Category Archives: Insurance

LATAM insurance market expected to continue fastest growth

Latin America is expected to remain one of the fastest growing insurance markets worldwide, despite potential headwinds facing the industry, according to Alan Murray, SVP at Moody.

The region has been the world’s fastest growing insurance market during the last decade, outpacing other emerging markets, such as Asia, as well as developed markets.

Average annual growth for the region’s insurance sector reached almost 15% in the last ten years, with particularly strong growth in markets including Brazil, Argentina and Colombia.

Much of this growth has been driven by a rapid expansion of Latin America’s middle class, as earnings, savings and consumption grew rapidly, Moody’s said in a report.

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Slowing economic growth in Latin America is giving rise to the possibility of stagnating income growth among the region’s middle class, and this could have a dampening effect on the insurance sector, the report added.

With a slower pace of growth, the positive gap in insurance growth relative to other markets is unlikely to be sustained at current levels, according to Murray.

The strong middle class expansion in the region, however, has been accompanied by capital market development, improved corporate governance and insurance market regulation.

As a developing market, Latin America is expected to grow at higher rates than mature economies, but whether it continues to exceed Asia “remains to be seen,” according to the analyst.

The Brazilian insurance sector, which accounts for around half of overall premiums in the region, has continued to grow faster than GDP despite the “ups and downs” of the local economy, Moody’s VP and senior analyst Diego Kashiwakura said.

The still relatively low level of insurance penetration in Latin America also means that there is still potential to grow, he added.

Aon Acquires Peru-based Graña y Asociados to Bolster Latin American Presence

Aon Risk Solutions, the global risk management business of Aon plc, announced the acquisition of Graña y Asociados, a Lima, Peru-based leader in risk and insurance solutions for individuals and businesses. Financial terms were not disclosed.

Aon said: “Graña y Asociados specializes in providing comprehensive advice and professional assistance for the prevention, reduction and management of the global risks facing individuals and businesses today, locally, regionally and globally. Graña y Asociados has 60 team members based in Lima.

Aon Risk Solutions CEO Michael O’Connor commented: “Latin America is one of the fastest-growing regions and a key area of focus for Aon and our clients. Graña is a market leader in Peru, with deep expertise in the construction and mining industries. Their local knowledge and expertise, combined with Aon’s global strength, will empower results for clients in Peru.”

Fernando Pereira, CEO of Aon Risk Solutions in Latin America, described the acquisition as “an exciting day for Aon, Graña and clients in Peru.” He said the “combination of Aon’s global capabilities, access to data and distinctive market relationships and Graña’s talent and understanding of the Peruvian market creates a risk and insurance partnership unlike any in this geography.”

Graña y Asociados Chairman Santiago added: “Over the past 19 years we built a great organization focused on serving clients with passion and integrity. Today we are proud to be able to partner with Aon, and take the next step in our journey to bring the best global capabilities, data and market access to clients in Peru.”

Marsh & McLennan Offers Insurance against Organized Crime in Mexico

The Mexican division of USA-based insurance brokerage firm Marsh & McClennan Companies Inc has announced it is launching a policy that will cover terrorism, organized crime and sabotage. This is the first policy of its type in a country repeatedly disrupted by drug-related violence.

Mexico’s ongoing battle with drug cartels has not often directly affected companies, however Marsh has introduced the policy in response to existing client demand.

“Customers have asked whether damages caused by organized crime are covered under their property insurance or terrorism insurance and we found that there’s a gray area and it’s not clear,” said Julian Abraham, Marsh’s deputy head in Mexico.

The new policy, launched in January to some clients, will cover up to $25 million of losses or damage related to terrorism, sabotage, organized criminal activity, violence between government and criminal organizations, or violence between criminal gangs.

“Since January we’ve had quite a few requests for pricing and interest in contracting the coverage,” Abraham said.

