NOSSA Seguros Angolan Insurance Company 2017, March 28th Agenda - - PowerPoint PPT Presentation

NOSSA Seguros

Angolan Insurance Company

2017, March 28th

• 1. NOSSA Seguros Corporate Overview
• 2. Angolan Financial System Overview
• 3. Angolan Insurance Market
• 4. NOSSA Seguros Review
• 5. Insurance Sector Challenges

Agenda

NOSSA SEGUROS CORPORATE OVERVIEW

5%

MATEBA

Shareholding Structure Highlights

In 2012 BAI assumed control of NOSSA Seguros with the purchase of Real Seguros’ shares. BAI shareholdings reached 72% of NOSSA’s share capital. NOSSA Seguros - Nova Sociedade de Seguros de Angola, S.A. was founded in 6 October 2004, resulting of a partnership between the Insurance company Real Seguros, Banco Angolano de Investimentos, International Finance Corporation and a group of Angolan small investors. NOSSA Seguros, part of the BAI Group, is

• ne of the pioneering companies to start business in the insurance sector in

Angola. Officially, NOSSA Seguros started its activity in November 2005 and, closely attuned to the multiple needs of the Angolan market, operates in Life and Non-Life insurance, in the corporate and private segments. 3,5%

MRN

19,3%

SMALL SHAREHOLDERS

72,2%

BANCO ANGOLANO

DE INVESTIMENTOS

Mission and Values

Our mission is to contribute to the development of the Angolan insurance market by promoting inclusion, innovation and quality of services, meeting the needs of customers, employees, partners and shareholders.

CUSTOMER ORIENTED RESPECT FOR OTHERS It is our main purpose and where we focus our attention. We work to meet your expectations and needs For the people and for the commitments we make with them, either being employees, customers, partners or shareholders VALUING HUMAN CAPITAL PROFESSIONAL ETHICS Our employees are our most precious resource. Through their effort, we build and consolidate our brand We are guided by clear principles, in all

• ur

relations, based

• n

integrity, transparency, accuracy and truth SOCIAL RESPONSIBILITY CORPORATE SUSTAINABILITY We strive to develop a more fair, cooperative and more socially aware society We support sustainable conditions for the planet, for people and for our business

Governing Bodies

In 2016 ended the mandate of the current administration and NOSSA Seguros in an ordinary General Shareholding Meeting proceeded to the appointment of new governing bodies for the period 2016-2020.

 Chairman  2 Members  2 Substitute Members

SUPERVISORY BOARD

 Chairman  2 Members

REMUNERATION COMMITTEE

 Chairman  Secretary

GENERAL SHAREHOLDERS MEETING

 Chairman  Chief Executive Officer  2 Executive Directors  Non Executive Director

BOARD OF DIRECTORS EXTERNAL AUDITORS SHAREHOLDERS

ANGOLAN FINANCIAL SYSTEM OVERVIEW

Financial System in Angola

REGULATORS NUMBER OF PLAYERS

BANKING CAPITAL MARKETS INSURANCE

27 Banks 24 insurance companies (3 with Pension Funds under management) 51 brokers 399 agents 6 pension funds managers 26 Pension Funds 45 registered entities

Financial sector development strategy (1/2)

STRATEGIC PILLAR II STRATEGIC PILLAR III STRATEGIC PILLAR IV

FINANCIAL STABILITY FINANCIAL INCLUSION CAPITAL MARKETS INSURANCE & PENSION

FUNDS

• Strengthening of the legal

framework and supervision effectiveness to oversee and rule the financial sector, banks resolution, crises management, contingency plans, anti money laundering (AML), countering financing of terrorism (CFT), financial services networks (FSN) and financial services relevant IT systems.

• Shore up collaterals,

strengthen payments systems and promote retail payments, savings campaigns, ensure financing to SMEs, consumer protection and financial education initiatives.

• To promote the

development of capital markets with an initial focus

• n sovereign debt,

subsequently expanding to corporate debt and ultimately the equity market.

• To diversify the insurance

products offering and spread the insurance coverage.

• To develop the pension

funds industry alongside strong regulation and sound governance.

IMPLEMENTATION STRATEGY

STRATEGIC PILLAR I

Financial sector development strategy (2/2)

STRATEGIC PILLAR IV

INSURANCE & PENSION

FUNDS

• To diversify the insurance

products offering and spread the insurance coverage.

• To develop the pension

funds industry alongside strong regulation and sound governance.

