Transcript Document
EBRD in Ukraine: Challenges
and Opportunities
Noel Edison
European Bank for Reconstruction and Development
Insurance & Financial Services
Director
EBRD Background
AAA-rated International financial
institution, founded in 1992 and located in
29 countries from central Europe to central
Asia
Shareholder breakdown
Japan
9%
Owned by 61 countries and two intergovernmental institutions
Largest single investor in Central and
Eastern Europe (CEE) and the
Commonwealth of Independent States
(CIS)
EBRD’s objectives include:
– Promoting the transition to competitive
market economies by investing mainly in
the private sector
– Mobilising significant foreign direct
investment
– Investing in projects and companies
whose needs cannot be fully met by the
market
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USA
10%
Others
11%
EBRD region
(excluding EU
members)***
7%
EU-27
countries**
63%
EBRD Background
Debt
€36.5 billion
Cumulative Gross Signings:
All sectors (€bn)
Equity
€9.4 billion
50
45
€45.9 billion invested
in over 2,750 projects
40
35
30
25
20
15
Financial Institutions (FI)
€14.9 billion (32%) invested in
1,282 projects
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2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
0
Debt
€10.1 bn (68%)
Equity
€4.8 bn (32%)
FI is a key element of the EBRD’s portfolio
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EBRD’s Profile in Ukraine
Ukraine is the Bank’s largest country of
operation after Russia
EBRD in Ukraine since 1993, 18 years
of experience in the local market
M &S
13%
41 staff based in Kiev, including 28
bankers
Total investments in Ukraine of over
USD 7 billion
Agribusiness
21%
Municipal
Infrastructure
5%
Financial
Institutions
31%
Approximately USD1.5 billion invested
last year, USD870m into financial
institutions
Total 249 projects (42 in 2009)
The EBRD is the largest financial
investor to the private sector in Ukraine
Transport
14%
Natural
3%
Telecom
4%
Energy
7%
Property
2%
EBRD Insurance in CIS
Russia
$150mln Equity Investment
Ukraine
Russia
$4mln Equity Investment
€ 26.5mln Equity
Investment
March 2008
May 2007
Purchase of up to 10% stake in
RESO Insurance
30% equity stake in a
greenfield life company
alongside Renaissance
Insurance Group / Sputnik
Group Limited
November 2008
30% equity stake in a
greenfield direct insurance
company
Regional
CHF250 million
equity framework
Six insurance and pensions
sub-projects in three
countries
Azerbaijan
Armenia
EUR 1.2 million
equity finance
USD 0.5 million
equity finance
30% equity stake in an
Azerbaijani non-life insurer
35% equity stake in one of
Armenia’s leading insurers
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Ukrainian Insurance Sector
Insurance Penetration Rates
4.0%
3.6%
3.5%
3.2%
3.0%
3.0%
2.5%
2.2%
2.1%
1.8%
2.0%
1.5%
1.5%
1.5%
1.2%
0.8%
1.0%
0.5%
0.0%
Germany
Western
Europe
France
Czech
Rep
CEE
Poland
Turkey
Romania
Real market, net of financial schemes, Swiss Re Sigma (2007) and market sources
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Russia
Ukraine
Ukrainian Insurance Sector
Severely hit by financial crisis: 2009 non-life premiums down by more than 20%, life
premiums down by more than 30%
Challenging market conditions.
–
Retail new business volumes down due to bank distribution channels drying up
–
Corporate new business volumes down due to reduced budgets and pressures in large
corporations
–
Retention levels down, Claim payments up
–
Insurance receivables and bad debts up
High level of financial (tax) schemes – real insurance penetration is below official 2.5%
Compulsory insurance (motor) has low uptake (30-40% vs. 90-95% in Russia)
Majority of European insurers are yet to build a strong market position. Only AXA, Uniqa
have sizeable presence, PZU and QBE also present
Highly fragmented market – top 10 only have 60% market share. No dominant market
leader – AXA, Lemma, Providna have 8-12% each – opportunities for consolidation
Capital eroded by financial crisis
Regulatory developments could spur growth
Economic recovery in heavy industries will drive growth of corporate insurance
Life insurance a promising sector in the medium to long term, but currently only 5% of
premium volume
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Ukrainian Insurance Sector
Positives
Negatives
Open to foreign ownership
Growth potential – emerging
middle class
Questionable quality of
insurance book
Tax schemes
Room to grow in CMTPL
Profitability
Scarcity value of targets
Transparency
Some major strategic
investors are yet to enter
Price expectations
Perception of political risk
Under developed life &
pensions sector
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EBRD’s Value Proposition
Experienced financial investor in insurance
companies
Local experience, regional network
Relationships with key strategic insurers
Provider of technical assistance to aid company
development and promote transparency
Support dialogue between company, government and
regulator
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EBRD Project Criteria
€1-200 million
Minority positions, up to 35%
7-10 year maximum investment time horizon
Reputable local or strategic partners
Our success is measured by a combination of
transition impact and investment return
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Contacts
Noel Edison
Director of Insurance & Financial Services, London
Email: [email protected]
Phone: +44 20 7338 6638
Alexander Pavlov
Head of Financial Institutions Ukraine
Email: [email protected]
Phone: +380 44 277 1100
EBRD
One Exchange Square, London. EC2A 2JN, United Kingdom
www.ebrd.com
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