Renaissance Insurance (RENI)

Renaissance Insurance ($RENI): Renaissance Insurance is among the top 10 insurers in Russia in terms of collected insurance premiums with a market share equal to 5.4%. Among independent insurance companies, it is the leader in the fastest growing segment — life insurance. In the next three years, this segment promises to grow by an average of 15% per year. The company has developed an innovative digital platform, thanks to which it is growing faster than the market. Over the past two years, the volume of insurance premiums collected by Renaissance Insurance has increased by 18%, and the amount of net profit has increased by as much as 38%. In the future, Renaissance can become a consolidator of the industry, gathering traditional and less efficient insurers on its platform.

Compared to other countries, insurance in Russia is still at the initial stage of development. If you look at the ratio of insurance premiums to GDP, then in Russia this percentage is several times less than the global average, let alone lagging behind developed countries. It turns out that the Russian market has a great potential for growth. According to the forecasts of the audit and consulting company KPMG, it may increase by 51% by 2024 — up to 2.3 trillion rubles, which may be comparable to 1.62% of GDP.

Now Renaissance offers a wide range of insurance products. In the non-life segment, these are CASCO, CTP, VMI, accident insurance, property insurance, cargo insurance, financial risks, etc. In the life insurance segment, it offers investment programs, life insurance up to a certain age (payment is made after the expiration of the contract or in case of death), medical and credit insurance (payment of outstanding debts in case of health problems of the insured or death). Renaissance ranks eighth in Russia in terms of insurance premium collections. But if we exclude state-owned and banking companies, then the company is number one among independent insurers in the life insurance segment and fourth in the non-life segment.

The issuer has a diversified insurance portfolio (as of the reporting date, there are no clients whose turnover accounts for at least 10 percent of the total revenue from the sale of the issuer's products (works, services)), therefore, there are no risks associated with the possibility of loss of consumers whose turnover accounts for at least 10 percent of the total revenue from sales of the company's products (works, services).

Renaissance ranks eighth in Russia in terms of insurance premium collections. But if we exclude state-owned and banking companies, then the company is number one among independent insurers in the life insurance segment and fourth in the non-life segment.

-Renaissance is among the top 10 insurers in Russia in terms of insurance premiums in 2020, billion rubles - Chart 1;

-The leader in collecting insurance premiums in the life insurance segment among independent insurers (data for 2020 in billion rubles) - Chart 2;

-Renaissance is the fourth largest insurance premium collection in the non-life segment among independent insurers (data for 2020 in billion rubles) - Chart 3.

1

2

3

The company considers its independence an advantage, as thanks to it it can focus on the development of the insurance business exclusively, be more flexible and innovate faster. In terms of business growth and profitability of equity in both segments of the insurance market, Renaissance is ahead of not only domestic insurers, but also some well-known foreign companies, such as Allianz, AXA, Zurich Insurance Group, Generali, Ping An, Porto Seguro S.A.

The company has made a real digital revolution in the Russian insurance market. It automates processes in all aspects of the business - from the preparation of insurance policies and the processing of applications for refunds to the organization of partner sales.

The company has developed a new programming interface, in other words API, for sales on partner platforms. It takes partners only one or two days to integrate the systems.

She also developed a functional agent's personal account for partners, which includes CRM, an engine for issuing new policies, agent support, and sales statistics. It is expected that the platform will help increase sales in the regions. The time interval between attracting a new partner and its first sale has been reduced by three times.

The company offers efficient processes for submitting client applications with more advanced scoring models (more than 60 parameters are used in the analysis) and automation. For example, in the life insurance segment, decisions on 40% of agency applications are made instantly, and on the remaining ones - within one day. Processing of applications for insurance indemnities under CASCO has already moved to online chats by 70%, which allowed optimizing the costs of operating staff.

Renaissance has introduced Google Pay, Apple Pay and a System of fast payments.

The company is actively developing in telemedicine, as it believes that due to the wide geography and underdevelopment of the medical infrastructure in Russia, online diagnostics, at least at the first stages, can significantly save patients' money. In addition to a medical application under its own brand (Renaissance Health) with the possibility of online consultations, the company has launched two more - Cardio Magazine and Budu. The first makes it possible to record and store pressure readings, track its dynamics, and also, if necessary, get expert advice. In the Budu app, you can consult online with doctors of 17 specialties. The user can even be assigned a personal doctor. In June of this year, the number of online consultations on all the company's medical platforms approached the 10,000 mark. There are plans to introduce control over chronic diseases and mental health.