INSURANCE:

a) Improve the regulations and supervision of the insurance industry:

New insurance regulation consistent with the international standards issued by the International Association of Insurance Supervisors (IAIS).

b) Strengthen of the supervision over the insurance industry:

Effective prudential and market supervision ensuring compliance with the regulation, based on a well trained and resourceful supervisor.

c) Spread the access to insurance products d) Set up ARSEG’s Insurance and Pension Funds Academy e) Reinforce “Motor insurance” and introduce mandatory “Personal indemnity insurance” f) Develop “Agriculture insurance”

PENSION FUNDS:

a) Review and update the legal and regulatory framework for insurance b) The taxation around insurance needs to be reviewed c) Increase awareness of the industry through the establishment of an association

ANGOLAN INSURANCE MARKET

NON-LIFE INSURANCE PENETRATION (GWP IN % OF GDP) AND GDP PER

CAPITA (USD) IN 2014 (IN AFRICA)

Context

2015 2014

Life Non-Life

2015

31% 32% 32% 32% 69% 68% 68% 68%

2012 2013

AFRICA

2014 2012 2013

ADVANCED MARKETS

42% 44% 43% 44% 58% 56% 57% 56% Source: Swiss Re, sigma explorer (non-life insurance penetration) and IMF, World Economic Outlook April 2016 (GDP per capita)

NUMBER OF COMPANIES

IN ANGOLA

ASAN – Association of Angolan Insurance Companies

ASAN

4 9 17 24 2005 2010 2015 2016

• Consultation with public

entities to improve the efficiency of healthcare provision;

• Creation of networks of

preferred providers. HEALTH TECHNICAL COMMISSION

• From a self-regulatory

perspective, all the associates subscription and claims management procedures are being reviewed;

• FUNDAP Creation.

WORKMEN’S COMPENSATION TECHNICAL COMMISSION

• Investment rules;
• Solvency requirements;
• New Chart of Accounts;
• Pension Funds fiscal

framework;

• Savings Insurance

Incentives. FINANCIAL AND FISCAL AFFAIRS TECHNICAL COMMISSION

• New minimum capitals

and new TPL rate;

• National registration file;
• Auto claims and fraud

file. AUTO TECHNICAL COMMISSION

WORKING GROUP ON LEGISLATION REVIEW MARKETING WORKING GROUP TRAINING WORKING GROUP

NOSSA SEGUROS REVIEW

NOSSA Seguros operational review

NOSSA Seguros operates Life and Non-Life insurance and manages open and closed Pension Funds. With a wide structure, expanding throughout the Angolan territory, it has 26 agencies installed in 15 provinces.

PENSIONS FUND LIFE (RISK) AUTO ACCIDENTS, HEALTH

AND TRAVEL

TRANSPORT, PROPERTY

AND OTHERS

It also relies on the support of the Bank BAI agencies’ network, under the channel Bancassurance.

NOSSA Seguros financial review

• Reinforcement of solvency from 166% in

2015 to 195% in 2016;

• Growth in 143% of net income;
• Increased coverage of technical

provisions from 150% in 2015 to 186% in 2016;

• ROE of 31%;
• Reduction of the Loss Rate;
• Maintenance of the Expense Ratio.

2016 Highlights

NOSSA Seguros financial review

INSURANCE SECTOR CHALLENGES

Is there a need to increase the number of mandatory insurance?

e.g. Freight transport insurance, multi peril insurance, personal indemnity insurance, etc

Reinsurance in Angola… When?

ANGOLA’S CURRENT LEVELS OF RISKS TAKEN MEANS

THAT THERE IS A NEED FOR RISK TRANSFER, RESULTING IN HIGH CEDED RATIOS TO REINSURERS.

AS SUCH, INSURERS’ PROFITABILITY IS VULNERABLE TO

SHARP INCREASES IN REINSURANCE RATES.

• 1st African Reinsurer:

Egypt Re (1957)

• 1st Privately owned Reinsurer:

Best Re (1985) in Tunisia

• 1st Continental Reinsurer:

Africa Re (1976)

• Today: 36 Reinsurers based in Africa

− 15 privately owned − 4 regional / sub-regional − 5 South African based (Swiss Re Life & Health, Munich Re, Hannover Re, Scor Re and Gen Re). − 10 State owned & 2 Private/State owned

Estimated non-life reinsurance market size

Sources: Africa Reinsurance Pulse 2016

Where AngoRe should be

Do we need AngoRe?

• Currently the insurance sector in Angola only

retains half of the GWP, being the other half ceded to international reinsurers;

• By increasing the retention of risk:
• Local wealth increases;
• The FX pressure easies.

0,47 0,48 0,49 0,5 0,51 0,52 0,53 0,54 0,55 0,56 0,57 2011 2012 2013

Source: ARSEG/PWC 2014

REINSURANCE BUSINESS RETENTION IN ANGOLA (%)

Could the whole players in the industry apply for Oil & Gas co- insurance?

• Unrated insurance companies?
• Lack of internal controls?
• True & fair audited financials?
• More stringent solvency requirements to operate the oil & gas insurance

business?

• Lack of underwriting expertise?
• Lack of actuaries to fairly price the oil & gas insurance risk?

Can bancassurance be a solution for growth?

• The banking sector in Angola

is now relatively developed, and insurers are somehow leveraging this through bancassurance and other cross-marketing options.

• New commercialisation channels trends

(e.g. internet, mobile, etc.).

