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Eastern Europe Business Plan International Start-up CASE STUDY.

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Presentation on theme: "Eastern Europe Business Plan International Start-up CASE STUDY."— Presentation transcript:

1 Eastern Europe Business Plan International Start-up CASE STUDY

2 Background Non-traditional marketing approach Local insurer wants to do business with us Recent deregulation in local market Get up and running in 6-9 months $10M-20M to invest All direct marketing expenses funded from HO

3 Countries under Consideration

4 Target Countries Market into Czech Rep and Slovakia Less competitive pressure 15 million population Relatively the richest in terms of purchasing power

5 Local Company Structure Negotiate to buy local insurer in each country Change name to our company name Keep the people but install an officer from our company to oversee operations

6 Channel Distribution Strategy Plan to make agreements with major banks Bank managers and officers Direct mail Call center follow up Trusted advisor approach

7 Product Development and Pricing Simple personal accident and term package Cross-over phase, Hospital cash, Dread disease, Riders Simple savings product Mortgage product Underwriting - Simplified, short form Local Currency, indexed  Czech Rep - 9.2%  Slovakia - 14%

8 Regulatory Issues Purchase of licenses should mitigate corruption costs Ability to close deals quickly No dividend restrictions to shareholders Reinsurance

9 Business Model Assumptions GNP Growth: 4% Insurance market share of GNP:  1% increasing to 4% Our market share:  2.5% initially - $13.75M premium first year Growth:  100% in year 2  50% in year 3  25% in year 4  15% in year 5

10 Business Model Assumptions Average premium per policy: $175 Benefit ratio: 40% Lapse rate:  20% first year  10% thereafter Start-up costs: $5 million  Cost of acquisition  Software and hardware  Physical plant, etc. Per policy expenses:  $75 first year  $35 renewal

11 Business Model Assumptions Commissions: 15% all years Other expenses: 15% of premiums per year Asset earning rate: 8%

12 Revenue/Start Up

13 Gain From Operations

14 Surplus

15 Recommendation Start first in Czech Rep within nine months Enter Slovakia market within nine months thereafter

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