA Key of success - Diversification of banking activities - Improvement of customer loyalty - Convergences of bank and insurance activities - Complementarity in economical cycles - Complementarity of the risks - To put on end to the market share's decrease on the saving products - A new source of profit - One contact bringing financial and insurance solutions Potential risks The Future 10 hannover life re ®

BANCASSURANCE Why ? Credit Life Insurance Property Insurance Introduction Buy a house Products Motor Insurance How to sell ? Why entering into ? Child Education Client Buy a car Advantages European overview The way to BA Key of success Unit Linked Product Save for retirement Credit Life Insurance Potential risks Life Insurance The Future 11 hannover life re ®

BANCASSURANCE Why ? Ø For a Bank Introduction Products How to sell ? • Intense competition : - Increase income generated - Reduction of the Bank fixed cost - Opportunity to increase productivity - Risk diversification Why entering into ? Advantages European overview The way to BA Key of success Potential risks The Future 12 • Customers preference - Shifting investment towards products with higher ROI - Favourable tax • Increase customer loyalty - Detecting the need - Detecting cultural / social change - Cross selling potential - Client oriented hannover life re ®

BANCASSURANCE Advantages ? Introduction For Bank Products How to sell ? Ø Ø Why entering into ? Ø Advantages Ø Better hit ratio Lower cost Better processing technology Higher knowledge of potential needs. European overview The way to BA Key of success Potential risks The Future 13 hannover life re ®

BANCASSURANCE Why ? Ø For an Insurance Company Introduction Products How to sell ? Why entering into ? Advantages • Source of new business - Access to new client easily - Geographic / Demographic new scope • Wider range of products • Products otherwise not feasible European overview The way to BA Key of success • Administration : Economy of scale • Defensive positioning Potential risks The Future 14 hannover life re ®

BANCASSURANCE Advantages ? For Insurers Introduction Products How to sell ? Why entering into ? Ø Know customer -> risk assessments easier Ø Increase market penetration Ø Access to different market segment Improve public image Lower cost Product that match the need (peace of mind) Delivery at doorstep Convenience in payment Easy & automatic renewal Advantages Ø European overview Ø Ø The way to BA Key of success Potential risks Ø Ø Ø The Future 15 hannover life re ®

BANCASSURANCE à Introduction European overview France : - 60 % of the market share - 35 % of the market share (Term Life Insurance ) - 7 % of the market (Non Life Insurance) - 69 % of the market (New Individual Saving) - Bank establishing Bancassurance Company Products How to sell ? Why entering into ? Advantages European overview The way to BA Key of success Potential risks à Spain : - 65 % of the market (Life Insurance) - A 30 % growth in average since the 15 past years - Alliance between Bank and Insurance Companies - A regional specifity which quicken the Bancassurance set up (Regional Saving Bank = 50 % of the premium) The Future 16 hannover life re ®

BANCASSURANCE Introduction Products How to sell ? Why entering into ? Advantages European overview à Portugal : - 82 % of the market share - But a rather small market (= population 4 Mios) à Italy : - Amato Law 1990 - From 8 % market share in 1992 to 50 % in 2002 - 70 % market share for saving product ("unit linked" or "index linked") European overview The way to BA à Belgium : Key of success Potential risks The Future 17 - The first Insurance Groups are Bancassurer - First distribution network - 56 % market share hannover life re ®

BANCASSURANCE European overview à UK : Introduction Products How to sell ? Why entering into ? Advantages European overview - From 40 % Broker's market share in 1992 to 54 % in 1999 - From 15 % Bancassureur's market share in 1990 to 9 % in 2003 à Germany : - Direct sale forces : 85 % in 1992 – 54 % in 1999 - Broker : 8 % in 1992 – 20 % in 1999 - Bancassurance : 1 % in 1992 – 18 % in 1999 - Growth of markets shares of Bancassurance due to agreement between Bank and Insurers. The way to BA Key of success Potential risks The Future 18 hannover life re ®

