Aiming to reach new heights

Aiming to reach new heights

Having helped the Vilnius Government to raise money when times were hard, Asta Grabinske is steering the Lithuanian unit of a global life insurance business to the top of the market. Dalius Simenas meets the inspirational CEO of Aviva Lietuva

She endured eleven years of hard slog leading a life insurer from the foothills of Lithuania’s market to its upper reaches. Now at last Asta Grabinske is ready for an assault on the summit. When she started her journey, Aviva Lietuva was in sixth position, with just 2-3% of the market. Today the company has a 20% share, the second largest.

“But if we look at gross written market premiums from the first two months of this year, we have overtaken Swedbank, so basically we are breathing down their neck. We believe that we shall make it” Grabinske says. To her Aviva Lietuva is the equal of any in the market, giant Nordic banking groups included.

Prior to joining Aviva Grabinske, 45, worked at the Ministry of Finance. Switching to the private sector business was a big decision, and not one that she or anyone else had expected. With the benefit of hindsight, however, it was a natural progression.

Grabinske studied economics at Vilnius University, graduating it in 1991 just as the old communist system was collapsing and a market economy was struggling to be born.
“When I started my career I noticed that I basically had no theoretical background, despite five years spent at university. I knew I needed completely different skills in the economy, business and finance” she says.

At that time in Vilnius there were many advisors and consultants from Western countries. Initially, locals regarded them as gods from on high, who knew everything about what to do and how. That perception helped prompt Asta Grabinske to go to the UK to study. In 1998 she was awarded an MBA in international banking and finance from Birmingham University.

“I was 29 when I went there. I had a child and a family and a job, and that was really a very big decision”, Grabinske says.

“It was a very big move out of my comfort zone, but I felt I could be as good as those western economists and financiers.”

When Grabinske returned from the UK she felt capable of something extraordinary. She had offers from the private sector and even took one up at a leasing company but when she saw all the invoices and dispatch orders she knew it was not for her.

“On my first day I suffered so much looking at paperwork for leased trucks that I just managed to stay until lunch break before walking out. And that is how I appeared at
the Ministry of Finance” she recalls.

Then followed what might be called her stateswoman years. At the Ministry of Finance, drawing on her studies in Britain, she realised that she was capable of big things.
“I started borrowing money on behalf of the government. These were big transactions with investment banks. Millions, even hundreds of millions of US dollars”, she says.

This was 1998, in the aftermath of the Russian financial crisis when Lithuanian exports were hammered, and a recession-hit economy was virtually unable to borrow due to high yields.
“I remember my first week there, when Finance Minister Algirdas Semeta (now European Commissioner for taxation and customs union) called me up and said ‘We urgently need $100 million and now you have to get it’” Grabinske recalls.

She returned to her desk and thought what to do about it. She remembered a very good advisor at the ministry who then headed the Swedish debt office. Between them, they drew up a borrowing strategy while he introduced her to the right bankers and Lithuania got the money it needed. “Those were difficult times. Today we can admit that we were on the brink of default. Treasury activities are actually quite close to those in  the private sector. Raising money is real life stuff. Sometimes maybe more demanding than the private sector, as you have to be a good diplomat, and navigate the political pressures” she adds.

She counts herself lucky to have worked with with Dalia Grybauskaite, the Lithuanian president, a previous deputy minister and then minister of finance.

Grabinske also had an opportunity to go to the World Bank in Washington DC and work there for a while as a country representative on its board. She describes this period as “a rewarding experience“, as it gave her the opportunity to look closely at how economic crises are managed. But she sees the World Bank as a political organisation and missed the more business-like environment of Lithuania.

“When Ms Grybauskaite became minister of finance she asked me to return to her team and become deputy finance minister. She was a strong leader who formed a team not of politicians but specialists and technocrats, including Vitas Vasiliauskas, currently governor of the Bank of Lithuania.”

“He was responsible for tax and I was responsible for raising money and for EU affairs. We were a good team of professionals. We were very much protected from politics and could focus on actual business of the ministry,“ Grabinske says.

All was set for a promising civil service career, but then the head hunters came calling. She was offered the chance to apply to be the CEO of a new life insurance company and that‘s how she joined Aviva Lietuva.

Aviva entered the Lithuanian life insurance market via Poland in 2001. At that time the London-headquartered firm already had successful business in Poland and saw Lithuania as fertile ground for for new life insurance and investment products.

Unlike other life insurance companies which based their business model on brokers or in-house employees, Aviva had a network of independent business advisors who were building their own businesses linked to Aviva.

Grabinske says that building this network demanded all her energy and experience. It helped the company focus on the long term care of its customers.
The life insurance business is quite subtle and personalised, and good ties between the advisor and the customer are vital. Aviva advisors have annual review meetings with customers to reassess their circumstances.

This customer care culture and the investment product range is based on worldwide experience of more than 300 years and have helped make Aviva a market leader.

