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Friday, January 15, 2010
Today's News Headlines
* After Haiti, govts will look to scale up risk management efforts sensibly - Swiss Re - Haiti, Regional
* Multifund systems more beneficial for young affiliates - FIAP - Regional
* AFPs buy US$195mn worth of local stock in December - Banchile - Chile
* Colpatria back in black in January-September - Colombia
* Ministry anti-trust divisions give okay to BB brokerage M&A - Brazil
* Premiums rise 6.77% in 2009 - Dominican R.
* IN BRIEF Zurich Minas Brasil adds life products - Brazil
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* After Haiti, govts will look to scale up risk management efforts sensibly - Swiss Re - Haiti, Regional
After the disastrous earthquake that destroyed large sections of Port-au-Prince, Haiti on Tuesday (Jan 12), governments in the region will be looking to scale up their risk management efforts, taking into account the various tools available, Nikhil da Victoria Lobo, public sector VP at Swiss Re, told BNamericas.
The earthquake certainly brings parametrically triggered insurance coverage into focus as a strong tool for risk protection, the executive said, pointing to the US$8mn maximum payout from the Caribbean Catastrophe Risk Insurance Facility (CCRIF), which Haiti will receive after a 14-day waiting period.
"We don't believe they are the solution to everything, but they do help alleviate some of the anguish and pain by providing governments at least some liquid financing to at least help get on their feet," da Victoria Lobo said.
However, given the country's low level of private sector insurance penetration and lack of other major risk management tools, the rebuilding process will be extremely challenging.
In particular, the government will be even more dependent on donor aid, which comes with donor-imposed restrictions, and likely has no protection for its lost future tax revenues, given that the government will likely be unable to collect taxes for the next several months, if not years, the executive said.
MEXICO EXAMPLE
While certainly much wealthier than Haiti, Mexico may prove an example of the steps that governments can take to broaden their options for risk management, according to da Victoria Lobo.
Mexico currently has a US$290mn parametrically triggered catastrophe bond, but it also has other risk management tools through more traditional insurance instruments and normal budgetary processes, he said.
"We believe these efforts should be scaled up, but they should be scaled up in a sensible manner in line with other risk management philosophies and tools," the executive said, "[so that governments can] optimize how they fund disasters before they happen."
By James Newman
Business News Americas
* Multifund systems more beneficial for young affiliates - FIAP - Regional
The creation of the multifund system by private pension fund managers, or AFPs, in Chile, Mexico and Peru have proven to be more beneficial for young affiliates, according to a report released by international pension fund association FIAP.
As most of those affiliates who sign up for riskier multifunds are below the age of 40, they benefit from higher returns and can have a better pension in the long term, FIAP said.
Since the multifund system was created in Chile in September 2002, seven other countries in Latin America and eastern Europe have adopted the scheme, which offers funds with different risk profiles. Fund A has the highest ceiling of variable income investments, while fund C or E - depending on the country - can only invest in fixed income instruments or invest a small amount in stocks.
According to FIAP, affiliates that contribute to funds A and B are on average 33 and 31 years old, while those who put their monthly contributions in funds C, D and E are on average 45, 57 and 47 years old in the countries polled.
Between September 2002 and 2009, these eight multifund systems combined have delivered the following returns in real terms: A, 8.90%; B, 7.03%; C, 5.86%; D, 4.99%; and E, 3.47%.
Affiliates can choose to sign up for funds A and E, while if they choose not to they are assigned to funds B, C and D depending on their age.
In Chile and Mexico, each AFP offers a family of five funds, while Peruvian AFPs offer three.
Colombia is currently working on a proposal to begin implementing a three-fund system in 2011.
By Business News Americas staff reporters
* AFPs buy US$195mn worth of local stock in December - Banchile - Chile
Chile's private pension fund managers (AFPs) bought domestic shares to the tune of US$195mn in December, the highest monthly amount in 2009, local brokerage Banchile said in a research note.
However, AFPs sold Chilean stocks amounting to US$847mn in 2009, which means a 102 basis points increase in their exposure to these instruments, reaching 13.9% of their total assets.
