This report differs from its predecessors in several respects. In our analysis of competitive conditions, we provide a much more comprehensive ranking of insurance companies in the major segments from the point of view of the organisation that is providing the data (almost always the national insurance regulator or the national insurance trade association). In Brazil, for instance, the three largest auto insurance providers in the first eight months of 2009, terms of gross written premiums, were: Porto Seguro Cia de Seguros Gerais, Bradesco Auto/Re Companhia de Seguros, and Sul Am

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Brazil Insurance Report Q2 2010
Published on February 2010
Report Summary
This report differs from its predecessors in several respects. In our analysis of competitive conditions, we provide a much more
comprehensive ranking of insurance companies in the major segments from the point of view of the organisation that is providing the
data (almost always the national insurance regulator or the national insurance trade association). In Brazil, for instance, the three
largest auto insurance providers in the first eight months of 2009, terms of gross written premiums, were: Porto Seguro Cia de
Seguros Gerais, Bradesco Auto/Re Companhia de Seguros, and Sul América Cia Nacional de Seguros, with 14.3%, 12.1% and 8.1%
market shares respectively. Over time, we hope to derive insights from observing how market shares change. We emphasise though,
that a decline in share of gross written premiums is not automatically a bad thing and is often the result of a deliberate corporate
decision to focus on more profitable business lines.
Writing in January 2010, we have been able to ensure that the report includes actual data for 2008. The industry regulator, the
Superintendency of Private Insurance Companies (Superintendência de Seguros Privados, SUSEP), identifies three life lines in its
data: VGBL products, retirement savings schemes (of which PGBL products are an important subset) and capitalisation schemes.
BMI data show life premiums rose to BRL40,808mn in 2008 from BRL35,966mn in 2007. Our figures for non-life insurance include the
consolidated insurance figures published by SUSEP, except for premiums for VGBL products, which are a subset of personal lines
that belong to the life segment. The figures include health insurance premiums as disclosed by Agência Nacional de Saúde
Suplementar (ANS). With this approach, we find that non-life premiums rose from BRL67,971mn in 2005 to BRL103,340mn in 2008.
We have generally been able to use data published up to January 2010 to adjust our forecasts for the year as a whole. We forecast
total premiums of for 2009 of BRL167,834mn, which includes non-life premiums of BRL127,062mn and life premiums of
BRL40,772mn.We have extended our forecasts to 2014, when the corresponding figures should be total premiums of
BRL329,354mn, with non-life premiums of BRL239,498mn and life premiums of BRL89,857mn.
In terms of the key drivers that underpin our forecasts, we expect for non-life penetration to rise from 4.21% in 2009 to 5.30% in 2014,
and for life density to rise from US$102 per capita to US$262. BMI's Insurance Business Environment Rating (IBER) for Brazil is 67.4.
This quarter, we include a discussion of developments within regional markets, on the basis of results published by major
cross-border companies in relation to Q209 or Q309 and the latest information provided by regulators and/or trade associations. The
first nine months of 2009 were an excellent period for Spain's MAPFRE, arguably the leading cross-border insurance group in Latin
America. In October 2009, MAPFRE signed a memorandum of understanding with Banco do Brasil to establish a strategic alliance in
the personal, property and motor lines in Brazil.
Brazil's Insurance Sector In Q210 Brazil's insurance sector is the beneficiary of several major trends. Perhaps the most important is
the general improvement in investors' perceptions of risks associated with the country. The overall tendency towards lower long-term
interest rates and stronger currency helps in several ways. Greater economic stability is conducive to the development of non-life
insurance, and greater availability of long-term local currency assets is helpful for the development of organised savings.
As investors, the insurance companies are helped by the substantial ' if often underappreciated ' improvements to Brazil's financial
infrastructure over the last two years. As reported by international securities services magazine Global Custodian in 2008, changes
have included: the merger of the São Paulo Stock Exchange (Bovespa) with the Brazilian Mercantile Futures & Derivatives Exchange
(BM&F) following the IPOs of both; the lifting of regulations that previously hindered foreign investment by Brazilians; and a project
undertaken by the National Association of Investment Banks (Associação Nacional dos Bancos de Investimento, ANBID) to adopt the
ISO 2022 standard in domestic securities transactions.
A key development in early 2009 was the purchase by Itaú Holding Financiera of the smaller União de Bancos Brasileiros (Unibanco)
to form the largest bank in the southern hemisphere in terms of assets. Even before the Itaú/Unibanco merger, Brazil's financial
services sector was dominated by organisations that are ' by global standards ' easily large enough to achieve substantial economies
of scale. This is one of the reasons why Brazil is one of the most exciting of any of the countries whose insurance sectors are profiled
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by BMI.
In terms of its timing, the merger roughly coincided with the sale by troubled US insurance group AIG of its stake in a joint venture
with Unibanco back to the Brazilian bank. The deal is noteworthy because despite AIG's need to raise cash to repay funds borrowed
from the US Treasury, relatively few of its many insurance businesses have actually been sold. AIG's Nan Shan operation in Taiwan
is the other large insurer that has been disposed of.
