Page 40 - bne_October 2021_20211004

40 I Cover story bne October 2021
Renaissance Insurance
Jordan became a billionaire earlier in 2019 following the float of his medical cannabis company Curaleaf, the biggest cannabis producer in the US, but he has been investing in Russia and continues to spend half his time in the country.
In a recent interview with Vedomosti Jordan said that the insurance business is rapidly being digitised and that part of the motive for listing it is to raise investment capital, as
he considers the other players in the market to be relatively weak players.
“I have been investing in the Russian economy for almost 30 years and I believe that during this time it has passed from the wild economy of the Communist system to capitalism. Now
to life in the last year as the economy bounces back from the coronacrisis. Investors are particularly interested
in financial sector stocks, as they are considered to be a proxy play on the economic recovery. Banks are currently making their best profits in the last
five years and the size of the total insurance market has tripled in the last ten years, and up a third in the second quarter of this year alone.
Insurance premiums totalled RUB434.4bn ($6bn) in the second quarter year on year, exceeding last year's and pre-coronavirus levels, the regulator reported in September.
“The number, coming as a result of low activity in 2020 when most restrictive measures were in place,
time horizons extended to months
and then years, and products like consumer loans took off in the early noughties. As that decade wore on, time horizons extended into decades and mortgages appeared as Russians felt confident about committing themselves to a decade-long investment. But it has been only recently that
the time horizon has extended to
old age and death, and Russians are starting to invest into pensions and life insurance to protect their families.
The life insurance segment has been growing even faster than the general insurance business, expanding 19-fold in the last ten years, according to Renaissance Insurance, driven by consumer lending and continuously falling bank deposit interest rates that have driven retail investors into the stock market as bne IntelliNews recently reported in a profile of SPB Exchange, the market leader in that business.
“The direct insurance sector led
by [Renaissance Insurance Group] remains significantly underpenetrated and supported by growing online adoption, especially post-COVID,” according to the company.
The offering should appeal to investors thanks to the group’s strong profitability and big upside growth potential.
Motor insurance made up 57% of
the revenues of RUB37bn ($510mn) in 2020, with voluntary medical insurance accounting for another 17% and other products for the remaining 26% in the non-life segment.
The bigger business is life insurance, where “investment” products –
these have become a proxy for bank deposits – account for 54% of the RUB46bn of revenues in 2020 and endowments another 17%, with others making up the remaining 29%.
Revenues have been growing at
a compound rate (CAGR) of 9% in the last two years from RUB70.3bn in 2018 to RUB82.8bn in 2020 and the net income growth was up from RUB3.4bn to RUB4.7bn over the same period,
a CAGR of 18% over those two years.
“Renaissance Insurance is disrupting the domestic insurance market with its leading digital platform that “offers efficiency and agility”
it is not developing, but in the process of transition to developed. Russia
today is a very attractive country for technology and innovation. Mobile payment systems in Russia are much better developed than in the States: few people pay by phone, people still use
a lot of cash,” Jordan told Vedomosti.
Renaissance Insurance is one of Jordan’s biggest investments and has been a focus of the Sputnik Group since it was established. Today the company says
it is disrupting the domestic insurance market with its leading digital platform that “offers efficiency and agility” that the other more traditional players lack.
The company has launched an AI-powered app that includes automated document and handwriting recognition software as well as photo recognition
to make a strong customer experience.
And business is booming. Russia’s financial sector has come roaring back
www.bne.eu
was further helped by the accelerated growth of premiums in core types of insurance. The trends are reported
in the Review of Key Indicators of Insurers,” the CBR said on its website.
As demand for household loans rose, life insurance premiums were up
2.2 times in the second quarter to RUB35.2bn, and health and accident insurance premiums grew 1.8 times to RUB69.8bn. Expanding car loans and higher prices of vehicles drove 34.3% growth in the car insurance market that totalled RUB48.6bn.
As bne IntelliNews has written elsewhere, the time horizon of the average Russian has been growing steadily over the
last three decades. In the early 1990s following the collapse of the Soviet Union and the Russian economy, personal time horizons came down to
a matter of days as the future became totally unforeseeable. However, as the country recovered and began to grow,