As a result, AFPs reduced their room to invest in local stocks in December to US$431mn.
Banchile said that AFPs will likely not be relevant players in the local stock market over the coming months, as the room they have left to invest in variable income has been reduced significantly, the report reads.
AFPs' total assets under management increased 31% to US$118bn last year, according to the latest figures from industry regulator SP.
By Business News Americas staff reporters
* Colpatria back in black in January-September - Colombia
Colombian insurer Seguros Colpatria posted earnings of 43.0bn pesos (US$221mn) in January-September 2009 compared to a 7.24bn-peso loss in the same stretch 2008, according to figures released by financial watchdog Superfinanciera.
Seguros Colpatria booked a 4.90bn-peso underwriting profit in the period compared to an 8.80bn-peso loss in January-September 2008. Net paid claims rose 17.6% to 74.4bn pesos.
The company's net written premiums rose 25.2% to 281bn pesos in January-September, equivalent to a 6.24% market share.
The P&C insurer had 499bn pesos in assets and 146bn pesos in equity at end-September.
Colpatria also operates a life insurer under the same brand.
By Business News Americas staff reporters
* Ministry anti-trust divisions give okay to BB brokerage M&A - Brazil
Brazil's anti-trust and consumer protection units of the justice and finance ministries have given federally controlled Banco do Brasil (BB) approval on its recent M&A of insurance brokerages stemming from its other purchases, according to insurance portal CQCS.
In 2009, BB grabbed full stakes in Nossa Caixa and Banco de Santa Catarina (Besc), as well as a half stake in Banco Votorantim. As part of this acquisition process, the bank also picked up insurance and brokerage units.
While the finance ministry's economic analysis unit Seae asked for more information on the brokerage segment, it concluded there was no reason to put special conditions on its approval of the deals, since the market had many players and there appeared to be no anti-competitive effects from the purchases, the report said.
On the insurance side, BB made its largest gains in non-life retail lines, increasing its market share to 8.96% from 8% through M&A, CQCS said.
By Business News Americas staff reporters
* Premiums rise 6.77% in 2009 - Dominican R.
The Dominican Republic's insurance sector had 23.2bn pesos (US$644mn) in net written premiums in 2009, up 6.77% on the previous year, local press quoted insurance superintendent Euclides Gutiérrez Félix as saying at the regulator's 41st anniversary celebration.
The growth seen in the sector is partly due to stable economic growth in the country, he said, which according to the central bank saw GDP increase about 3.5% in 2009. Effective regulation and supervision, as well as insurance companies' generally good performance, have also played a role.
He also said that per instructions from the country's President Leonel Fernández, the current taxes on health and life insurance will be removed, making the social security system and family health insurance programs more competitive.
Construction will soon begin on a new building for the insurance regulator's office, which will cost some 111mn pesos to complete, Gutiérrez said.
By Business News Americas staff reporters
* IN BRIEF Zurich Minas Brasil adds life products - Brazil
Zurich Minas Brasil, the Brazilian insurance unit of Swiss group Zurich, has launched three new life-related products, aiming to cross-sell with other non-life products and using surveys with brokers, the company said in a release.
One product adds nutritional and prescription drug coverage, while another allows the insured client to designate up to five additional people to be covered by the plan without a health exam, the release said.
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,/170073191
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Main companies covered in today's news
* Hannover Rückversicherung AG
http://www.bnamericas.com/company-profile/en/Hannover_Ruckversicherung_AG-Hannover_Re/170073191
* Penta Vida Compañía de Seguros de Vida S.A.
http://www.bnamericas.com/company-profile/en/Penta_Vida_Compania_de_Seguros_de_Vida_S,A,-Penta_Vida/170073191
* Swiss Reinsurance Company
http://www.bnamericas.com/company-profile/en/Swiss_Reinsurance_Company-Swiss_Re/170073191
* Zurich Brasil Seguros S.A.
http://www.bnamericas.com/company-profile/en/Zurich_Brasil_Seguros_S,A,-Zurich_Brasil_Seguros/170073191
* Allianz SE
http://www.bnamericas.com/company-profile/en/Allianz_SE-Allianz/170073191
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