"ARX" is the new name of the leader

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AXA Insurance - the leader of the Ukrainian insurance market since July 2019 began operating in the Ukrainian insurance market under the new brand ARX, and AXA Life Insurance - changed its name to ARX Life.

Chairman of the Management Board Andrey Peretyazhko, First Deputy Chairman of the Management Board Maxim Mezhebitsky and Deputy Chairman of the Management Board of ARX, CEO of ARX Life Vyacheslav Gavrilenko spoke in an interview about the insurer’s rebranding process, the team’s achievements, the new investor and personnel changes, the demand for insurance products, the company’s strategy and market expectations.

Rebranding one of the largest market players is a significant event. What did you put into the new name? Does it have any message?

—Of course, because the company’s name is an important part of its philosophy and strategy for success. In our case, the story is interesting because all the company’s employees had the opportunity to take part in the competition for its creation. We have a very close-knit team, so it's no surprise that we received a great response, with over 160 names being suggested. Ultimately, one of the options became the final one, so we're glad the name was born within the company.

When we began the rebranding, we wanted the company to be associated with the core attribute of the insurance business: reliability. "ARX" is Latin for "fortress" or "stronghold." Furthermore, the new name aligns with the name of our investor, "Fairfax Financial Holding," and is concise and in line with all modern trends. From a visual standpoint, we strove to ensure that the logo reflected the stability of our company, which has been operating in the Ukrainian market for 25 years. And of course, we couldn't ignore the fact that we are part of a Canadian international group, which is why the logo features red colors and a stylized maple leaf.

What were the company's results when it came to rebranding? What do you consider your greatest success in 2018?

—We were and remain the number 1 company in terms of net premiums and payments, in terms of premiums and payments to individuals, and most importantly—the undisputed leader in CASCO. We have about 1 million unique clients and more than 1.77 million contracts, and the customer satisfaction level in claims settlement is 92-93%.

The success of 2018 can be considered the record amount of collected insurance premiums, which amounted to about UAH 2 billion, as well as the profit we received in 2018 — UAH 164 million. According to AXA Group international standards, which is 176% higher than in 2017 (profit according to national standards was UAH 75 million).

We achieved these results in a challenging environment, during negotiations with potential investors. At the same time, it was necessary to focus on the current business and demonstrate good results. We managed everything and retained the entire team, having received the best shareholder of all possible options, as evidenced by the very positive feedback from our main partners and major clients.

The deal was announced in October, and the closing took place in February. How did the change in shareholder affect your performance?

Based on the results of the first half of this year, it is already clear that these six months were very successful, and the change in shareholder did not affect our achievements in any way. In the first two quarters of 2019, we collected (non-life and life) over 1.2 billion in insurance premiums (+25%), paid out approximately UAH 483 million (we pay out over UAH 3.5 million per day on average), and continue to lead in our traditional segments. Our profit for the first half of 2019 even exceeded the planned level and amounted to UAH 80 million.

Does the new investor influence the company's operations?

—The Fairfax Group adheres to a decentralized management model for its companies and gives a high level of autonomy to local management. In our case, for example, this means that decisions on the launch of new products and services will be made quickly and in line with market needs. This gives us new competitive advantages, as well as the opportunity to reduce our administrative costs.

You have undergone personnel changes. Who is currently on the Management Board?

—Currently, the new Board of Directors of ARX includes only three top managers (Andrey Peretyazhko, Maxim Mezhebitsky, and Vyacheslav Gavrilenko — Ed.). This means that the involvement of the company's directors (departments) in decision-making and their responsibility for results are increasing. At the same time, the speed of decision-making increases, and management costs are decreasing.

Have your clients and partners felt any changes due to the rebranding?

—Our goal was to make the rebranding process simple and clear. We carried out extensive preparatory work and launched an advertising campaign. Clients received notification of the new name through all possible communication channels. We see that our partners and large legal entity clients have responded positively to the new brand, and the first weeks of working with individuals under the new brand also inspire optimism. The name "ARX" has appeared on all information portals, and a complete name change will be implemented on all media by mid-August.

Speaking of products—what is most in demand? Are you planning anything new?