• Insurtech is a burgeoning phenomenon

that has the potential to help the insurance industry to connect with its

• customers. This is an evolving

landscape.

INSURANCE BROKERAGE CURRENTLY REPRESENTS

AN EFFECTIVE WAY OF DISTRIBUTING INSURANCE

• PRODUCTS. NEVERTHELESS, ONLINE IS GROWING!

5 10 15 20 25 30 35 40 2009 2010 2011 2012 2013 2014 2015

INVESTMENT IN INSURTECH AND FINTECH ($ BILLION)

Motor insurance… A growing constraint?

• Angolan vehicle sales will continue to decline in 2017, as the combination of high inflation,

foreign exchange constraints and unattractive borrowing costs weight on the demand for passenger cars and commercial vehicles.

• Angola is in the “High Risk, Low Reward” quadrant.

2016f 2015 2014 2017f

Source: BMI Research - Angola Autos Report Q2 2017 – January 2017

MOTOR RISK/REWARD INDEX PASSENGER VEHICLE SALES

IN UNITS

Motor insurance… A growing constraint?

• Given the current economic situation in Angola, motor insurance segment is underperforming.
• Motor insurance has the second biggest percentage of market share.
• Available statistics on Claims in Angola still lag from developed countries.

Indicators

2011 2012 2013 2014 2015 2016 Trend

As % of non-life insurance 21% 24% 23% n.a. 27,2% 18,6% Motor insurance, in million Kwanza 17 921,2 20 891,3 22 717,3 n.a. 20 665 16 640 Motor insurance, % Change 17% 9% n.a.

• 9%(13-15)
• 19.5%

Motor insurance claims, in Kwanza 3 243,6 4 601,6 5 564,2 n.a. 5 996 6 241

IS THERE ANY POSSIBILITY OF SETTING UP A LEGAL FRAMEWORK LEVELING THE ANGOLAN MOTOR

INSURANCE CLAIMS STATISTICS WITH THE DEVELOPED COUNTRIES?

MOTOR INSURANCE

Should we price Motor Insurance using which available statistics?

THERE IS URGENT NEED TO ACT!

Kenya

3 191

Angola

5 591

South Africa

7 190

Botswana

7 770

Nigeria

2 710 25,1

Angola

26,9

Kenya Nigeria

20,5

Botswana

23,6

South Africa

29,1

• FINANCIAL EDUCATION IN SCHOOLS
• INTER-MINISTERIAL COMMISSION FOR ROAD CASUALTY
• CAMERAS ON VEHICLES AND ROADS

Source: World Health Organization – Global Status Report on Road Safety - 2015

2011 2012 2013 2014 2015

Accidents Deaths

4 505 3 802 18 750 15 121 3 593 14 844 17 057 4 428 17 262 4 305

Source: Polícia Nacional – Direcção Nacional de Viação e Trânsito

ROAD TRAFFIC IS THE SECOND CAUSE OF DEATH

IN ANGOLA, AFTER MALARIA

REPORTED ROAD TRAFFIC CAUSALITIES IN ANGOLA REPORTED NUMBER OF ROAD TRAFFIC DEATHS ESTIMATED ROAD TRAFFIC DEATH RATE

PER 100,000 INHABITANTS

Regulation Trends

THE PATH TO IFRS THE PATH TO SOLVENCY II

• Half-way IFRS implementation in the short term

(similar to "Insurance CONTIF");

• Aiming for full IFRS in the medium to long term,

carving out the adoption of IFRS 17;

• Extended deadline for the IFRS 17 adoption.
• Introduce a regulatory requirement in having a

self-assessment report on the internal control system effectiveness;

• Introduce a regulatory requirement in having an

external audit on the internal control system effectiveness;

• Introduce a regulatory requirement in having the

solvency margin audited by an external auditor.

OVERHAUL OF IT SYSTEMS & INFRASTRUCTURE

WHAT ARSEG’S TIMELINE IS GOING TO BE?

Skills and Competencies

• Insurance companies are struggling for talent;
• Ongoing strong investment in professional training should be maintained.

Marketing Technical Finance Technology Claims management Actuarial and Risk Accounting and Tax IT Infrastructure FOCUS AREAS EXAMPLES OF KEY SUBJECTS Regulator All skills Corporate governance Strategy Underwriting Compliance Internal control Insurance’s Academy

• INCREASED CREDIBILITY & CLIENT SATISFACTION
• INCREASED PROFESSIONALISATION
• FAIR COMPETITION ENHANCEMENT

Insurance sector challenges

INSURANCE SECTOR CHALLENGES

• Better regulation;
• Improved supervision;
• Increased policyholders

protection. . REGULATOR

• Strong solvency ratios;
• Diversified investments

through capital markets;

• Statutory auditors;
• Appointed actuaries;
• International rating.

FINANCIAL STABILITY

• Skilled & knowledgeable

professionals. PEOPLE

• Financial literacy;
• Credibility of the

insurance industry;

• Increased satisfaction.

CLIENT