UK life and pensions provider Aviva says it is aiming to build a leadership position in the Russian life insurance market, aiming to achieve a 10 per cent market share and a top five market position within the next five years.
Aviva aims to become a major player in Russia by offering a range of long-term savings and protection products through a multi-distribution approach. It has just written its first policies in the corporate market which include group life, accident and sickness policies, having received its licence to operate in March 2006.
There are a number of factors that make the Russian market attractive, says Aviva, including regulatory reforms, steady economic growth and a growing middle-class, which is becoming increasingly wealthy and financially sophisticated. Additionally, there is increasing penetration of life insurance and protection products – from a very low base of around 0.05% of GDP. All of these factors combine to make Russia a potentially important market for Aviva in the long-term, says Aviva.
Aviva points out that Russia is Europe’s most populous country, with more than 140 million people. In the last three years, says the insurer, Russia’s nominal GDP has doubled to US$766 billion or US$5,364 per head, and strong growth is projected in the short to medium term.
Aviva Russia will draw from Aviva’s worldwide experience, leveraging the knowledge and expertise gained by Aviva businesses around the world, including the emerging markets of Asia and Central and Eastern Europe.
The local operation will initially develop the business from the head office in Moscow and then subsequently expand to other areas of Russia in due course.
“Our strategy is to position Aviva to take advantage of the rapid growth that will occur in the transition to a developed life insurance industry,” says Philip Scott, executive director, Aviva international. “We aim to achieve at least a top-five market position and a 10% share in the life insurance market in the next five years.We are delighted to have started trading so soon after the licence was granted for us to operate in Russia. Our local team is making an excellent start in the Russian market and this is an important milestone for Aviva.”