—We are consistently the leader in CASCO insurance, ahead of all our closest competitors. The high quality of our auto insurance products and excellent claims service guarantee the loyalty of our customers. We adapt our core products to suit any demand and budget. For example, for customers interested in simpler and more affordable services, we have created a number of lightweight CASCO versions. Our strong point is our focus on digitalization, as we understand that the future lies in online services.

In addition to CASCO products, travel insurance is in great demand. We have provided customers with the opportunity to purchase policies online, and they have fully appreciated this service. The share of online travel policy sales has approached 30%, and online MTPL sales are approaching 5% of total premiums. Online sales of voluntary motor insurance (VHI) and mini-CASCO are also growing dynamically. This year, we also plan to launch an electronic policy for retail voluntary medical insurance.

At the same time, a number of more complex products are selling successfully and will continue to do so in the so-called "hybrid" (or mixed) channel: clients begin the process online and complete it offline, with support from the contact center and regional network sales offices.

Naturally, we also focus on corporate clients. Several years ago, we successfully launched corporate health insurance products. These products and the support services that support them are among the best on the market, a feat made possible by building our own professional medical assistance service. At one time, this area required a significant investment in personnel, equipment, and IT, but as a result, we are in the TOP-5 companies in medical insurance.

Life insurance is also selling successfully. Just over a year ago, we began actively promoting life insurance products for businesses, and at this stage, our portfolio already includes more than 30 corporate clients.

Furthermore, we have a completely unique product - "Medicine without Borders", critical illness insurance, which has become a real hit. Serious diseases have no preventive measures, so an insurance policy can be a real panacea. At a moderate cost - 255 euros per year, it covers expenses amounting to 1 million euros per year. The policy is actively purchased by both retail clients and businesses, with the renewal rate approaching 80%.

Overall, we understand that the era of personal insurance is coming. There's a growing awareness that insurance isn't just a formality, and we're seeing increased demand for insurance for what's most valuable: health and life. We're currently actively testing a new health insurance product for retail, and will soon launch a service that's innovative for Ukraine, with a focus on online promotion.

We believe cutting-edge digital services and a professional sales team are the key to our success. The ARX sales team across Ukraine is comprised of strong, highly professional, and loyal employees. Most have been working there for over 10, 15, and even 20 years. We invest heavily in their training, corporate culture, and introduce them to best global practices.

You mentioned online services—what's the total sales volume? And what other successful IT solutions are you implementing to serve your customers?

—Last year, for the first time, we received over $1 million in premiums from the digital channel. Undoubtedly, the launch of electronic MTPL sales in 2018 gave a huge boost to the online business, to which our company was directly involved as the project leader at the MTIBU.

We are actively developing electronic services; this year we launched a chat service in Viber and Telegram for those insured under health insurance. For IT industry employees and individual entrepreneurs, we implemented the ability to use electronic document management and remote signing of voluntary health insurance contracts using an electronic digital signature. We have also introduced an electronic payment service for insurance premiums. Now clients can pay an invoice issued by the company automatically via Viber online in two clicks.

Could you share the key points of the company's strategy for 2019?

There will be no major changes in the company's strategy. Profitable growth, with a focus on high quality service - this is a strategy that has proven its success. The only change is This is a more ambitious goal for the main target indicator; for any international company, it is the combined result. At Fairfax Group, it is 95%.

Despite the high level of profitability, or the company's return on equity (ROE) ratio, which we are currently demonstrating, we understand that most of the profit is generated through investment income.

Interest rates on deposits and government bonds will fall over time, and only a sustainable positive result from insurance can ensure the expected level of profit. For us, this means that the combined ratio for each product in our wide range should be below 100%.

What are your forecasts for the development of the domestic insurance market over the next three years?

Currently, big business is closely monitoring political developments in Ukraine. It is very important to see what the Parliament and the Government will be like, and what reform programs will be adopted for the next three to five years. There's a good chance the insurance market will be included in the list of necessary reforms discussed not only by the Ukrainian market but also by international financial institutions supporting reforms in Ukraine, primarily the International Monetary Fund and the European Bank for Reconstruction and Development.

We expect the role of the Regulator to be strengthened; one reform option should be the adoption of a "split" law. If the Regulator's role is strengthened and the market begins to align with European legislation, we will see significant qualitative changes in the next three years. We will have the chance to see an insurance market that is transparent, solvent, customer-oriented, and attractive to new investors.

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AXA Insurance

COLONNAIDE Ukraine

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