Last year, warehouses and trucks belonging to PepsiCo Inc’s Sabritas brand in Guanajuato state were attacked by a gang known as the Knights Templar, an offshoot of the La Familia cartel in western Mexico.

Close to 70,000 people died in drug-related killings during the six-year administration of former president Felipe Calderon. Calderon launched a military offensive against the cartels shortly after taking office in December 2006.

More than 5,000 people have died in the violence since President Enrique Pena Nieto replaced him. Pena Nieto has pledged to significantly reduce the killings, but has yet to give details on his plans.

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Brazil’s Mapfre earnings jumped 31% in Q1

mapfreMapfre SA, Spain’s biggest insurer, said first-quarter earnings in Brazil market jumped 31 percent to 151 million euros, while earnings in it’s home market fell 17% as winter storm claims weighed on profit .

Net income fell to 219 million euros ($304 million) from 264.3 million euros in the same period a year earlier, the Madrid-based company said in a filing to regulators today. The shares fell 1.6 percent to 2.99 euros by 11:48 a.m. in Madrid.

Mapfre is betting on developing markets such as Brazil to cushion the impact of profit declines in its Iberian division, which contributes 43 percent of earnings.  While earnings from Brazil jumped 31 percent to 151 million euros, while earnings from southern Latin America, a separate unit, declined 43 percent.

Total premiums rose 1 percent to 5.96 billion euros from 5.9 billion euros a year earlier, Mapfre said, limited by the euro’s strength against major currencies. In constant currency terms, premiums would have risen an annual 10 percent. The euro averaged about $1.37 in the first quarter, up from about $1.32 in the first three months of 2013.

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ACE Insurance appoints former AIG exec for LATAM Personal & Business lines

aceThe ACE Group announced the appointment of David Heard as Senior Vice President, Personal and Business Insurance, for the company’s Latin America region. He takes over responsibility for all personal lines and small commercial business in the region.

David Heard joins ACE from American International Group (AIG), where he has held leadership roles at the country, regional and home office levels, most recently as Senior Vice President, Strategic Business Expansion.

He has more than 25 years of industry experience in emerging and mature markets, including Brazil, Chile, Mexico and the U.S. Heard’s international experience spans line of business management, strategic planning, direct marketing, agency distribution, pricing, underwriting and portfolio management.

He will report to Jorge Luis Cazar, ACE Group Senior Vice President and Regional President, Latin America, and Darryl Page, ACE Group Vice President and Division President, International Personal and Business Insurance.

In welcoming Heard to ACE, Cazar noted the depth and breadth of his “insurance industry experience,” which is matched by “his deep knowledge of the region. He has had extensive cross-cultural experience and speaks Spanish, Portuguese and English. Latin America is an important, growing market for ACE, and we’re fortunate to have David as part of the team.”

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Swiss Re to Buy Stake in Brazil’s Sul America

Sul AmericaThe world’s second- largest reinsurer, Swiss Re has reached an agreement to buy a 11% stake in Sul America SA from dutch-based ING Groep NV to expand in Brazil.

Swiss Re will also purchase a 3.8%  holding in Rio de Janeiro-based Sul America from members of the Larragoiti family for a combined total of about $334 million, according to a statement yesterday from the Zurich-based company.

“Sul America is a well-established and successful multiline insurer in Brazil where we see attractive growth opportunities,” Swiss Re Chief Executive Officer Michel Lies said in the statement.

The reinsurer has been looking to expand in high-growth markets such as China, India and Brazil. In October, Lies agreed to invest as much as $425 million in Richard Li’s FWD Group. The deal announced yesterday will give the reinsurer a stake in Brazil’s largest independent insurance group. Sul America offers property, casualty and life insurance, as well as pension and asset-management products.

The transaction also helps ING unwind a joint venture formed in 2002. Earlier this year, the Amsterdam-based company agreed to sell a 7 percent stake to the Larragoiti family. Proceeds will be used to pay down debt, ING said in a separate statement yesterday.

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