“I think that we have a really very good and balanced investment offer for our customers based on our experience of many crises. Our investment offer is neither too aggressive, nor too enthusiastic”, Grabinske says.

She is satisfied to have surpassed the major retail banks from Nordic countries which dominate the Lithuanian financial scene.

It is easier for a bank to cross-sell other financial services to visiting customers. For life insurance companies it is different. Aviva Lietuva advisors just have a few life insurance and pension fund products and they focus on customer needs.

“If a customer has money we are here to help them use it wisely to invest and save. If a customer has a problem, we are here to meet their claim. We provide a lifetime of personalised financial advice. It’s like being a personal tax advisor, investment advisor or even a doctor”, she smiles.

In contrast, banks often have 40 or 50 products to sell, and guidelines on how many minutes to spend per customer.

“For us it is completely different. We don’t count minutes or hours. We spend as much time as needed, every year. It sends the message that your aim is not to sell today because if you have to meet the customer again after a year you need to know you have made a good offer, relevant to the client. Otherwise the client is unhappy, and the whole business model does not work”.

The Aviva team have already observed that young, energetic, enthusiastic companies encourage customers to invest in very risky and new areas. For some time or period it might be rewarding but there can be consequences.

She knows of a locally administered pension fund that has lost some 70% of value due to an aggressive investment strategy. This is not what is meant to happen.

For Grabinske, saving for retirement, like protecting yourself, is a serious business.
She encourages everybody to think of retirement savings early, given constraints on government financing, budgetary problems and the unfavourable demographics which signal the growing inadequacy of state guaranteed pensions.
“When do you spend more: at work or on holiday? Imagine retirement as one long holiday.

You have to save for it“ When you are thirty, she says, you should be devoting 10% of income to retirement.

“My daughter started work this year and is already in a pillar two pension fund [a funded system that recipients and employers pay into]. In a way it’s funny to be thinking about retirement at 23, but when you think of what your pension would be with or without extra savings, even a young person can picture life with the standard 1.000 Litas (€290) per month, compared to a pension that could potentially match your current income”.

“I tested this on my daughter and it worked very well. This generation has not seen very
difficult economic times. They are used to a good life and they want to be sure that they have it when they grow older“.

Aviva Lietuva has 242,000 life assurance and pension fund customers, served by over 500 financial advisors and 80 employees in the head office and regional bureaus.

2013 was a year of growth with 6% or 8,000 more life insurance customers (50,000 in total) and 11% or 25,000 more pension fund customers (189,000 in total). Life insurance gross written premiums rose 13% to LTL 127 million (€37m) with total assets under management rising 18% to LTL 1.1 billion (€319m). 2013 was special for second pillar (mandatory) pension fund participants in Lithuania. Until November 2013 they had to choose from three options: they could either save extra and get a matching subsidy from the government; stay with the old rules of saving in private pension funds (without extra payment and subsidy) or they could return to the state pay-as-you-go pension system.

Most Lithuanians chose to save extra, as did more that 52% of Aviva Lietuva managed pension fund customers. Grabinske notes that with this low interest rate environment, with annual interest on bank deposits of about 0.5%, people started to think more of other investment opportunities at more profitable rates. Aviva provides a helping hand here with pension funds that for the last five years have generated an annual growth averaging about 8%. Grabinske says that the Lithuanian market, the biggest of the three Baltic States, remains promising. Levels of life insurance penetration are still much lower than in Western countries. It may have only three million inhabitants but the economy is growing, and the euro is coming in 2015.

Lithuanians are known to be excellent workers, partners and suppliers, with a reputation for professionalism, honesty and diligence.

“We have very good employees, we see more and more inward investment coming in.
We have more service centres opening so I believe that Lithuania is a good place to do business. The government wants more investment. Lithuania is a place for those with a regional strategy, or for those who want to be present in EU countries.

The Lithuanian insurance market has recently witnessed a major M&A deal when in April 2014, Lietuvos draudimas, the biggest non-life insurer, was sold by RSA, the UK insurance group, to PZU of Poland. RSA also sold to the Poles its other Baltic non-insurance businesses (AAS Balta in Latvia and Codan Forsikring in Estonia). That consolidation trend may get into the Baltics‘ life insurance business, too. However, Grabinske claims that Aviva’s achievements in Lithuania have been made by organic, natural growth, that is, by persistently doing what the company is best at.

She believes that the company will stick to that strategy, and not chase business in Latvia or Estonia, where Aviva has no presence.

The group as a whole is very much focused on countries and areas that have created good, sustainable and profitable businesses. It now operates in only 17 countries, where previous it operated in as many as 30. Whereas Aviva recently sold businesses in the Czech Republic, Hungary, Romania, and Russia, Lithuania remains firmly part of the group.

“It shows that Lithuania is a good place for business” says Grabinske, with the air of someone who has proved their point.