ING Direct 2008 Annual Report Download - page 29

ING Group Annual Report 2008
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Stable growth in Central and Rest of Europe
Based on market share, ING is the number one pension and life
insurance provider in Central Europe. Markets in Central Europe
tend to be sizable, with a growing middle-class: demographic
conditions that are conducive to growth in life insurance and
retirement services. In 2008, ING in Central and Rest of Europe
showed solid financial results and sales in general were up.
Overall, the number of customers increased from 7 million to
8.6 million, especially through the success of the Romanian
second pillar pension fund. In Poland, where about half the
region’s profit was recorded, premium income rose by 85% after
the successful introduction of a single premium investment product
(‘Optima’) sold through the bank channel. In Poland and in the
Czech Republic APE increased by 42% and 24% respectively.
Furthermore, an integrated transformation programme was
launched in the region to leverage size into economies of scale by
creating one operating model for all businesses, to reduce costs
and increase synergies.
Solid performance in pensions
A growing number of customers and increasing wages resulted
in a solid performance in the pensions business in Central Europe.
In Poland, ING is the number two ranked pension provider with
2.6 million customers (24% market share) and over EUR 9 billion
in assets under management (AuM). Strong inflows continued
and the market share has increased.
The strong performance of the two Romanian ING pension
funds continued in 2008 with ING’s market-leading position
supplemented by the final governmental ‘lottery’, through which
a further 300,000 customers were allotted to ING’s pension fund.
ING is Romania’s number one pension fund provider with a market
share of almost 40% with 1.4 million customers. Furthermore,
ING secured the pension contract for 35,000 employees at
Romania Post.
ING Bulgaria won group pension deals with some well-known
companies in the country, for instance with the national TV
station. ING Pension Insurance Company will also provide a
comprehensive voluntary pension contribution scheme to the
main telecommunication operator, BTC. The contract covers
approximately 5,000 employees and has the potential to extend
to the entire staff of more than 9,000. It is one of the largest
pension plans of its type in Bulgaria.
Enhancing the multi-channel distribution network
ING is implementing a multi-channel distribution approach, with a
blend of channels such as tied agents, bancassurance and brokers.
Direct channels are mainly used to generate leads. An example of
this approach is a pilot with ING Direct in Spain.
Insurance Europe has the long-term ambition to grow sales
through bancassurance in Central and Rest of Europe. ING has
a solid retail banking presence in the large markets of Poland,
Romania and Turkey. In addition, Insurance Europe has developed
distribution agreements with third-party banks in other countries.
In Greece it has a bancassurance joint-venture with Piraeus Bank.
For the longer term, ING will focus on growth in pension and life
insurance client balances driven by economic growth and growth
in retirement services.
Several initiatives have been taken to enhance tied agent
effectiveness in Central and Rest of Europe, such as the roll-out
of a region-wide programme to increase value of new business
by strict activity management, standardised monitoring, intensive
coaching and joint field work.
New operations
ING entered the Turkish market by acquiring Oyak Bank in 2007,
and in 2008 integrated it into the ING Group, rebranding it ING
Bank Turkey. In December 2008, ING completed the acquisition of
Turkish voluntary pension company Oyak Emeklilik, providing the
opportunity to enter the growing Turkish pension market. Turkey
is a sizeable market, with a population of approximately 70 million.
Oyak Emeklilik is Turkey’s sixth largest pension company with over
EUR 150 million AuM. The acquisition was financed entirely by
internal financial resources. Oyak Emeklilik will be integrated into
Insurance Central and Rest of Europe and was rebranded under
the ING brand in February 2009.
Ukrainian life insurance greenfield postponed
In July 2008, ING received approval from the relevant authorities
to start life insurance operations in Ukraine. However, economic
circumstances in Ukraine have deteriorated drastically due to the
global financial turmoil. As a result of this instability, ING decided
to postpone its greenfield life insurance operation there. ING still
considers Ukraine to be an attractive emerging market, with strong
growth indicators and potential and will continue to monitor
Ukraine’s commercial climate. This is witnessed by the fact that
ING launched retail banking operations in Ukraine in 2008, based
on the successful Romanian self-banking concept.
CONCLUSIONS AND AMBITIONS
The fundamentals of ING Insurance Europe’s well-diversified
portfolio are solid. Commercial performance is resilient, expenses
are under control and ING is well positioned to take advantage of
major trends in areas where it is present.
Insurance Europe will reinforce its position as the specialist in
investments and retirement services across Europe. Although
economic prospects are muted due to the global economic
climate, long-term growth prospects remain favourable. Insurance
Europe will re-base the business to respond to market conditions,
through a focus on expense reduction and capital management.
In Central and Rest of Europe, ING will build on its leading position
and focus on broadening the distribution base and increasing its
operating efficiency.