The insurance industry in Russia has many problems, for example, such as:

Low level of demand for insurance services. There is no culture of insurance in Russia, most often residents turn to insurers only because they are obliged to do so. Without life insurance, it is impossible to get a loan from a bank, violators must pay a fine for the absence of a CTP policy, it is impossible to get a visa without traveler's insurance, etc.

Restriction of competition. Unfortunately, sometimes competition in the insurance market is artificially limited. For example, if a customer has taken a mortgage from a bank, he can only get insurance from partner companies. The situation is similar with medical insurance: if a patient wants to be observed in a particular clinic, he will have to choose a policy from only one or several insurance companies with which the medical institution cooperates.

Perhaps only insurers understand how the insurance market works. Such opacity of work also causes distrust of potential customers. Why apply for services in which nothing is clear? How can you trust a company that classifies documents and important information?

Low standards of operation. The problem concerns not only the insurance industry, but also the entire service sector in Russia. Low standards of activity lead to the fact that many insurance companies are not responsible to customers.

Although the company may have plans for geographical expansion, so far Renaissance operates only in one country. Therefore, macroeconomic risks are not diversified. If the forecasts of Russia's economic growth and income growth do not come true, the company's financial results may be worse than predicted.

Renaissance Insurance is one of the first private insurance companies in Russia. It was founded in 1997. The company was founded by entrepreneur Boris Jordan, who at that time headed the Moscow office of the investment bank Credit Suisse First Boston, and two years earlier founded the Renaissance Capital investment company. In 1998, he founded the Sputnik Financial Group, which to this day is the largest shareholder of Renaissance Insurance. Jordan also heads the company's board of directors.

A professional and experienced management team, supported by a highly authoritative founder and long-term shareholders. The leaders of Renaissance Insurance have many years of successful experience in Russian financial and non-financial companies. Key team members have been working in the Group for more than 10 years. The CEO of Renaissance Insurance, Yulia Gadliba, has been recognized by Forbes Russia as one of the best female executives in Russia over the past three years. Oleg Kiselyov, CEO of Renaissance Life, has been working for the company since its foundation and is a key figure in the development of the Russian life insurance market.

The company is developing in the promising field of telemedicine. Even before the pandemic, the Foundation of the International Medical Cluster predicted the growth of the telemedicine market in Russia by 10-15% per year on the horizon of five years. Because of covid, the growth is likely to be even more significant. So, in the first half of 2020, the demand for online consultations with doctors increased by 177%. A clear regulatory framework is needed for the further development and wide dissemination of remote medical services.

Renaissance should benefit from the development of life insurance, which is outpacing the more mature non-life segment in terms of growth rates and in which the company is significantly ahead of competitors.

Yes, there are such constraints as:

-affordable free health insurance that covers a wide range of diseases;

-low tax deductions for life insurance expenses (compared to developed countries);

-the continued popularity of deposits as the main tool for savings.

However, there are also incentives that can contribute to the continuation and possibly acceleration of the growth of life insurance:

-the average life expectancy is gradually increasing, while pensions remain at a low level, which is why there is a need to create savings in advance;

-at the same time, the welfare of the population is also growing, as evidenced by the growth of deposits;

-but deposit rates are also at a low level, which forces us to look for more attractive tools to increase savings;

-there is a discussion of government initiatives to increase the tax deduction for life insurance expenses and the introduction of state liability insurance for insurance companies (similar to deposit insurance).

It should be noted that almost all Renaissance sales in the life insurance segment are accounted for by partner banks. There are 46 of them now. They choose Renaissance because of the wide range of products and convenient and fast integration, as well as because of the lack of competition (other serious life insurance providers themselves conduct banking activities).

Also, do not forget about the technological advantage of the Renaissance, which will continue to bear fruit against the background of growing demand for online services from consumers and partners. And the company, as one of the leaders of the segment, can become a beneficiary of the development of car insurance. KPMG forecasts that the share of new car sales accompanied by CASCO sales will increase from 49% in 2020 to 69% in 2024. The same indicator for used cars may grow from 30% to 38%.