This report is being written at a time that the global financial crisis – which arose as a result of the evaporation of inter-bank liquidity – appeared to be moving towards a resolution: the governments of the UK, the USA and most of the larger countries in the euro area have all announced plans to make funds available – in one form or another – to their respective commercial banking sectors. As yet, it is too early to identify the impact of the crisis on particular emerging markets. However, in the regular section which discusses the changes which we are making to the report, we include a lengthy essay which attempts to identify the key issues. In essence, in the emerging markets (and, indeed, the developed countries) of Asia Pacific, commercial banks and insurers appear to be well placed to deal with the crisis. The same is, broadly, true of commercial banks and insurers in the various countries of the Middle East and North Africa. In Latin America, Chile, Brazil, Mexico and Colombia appear better placed than Argentina, Venezuela, Bolivia and Ecuador. South Africa’s situation appears to have much in common with that of Brazil. By contrast, Nigeria faces some of the same challenges as those that confront Venezuela. The positions of most countries in Central and Eastern Europe (CEE), however, are alarming.

It has not been practicable for us to collate the latest figures for assets and premium income this quarter.

The global financial situation has been changing so rapidly that most numbers would have become out of date. Nevertheless, we expect that, in coming months, it will become obvious that credit growth is slowing dramatically in most of the countries whose commercial banking sectors are profiled in BMI’s reports. We will amend the figures – and indeed our forecasts – accordingly.

Nevertheless we believe that the figures which we had compiled last quarter provide insights as to how the various insurance sectors will fare in the current, extremely uncertain, environment. We have therefore left them, and the comments on the Key Issues, essentially unchanged. For almost all the countries whose reports we are updating, we are also able to include actual data for calendar 2007 which was not the case for our Q208 reports.

The global financial crisis is likely to affect the various segments of the global insurance industry in different ways. In many countries – especially in Europe – the coming recession points to softness in the non-life segment. In many cases, the numbers of policies may fall so there should be downwards pressure on premiums. By contrast, the main problem for the life segment – in almost all countries – is the extreme volatility of financial markets. Over the longer-term, though, the fortunes of life insurance will recover – thanks to the secular growth of organised savings in most countries. China, where the larger insurance companies continue to achieve double digit growth in premium income, is a good example of this. Some particular niches should also do well in the current environment, such as legal liability insurance.

In CEE, we profile 22 multi-national insurance companies. In alphabetical order, these are AEGON, AIG, Allianz, Aviva, AXA, Cardif, ERGO, Eureko, Fortis, Generali, GRAWE, Groupama, HDIGerling, HSBC Insurance, ING, MetLife, Prudential Financial, QBE, RSA, UNIQA, Vienna Insurance Group and Zurich Financial Services. We also discuss the regional presence of Belgium’s KBC and Austria’s Erste Bank through a number of insurance subsidiaries and explain the importance, for each of the various countries, of purely domestic firms.

In 2007, total premiums in Bulgaria rose by 20% to BGN1.50bn. Non-life premiums rose by 18% to BGN1.25bn, while Life premiums rose by 31% to BGN252mn. Between now and the end of the forecast period, we expect that annual Non-life premiums will grow by BGN793mn, while annual Life premiums should increase by BGN69mn. Growth in Non-life premiums should be driven by the general growth in nominal GDP plus a rise in Non-life penetration from the current level of 2.42% to 2.50%. Growth in Life premiums should be driven by the change in the overall population and a rise in life density from US$22 to US$28 per capita.

BMI’s Insurance Business Environment Rating is 49.6.