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Tuesday, January 19, 2010
Today's News Headlines
* Insurance industry's premiums up 19%, profits increase fivefold in 2009 - association - Peru
* IDB board to gather before Cancún meeting to fine-tune capital increase - Regional
* Allianz closes purchase of stake from Itaú Unibanco - Brazil
* Pension assets rise 22% in 2009 - Mexico
* AM Best rates ICBL at A- - Barbados
* Microinsurance premiums could grow 20% this year - report - Peru
* Factorline aims to enter insurance business - Chile
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* Insurance industry's premiums up 19%, profits increase fivefold in 2009 - association - Peru
Peru's insurance industry had an estimated 5.1bn soles (US$1.79bn) in written premiums in 2009, for an increase of 19% over 2008, insurance association Apeseg general manager Raúl De Andrea told BNamericas.
This performance was better than Apeseg's expectations in early 2009 of 10% premium growth, despite the country's GDP growing just 1% in the year, according to estimates by central bank BCRP.
P&C lines saw a particularly good year, both because of increased premiums and lower claims than the previous two years, when the industry had to deal with payouts due to heavy rains in northern Peru in 2008 and the 8.0 magnitude earthquake that hit the province of Pisco and others in 2007.
De Andrea also said the insurance industry improved its underwriting and more accurately priced premiums in 2009, for two main reasons: "The international financial crisis led to a refocus on basic fundamentals, as companies previously compensated for poor technical results with good investment returns."
In addition, the end to heavy competition between the top two players - Rimac and El Pacífico - for the biggest share of the market also played a role, he said. The latter has life insurer El Pacífico Vida and non-life company El Pacífico Peruano Suiza.
The industry's combined ratio in the 12 months through November was 80%, an improvement from 90.2% in the year-ago period, according to the most recently available statistics from financial regulator SBS.
"Because of the improved technical results and solid returns on the Lima stock exchange, the insurance industry saw an estimated 470mn-sol profit in the year, up from 92mn soles in 2008," he said.
This return was similar to that seen in 2007, but with the fundamental difference that they were based mainly on technical results in 2009 but investment returns in 2007.
2010 OUTLOOK
Looking to this year, the association is optimistic due to predictions that private investment will return to previous levels, the construction industry will be active and auto, consumer and mortgage credit will flow.
Peru's temporary early retirement program - meant to ease the effects of the international financial crisis on the population - should also help results, De Andrea said. The program came into effect at the beginning of this year and will last through 2012.
These factors, and the beginnings of an insurance culture in Peru, as well as new products and sales channels this year, should lead to premium growth of about 15% over that seen in 2009, according to the official.
The industry is challenged to continue growing and increasing the penetration of insurance in Peru, which has among the lowest penetration rates in the region, De Andrea said.
As of end-November, the country's 13 insurers had 13.9bn soles in assets and 2.70bn soles in equity, up 10.9% and 31.7%, respectively, on a year earlier, according to SBS.
By William Schatz
Business News Americas
* IDB board to gather before Cancún meeting to fine-tune capital increase - Regional
The Inter-American Development Bank's (IDB) board of governors will gather before the bank's annual meeting in Cancún, Mexico at the end of March to fine-tune the details of a proposal for its ninth capital increase as well as the institutional strategy and results, Susana Sitja, senior modernization of the state specialist at IDB's office of strategic planning and development effectiveness, told BNamericas.
Last March the board of governors - IDB's top policymaking body, where all member countries are represented - called for an assessment of the need to add resources to the bank's ordinary capital and the fund for special operations, its source for concessional lending to the region's poorest countries. The capital increase is expected to come close to US$175bn, or more than double the bank's existing capacity.
Last week, IDB completed what it described as a far-reaching public consultation related to its proposed capital increase, a process that began on September 8 last year.
About 500 civil society organizations in the Americas and Europe participated in the consultation process. During the period, management met with organizations in the US, Europe and Latin America and the Caribbean, and conducted face-to-face meetings in seven countries.
"The public consultation focused on three aspects: the bank's institutional strategy, the institution's comparative advantages and the IDB's agenda to become a more effective and efficient institution," Sitja said.
Civil society organizations provided suggestions ranging from increased support for the private sector to greater emphasis on urban development, community participation in projects and an expansion of poverty alleviation programs.
"Suggestions and comments made by civil society regarding the bank's capital increase through eleven public consultations and the bank's website are being systematized in a document that will be sent to the board of executives and the board of governors, so that they [serve as] material for their discussions about the final structure of the capital increase," she said.
IDB hired a non-profit firm with vast experience in dialogue and consultation processes to handle the information. The bank's management has already taken several comments made by civil society about poverty and inequality reduction, climate change and renewable energy to its institutional strategy that will be proposed with the capital increase, according to Sitja.
By Jorge Porter
Business News Americas
* Allianz closes purchase of stake from Itaú Unibanco - Brazil
Germany's Allianz has acquired the outstanding 14% of its Brazilian subsidiary Allianz Seguros that was held by Itaú Unibanco (NYSE: ITUB), Allianz said in a statement.
The deal was announced in late December last year when Itaú Unibanco - Brazil's largest private sector bank - said it had reached an agreement to sell its stake for about 109mn reais (US$62mn) to Allianz South America.
The transaction was closed on January 14 and has been submitted to regulatory authorities for respective approval, the statement reads.
For 2010 Allianz Group economists forecast Brazil's GDP will grow by 5%. "Major sports events in the years ahead, such as the soccer World Cup in 2014 and the Olympic Games in 2016, not to mention the huge infrastructure works already planned to take place, will further accelerate the country's development."
