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Wednesday, January 13, 2010
Today's News Headlines
* Govt ready for 66% increase in agricultural insurance subsidy - Brazil
* Allianz prepares offer for Swiss Life - report - Argentina
* Supreme court rejects AFP Habitat's injunction against regulator - Chile
* AFPs with US$20.7bn available to invest abroad - EuroAmérica - Chile
* Mapfre life unit's January-September profits up 273% - Colombia
* IN BRIEF Committee to investigate alleged illegal monopoly on insurance sales - Brazil
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* Govt ready for 66% increase in agricultural insurance subsidy - Brazil
The Brazilian government has set aside as much as 451mn reais (US$258mn) for agricultural insurance subsidies in 2010, 66% more than the figure set aside in 2009, the agriculture ministry's risk management director, Welington Soares de Almeida, confirmed.
The agriculture ministry's budget also calls for 570mn reais in such spending in 2011 and as much as 680mn reais in 2012.
These are estimates for the ministry's three-year budget plan and will be subject to congressional approval, according to Almeida.
"For 2010, the currently approved amount of 238mn reais is less than our estimate and the government is taking steps to find the funding in the budget," the director told BNamericas, saying that the program has improved access to insurance and risk management options for farmers.
The next step, Almeida said, is to get a catastrophic loss fund in place to back insurers and reinsurers - a measure currently being reviewed in congress.
"The subsidies are big compared to previous years, but they are still small compared to the full value of the agricultural and fishing production in Brazil," José Carlos Vaz, agribusiness director at federally controlled Banco do Brasil (BB), told BNamericas.
BB sees the subsidies as a help to reducing risk and improving access to investment and technology for rural producers, Vaz said.
The subsidy rates will continue to vary from 30% to 70% depending on the crop type and are only available to producers that do not have outstanding debts with the federal government. The Brazilian government's rural insurance subsidy was 272mn reais in 2009 and 158mn reais in 2008, an increase of 158% over 2007.
By James Newman
Business News Americas
* Allianz prepares offer for Swiss Life - report - Argentina
German insurer Allianz is preparing an offer for Swiss Life, French online news site Wansquare reported, citing Swiss banking sources.
If an offer materializes in the coming days, it would be worth 5.5bn Swiss francs (US$5.3bn), or a premium of around 20% over Swiss Life's market value of 4.6bn francs, said Wansquare, which is owned by newspaper Le Figaro.
However, in November Allianz finance chief Oliver Baete said the company had no plans for either acquisitions or a capital hike, Wansquare reported. The German group has a market value of 40bn euros (US$57bn).
Although Swiss Life has no direct operations or subsidiaries in Latin America, it cooperates with local partners in Argentina, Brazil, Chile, Colombia, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama and Venezuela, offering customized employee benefit solutions, especially for multinational companies.
In Latin America, Allianz operates in Argentina, Brazil, Colombia and Mexico.
By Business News Americas staff reporters
* Supreme court rejects AFP Habitat's injunction against regulator - Chile
Chile's supreme court has unanimously confirmed a ruling rejecting a request for an injunction filed by private pension fund manager AFP Habitat against pension regulator SP regarding the rules for this year's tender for the approximately 600,000 new affiliates entering Chile's private pension system in 2010 and 2011, SP said in a press release.
The tender system aims to cut commissions charged to contributors and also to increase efficiency in the industry by tendering new affiliates who enter the system each year to the AFP, offering a commission for 24 months that is less than the industry's lowest. Today the lowest commission is AFP Habitat's 1.36%.
AFP Habitat's injunction was aimed at allowing existing AFP owners to create another AFP with lower commissions. According to the law, the winning AFP in the tender must transfer the lowest commissions to all new and existing affiliates.
The tender will go on as planned, an SP spokesperson told BNamericas, and bids must be submitted by January 22.
Citi (NYSE: C) and the local construction chamber CChC own 40% respective stakes in AFP Habitat.
