Russia key facts

Russia key facts

Russia Key facts

  • US$2tr GDP in 2012 with 3.4% real growth over the year
  • Government debt 9% of GDP in 2012 (down from 70% in 2002)
  • Unemployment rate of 5.4%
  • Second in Europe in terms of job creation
  • Population of 143 million
  • Ninth largest consumer market in the World, 2012
  • Projected to be Europe’s largest automative market by 2014
  • Projected to be Europe’s largest, and the World’s fourth largest consumer market by 2020
  • Projected consumer spending to reach US$3tr by 2025
  • Western companies typically sell 6-12 times more per capita in Russia than in China and India
  • Joined WTO in 2012, acting as a lever to boost international trade
  • World’s seventh largest workforce (75m workers)
  • Europe’s largest online population of 73.8m users
  • Europe’s largest mobile phone market with 230m phones
  • 6th most attractive region for investment in the World

Source: Ernst and Young’s Attractiveness Survey, Russia 2013

Russia is a fast growing market and the only European member of the BRICS countries driving global economic growth.  Russia is distinctive from the other BRICS countries in that it has been a global superpower in its recent history.  In common with the other BRICS countries, Russia has an abundance of labour skills and resources, an entrepreneurial environment and healthy domestic market.  Russia is particular well served in terms of natural resources and its own telecoms infrastructure.  Of course, there are areas for improvement, too such as perceived and actual improvements required to political and legal transparency and involvement – issues common with all the BRICS countries, but to varying degrees, and with their own cultural impacts and characteristics.  Companies looking to invest in emerging markets should assess the characteristics, opportunities and potential pitfalls for all potential markets.  Russia is rated as the 6th most attractive region for investment in the World right now and it might be an opportune time to assess Russia for your own company’s strategic outlook.

The key growth industries in Russia are:

Energy

32%

Heavy industry

23%

Automotive

13%

Consumer Goods

12%

High technology equipment

12%

Transport infrastructure

10%

Chemicals

10%

Pharmaceuticals

9%

Financial Services

8%

Source: Ernst and Young’s Attractiveness Survey, Russia 2013

While Financial Services is unsurprisingly at the tail-end of the list, in terms of insurance, there are some key highlights.

  1. There is a significant investment in infrastructure in Russia – this requires large commercial insurance and reinsurance
  2. The automotive market is large and growing fast in Russia.  This market is projected to be Europe’s largest by 2014.  The Motor Insurance market potential is considerable.
  3. The domestic insurance market is undergoing significant consolidation.  Investment opportunities exist for companies with the appetite, skills and capital.

Russian Insurance Market Key Facts

  • Combined insurance growth predicted to be 10-15% in 2013 taking market size to between RUB890bn-RUB930bn (US$26-28bn)
  • Life insurance is the fastest growing segment, with a CAGR of 63%.  Growth is projected to continue at 30-50% fuelled by increased mortgage lending (forecast at 15-20% for 2013).
  • Casco is the main driver of growth in the non-life market.
  • The Top 10 insurers are predicted to increase their market share by more than 2% in 2013 due to market consolidation.
  • Insurance market maturity is regarded as 5 years or more away, with the industry currently in a sharp growth phase.
  • Insurers’ focus is increasingly on profitability rather than growth.

Source: Rewarding Risk: The Russian Insurance Market in 203, KPMG

Russian Insurance Market Comparison with Selected Countries, 2010

Country

Insurance Market Ranking

2010 Premium (US$m)

# Insurance Companies

Insurance Regulator

GDP (US$bn)

Population (Mn)

China

6

214,626

125

China Insurance Regulatory Commission

5,930.4

1,341.4

India

12

74,393

48

Insurance Regulatory and Development Authority

1,597.9

1,190.5

Brazil

15

64,264

122

Superintentendance of Private Insurance

2,142.9

193.3

Russia

19

41,644

579

Federal Service for Financial Market

1,487.3

142.9

Sources: Swiss Re, IMF, World Economic Outlook Database