Allianz Seguros ranks among the top seven P&C insurers in Brazil with a market share of 5.6%, according to the statement. From January to September 2009 Allianz Seguros reported 1.4bn reais in gross written premiums, up 26.5% on the same period the year before. The company also sells group health insurance.
By Business News Americas staff reporters
* Pension assets rise 22% in 2009 - Mexico
Mexico's pension fund managers (Afores) reported mandatory pension assets under management of 1.13tn pesos (US$89.1bn) as of the end of 2009, a nominal rise of 22.1% on end-2008.
Pension assets as of end-December were up 2.46% from a month earlier, according to statistics from pension regulator Consar.
The five types of mandatory retirement funds managed by the Afores posted the following net returns at end-December: Siefore Básica 1 (SB1) 5.80%, SB2 4.85%, SB3 4.86%, SB4 4.80% and SB5 4.59%.
As of November 30, the five Siefores had recorded the following net returns: SB1 6.22%, SB2 5.31%, SB3 5.31%, SB4 5.21% and SB5 5.01%.
SB1 is the most conservative and for pensioners 56 years old and above, while SB2 is for those aged 46 to 55, SB3 for 37 to 45, SB4 for 27 to 36 and SB5 for 26 and below, with investments increasing in risk at each stage.
Net returns are the nominal returns on pension assets over the last 36 months, minus the commission Afores charge on assets under management.
The industry ended 2009 with 14 fund managers, after the year saw Afore Profuturo GNP buy Scotia Afore and Afore Banorte-Generali acquire Afore Argos, IXE Afore and Afore Ahorra Ahora.
By Business News Americas staff reporters
* AM Best rates ICBL at A- - Barbados
AM Best has assigned a financial strength rating of A- and an issuer credit rating of a- to the Insurance Corporation of Barbados (ICBL). The outlook assigned to both ratings is stable, the agency said in a report.
The rating actions reflect ICBL's solid capitalization, leading market presence in its domestic market, favorable operating results in recent years and its affiliation with Bermuda-based BF&M, its majority owner, the report reads.
Publicly traded ICBL is the leading P&C insurer in the Barbados market and enjoys excellent brand recognition, AM Best said. ICBL has achieved favorable underwriting results in recent years through prudent risk selection and underwriting discipline. Underwriting profitability has been increased by consistent levels of investment income, which has enabled the company to continue enhancing its solid capitalization.
Partially offsetting these strengths is the geographic concentration of ICBL's business in Barbados as well as the increasingly competitive market environment in which the company operates, the report reads.
ICBL, like other regional insurers, has significant exposure to catastrophic losses. The company manages this risk through the utilization of reinsurance to limit its catastrophe exposure to a manageable level and protect its surplus against frequency of events, AM Best said.
By Business News Americas staff reporters
* Microinsurance premiums could grow 20% this year - report - Peru
Microinsurance premiums in Peru will grow 20% this year, after a 16-17% increase in 2009, state news service Andina reported insurance company La Positiva's corporate underwriting director Gustavo Cerdeña as saying.
The overall insurance industry grew about 19% last year, according to estimates from insurance association Apeseg.
There are currently 2.5mn people in the country that could purchase microinsurance, as they have access to credit and could afford the 4 or 5 soles per month for such insurance, said Cerdeña, adding that there are 6mn Peruvians that are potential microinsurance clients.
The high potential growth this year is due partly to financial regulator SBS's new microinsurance rules, which came into effect at the beginning of 2010, he said. The new rules loosened the requirements for an insurance product to qualify as microinsurance and thus have a lower price.
By Business News Americas staff reporters
* Factorline aims to enter insurance business - Chile
Chile's largest factoring company Factorline plans to enter the banking industry either through a purchase or by starting from scratch, as well as re-enter the consumer finance business which it sold in 2008 to local bank BCI, daily La Tercera quoted Factorline chairman Jorge Sabag as saying.
Factorline is aiming to broaden the array of financial services it offers by entering the insurance and stock brokerage businesses among others over the next few years, the executive said.
The company's entrance to the insurance segment will first be carried out through an insurance brokerage, and in two to three years, when it has the necessary critical mass, Factorline plans to launch an insurance company, he said.
The company is also mulling an IPO for the next two or three years, said Sabag.
Factorline - controlled by the local Massú family - had US$329mn in assets as of September 30 and operates through 30 branches countrywide.
By Business News Americas staff reporters
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In-deph interview
* Aiming to become one of the top five foreign players in the region
Fernando Concha
Latin America CEO
RSA
Regional
http://www.bnamericas.com/interviews/insurance/Fernando_Concha_,RSA,/170505152
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Main companies covered in today's news
* Swiss Reinsurance Company
http://www.bnamericas.com/company-profile/en/Swiss_Reinsurance_Company-Swiss_Re/170505152
* Sagicor Financial Corporation
http://www.bnamericas.com/company-profile/en/Sagicor_Financial_Corporation-Sagicor/170505152
* Federación Internacional de Administradoras de Fondos de Pensiones
http://www.bnamericas.com/company-profile/en/Federacion_Internacional_de_Administradoras_de_Fondos_de_Pensiones-FIAP/170505152
* Banco Bilbao Vizcaya Argentaria S.A.
http://www.bnamericas.com/company-profile/en/Banco_Bilbao_Vizcaya_Argentaria_S,A,-BBVA/170505152
* Allianz SE
http://www.bnamericas.com/company-profile/en/Allianz_SE-Allianz/170505152
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