By Business News Americas staff reporters
* AFPs with US$20.7bn available to invest abroad - EuroAmérica - Chile
Chile's five private pension fund managers (AFPs) have today US$20.7bn available to invest abroad after seeing their overseas investments jump 102% last year, according to a report by Chilean financial group EuroAmérica's studies department.
The AFPs saw their investments abroad hit US$51.8bn as of end-December, representing 43.8% of their total investment portfolio compared to 42.9% a month before, according to figures unveiled by industry regulator SP.
Of the total invested abroad, the AFPs increased their investments in Asia Pacific by 0.7% compared to November, while those in the US fell by 1.3%. Among emerging economies, Asia was up 0.5% and Latin America grew 0.3% compared to November, EuroAmérica said.
Each AFP offers a family of five funds with different risk profiles, with fund A having the highest ceiling of variable income investments.
All five funds have individual investment limits in stocks. Thanks to AFPs' eagerness to invest in variable income instruments last month, the overall available amount was reduced to US$432mn from US$2.53bn in November.
Among local stocks, the electric sector increased its weight by 0.5% in December thanks to gains in power holding company Enersis (NYSE: ENI). Both the services and natural resources sectors increased their importance within the AFPs' portfolio, a trend that should increase, especially in the latter, the report reads.
Overall, AFPs' total assets under management increased 31% to US$118bn last year.
By Business News Americas staff reporters
* Mapfre life unit's January-September profits up 273% - Colombia
Colombia's fourth largest life insurer, the local unit of Spain's Mapfre, booked net profits of 7.81bn pesos (US$3.99mn) in January-September last year, up 273% compared to the same period 2008.
Mapfre Vida's underwriting losses narrowed 16.1% to 16.1bn pesos, with net paid claims rising 27.4% to 54.3bn pesos, according to figures released by financial watchdog Superfinanciera.
Mapfre Vida's net written premiums rose 98.0% to 291bn pesos for a 7.54% market share, according to Superfinanciera.
The insurer had 610bn pesos in assets and 515bn pesos in reserves as of end-September.
Mapfre also operates a P&C insurer in Colombia.
By Business News Americas staff reporters
* IN BRIEF Committee to investigate alleged illegal monopoly on insurance sales - Brazil
The urban development committee of Brazil's lower house of congress has decided to investigate charges that an insurance broker with ownership ties to employees of federal savings bank Caixa Econômica Federal (CEF) may have an illegal monopoly on insurance sales through a federal housing program, insurance website CQCS reported.
Fenae Corretora, which is run by union members of CEF, is accused of securing an informal monopoly on surety bonds for federal housing program "Minha Casa, Minha Vida" (My House, My Life).
By Business News Americas staff reporters
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In-deph interview
* 2010: Investment returns back down to earth, caution the name of the game
Gonzalo de las Casas
Chief investment officer
AFP Integra
Peru
http://www.bnamericas.com/interviews/insurance/Gonzalo_de_las_Casas_,AFP_Integra,/169679601
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Main companies covered in today's news
* Principal Financial Group Inc.
http://www.bnamericas.com/company-profile/en/Principal_Financial_Group_Inc,-Principal/169679601
* Banco Bilbao Vizcaya Argentaria S.A.
http://www.bnamericas.com/company-profile/en/Banco_Bilbao_Vizcaya_Argentaria_S,A,-BBVA/169679601
* Administradora de Fondos de Pensiones Capital S.A.
http://www.bnamericas.com/company-profile/en/Administradora_de_Fondos_de_Pensiones_Capital_S,A,-AFP_Capital/169679601
* Administradora de Fondos de Pensiones Habitat S.A.
http://www.bnamericas.com/company-profile/en/Administradora_de_Fondos_de_Pensiones_Habitat_S,A,-AFP_Habitat/169679601
* Federación Internacional de Administradoras de Fondos de Pensiones
http://www.bnamericas.com/company-profile/en/Federacion_Internacional_de_Administradoras_de_Fondos_de_Pensiones-FIAP/169679601
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