BANCASSURANCE Introduction The way to achieve BA à Distribution agreement (exclusive or not) Products How to sell ? Why entering into ? Advantages European overview à A Bank wholly or partially acquires a Company à The Bank start establishing a Insurance Company The way to BA Key of success Potential risks The Future 19 hannover life re ®

BANCASSURANCE Introduction Products The way to achieve BA à Distribution agreement (exclusive or not) How to sell ? - No cost for the bank - Product can be branded or co – branded Why entering into ? - Basic training for bank employee Advantages European overview The way to BA Key of success Potential risks • Strength : • Weakness : - Need a close cooperation between Insurance Company / Bank - No gain for Database access (or nearly nil) - Insurance products must match the need - Low reactivity to cultural and social change. The Future 20 hannover life re ®

BANCASSURANCE Introduction Products How to sell ? Why entering into ? Advantages The way to achieve BA à A Bank wholly or partially acquires a Company • Strength : - Easier access to Database - Dedicated products - Better cooperation between Insurance Company and Bank European overview The way to BA Key of success • Weakness : - Higher cost for the bank - Higher reactivity to the change - Bank employees need a training Potential risks The Future 21 hannover life re ®

BANCASSURANCE Introduction Products How to sell ? Why entering into ? Advantages European overview The way to achieve BA à The Bank start establishing a Insurance Company • Strength : - Dedicated products - higher efficiency in detecting the needs and customers habits - Very close cooperation between Insurance Company and Bank The way to BA • Weakness : - Need staff training Key of success Potential risks - High capital cost - Need to acquire Insurance skill The Future 22 hannover life re ®

BANCASSURANCE The way to achieve BA Ø Distribution agreement : • OIB & MIC Introduction • NBK & ALICO Products • BBK & BKIC How to sell ? Why entering into ? Advantages European overview The way to BA Ø Merge and Acquisition : • ING (Netherland) – National Nederlanden & NMB Postbank • Arope Insurance (Blom Bank) • Dubai Islamic Bank & Aman Bank • Citigroup / Travelers Life & Annuity Key of success Potential risks The Future 23 Ø Establishing a new company : • Bancassurance Lebanon (CA / Fransabank / Libano Française) • Sogecap / NSGB Life (Société Générale) in Egypt hannover life re ® • Assurance Biat (Natexis) in Tunisia

BANCASSURANCE Key of success External Factors Introduction Products How to sell ? Ø Legal & Fiscal Environment i. e. Amato Law in Italy (+) i. e. Glass Steagal Act in U. S. (-) Why entering into ? Advantages Ø Low rate of Insurance penetration European overview The way to BA Key of success Potential risks The Future 24 hannover life re ®

BANCASSURANCE Key of success Internal Factors Introduction Products Ø Organisation / IT System integration Ø Remuneration / Training Ø Public image Ø Products sold How to sell ? Why entering into ? Advantages European overview The way to BA Key of success Potential risks The Future 25 hannover life re ®

BANCASSURANCE Introduction Potential Risks Ø Lack of sufficient experience Ø Complexity of the structure making supervisory oversight more difficult Ø Difference of culture between Bank and Insurance Ø Inadequate capital allocation Ø An aggregate risk exposure rather than acting as a hedge Products How to sell ? Why entering into ? Advantages European overview The way to BA Key of success Potential risks The Future 26 hannover life re ®

BANCASSURANCE The Future Ø Shop Insurance : Introduction Products - Carrefour - Auchan How to sell ? Why entering into ? Advantages European overview Ø Insurance Bankers : - AGF (Banque AGF) - AXA (Banque Directe -> AXA Banque) - Prudential (Egg) The way to BA Key of success The Future Potential risks The Future 27 hannover life re ®

Introduction Products How to sell ? Why entering into ? Advantages Thanks for your attention! European overview The way to BA Key of success Potential risks The Future 28 hannover life re ®