The Itaú/Unibanco deal is also noteworthy because it combines the now fully owned insurance operations of Unibanco with those of
Itaú within a huge financial services empire that has an extensive branch network across Brazil. Time will tell to what extent Unibanco
and Itaú are able to achieve substantial rationalisation benefits within their insurance operations and whether these gains flow mainly
to shareholders or customers.
Nevertheless, bancassurance is only one of several distribution options that are exploited by the major insurers. Bradesco's insurance
arm is, by some accounts, the largest insurer in Latin America. It distributes by way of its own branch network and 30,000 brokers.
Although some of the large Brazilian insurers are elements of the leading banking groups and others, such as Porto Seguro and
SulAmérica, are independent insurers, what they all have in common is that they are essentially composite insurers. Through a
variety of subsidiaries, they offer voluntary auto insurance (CASCO, but typically including roadside assistance as well), property
insurance, life/savings products and capitalização savings bonds. Life/savings products include private pension (previdência aberta)
plans as well as Vida Gerador de Beneficio Libre (VGBL) and Plano Gerador de Beneficio Libre (PGBL) products. The VGBL and
PGBL products are flexible premium deferred annuity schemes that differ mainly in the way they are taxed. VGBL contributions are
not tax deductable and the benefits are only partially deductable. PGBL contributions are, subject to limits, tax deductable but the
benefits are fully taxable. Capitalização savings bonds are fixed income securities that, usually, have a maturity of one year. In
addition, they enable the holder to participate in lotteries.
Unsurprisingly, many of the leading global insurance groups have a presence in Brazil. The links between the large local groups and
the banking networks present a challenge to foreign players ' but not an insurmountable one. ING's minority holding in SulAmérica
arguably gives it the strongest position among the foreign players and the broadest spread in terms of product lines. In a similar way,
France's CNP is a partner with Caixa Econômica Federal in Caixa Seguros. Several other foreign groups have focused on particular
niches. AEGON's partnership with Mongeral, for instance, reflects a common philosophy, as well as an orientation towards long-term
savings products. Allianz's latest results point to growth outside the major cities, and non-life lines in particular.
Issues To Watch:
'' Resumption of growth in life segment: Figures released by SUSEP in mid-2009 showed a slowing of growth in product lines that we
have included in the life segment. Previously, the life segment was growing at double digit rates. We forecast rapid growth to resume
from 2012.
'' Itaú's strategy following the Unibanco merger: The combination of these two large financial services groups should provide
substantial rationalisation benefits and improve the overall competitive advantage. Nevertheless, Itaú and Unibanco do not have
complete domination of the segments of the insurance market in which they operate and together they represent an attractive
potential distribution partner for other insurers.
'' Macroeconomics: The superior long-term growth of what is already a large and fairly sophisticated insurance sector depends on a
continuation of the virtuous circle of lower long-term interest rates and a stronger currency.
Table of Content
Executive Summary ......5
Table: Overview Of Brazil's Insurance Sector . 5
Key Insights On Brazil's Insurance Sector ... 5
SWOT Analysis..9
Brazil Insurance Industry SWOT ...... 9
Brazil Political SWOT . 10
Brazil Economic SWOT .... 11
Brazil Business Environment SWOT .... 12
Global Outlook.13
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Regional Overview ......15
Table: MAPFRE AMÉRICA ' Gross Written Premiums, 2008-2009 (EURmn) ... 16
Projections And Forecasts17
Table: Premiums, 2006-2014 ... 17
Projections And Drivers Of Growth 17
Table: Growth Drivers, 2006-2014. 18
Country Update ....19
Macroeconomic Outlook ... 19
Table: Brazil Economic Activity, 2006-2014 . 20
Political Outlook 21
Insurance Business Environment Rating ....23
Table: Brazil's Insurance Business Environment . 23
Table: Latin America And Caribbean Insurance Business Environment Ratings 24
Regional Context ..25
Table: Non-Life Premiums In A Regional Context, 2008 .. 25
Table: Life Premiums In A Regional Context, 2008 ... 26
Key Players In Brazil's Insurance Industry .27
Table: Principal Insurance Lines ' Gross Written Premiums, 8M09 (BRLmn) ... 27
Table: Insurance Companies By Gross Written Premiums, 8M09 (BRLmn)... 28
Analysis Of Regional Competitive Conditions ...30
Local Company Profiles ....34
Bradesco 34
Brasilveiculos .... 36
Itaú Seguros 37
Porto Seguro...... 38
SulAmérica . 40
Regional Company Profiles ....42
AEGON Mongeral 42
Allianz.... 44
Cardif..... 46
CNP 48
Generali. 50
HDI-Gerling ...... 52
HSBC Insurance 54
ING . 57
Liberty Mutual ... 59
MAPFRE 61
MetLife... 64
Prudential Financial.... 66
QBE 68
RSA . 70
The Hartford...... 72
The Principal ..... 73
Zurich .... 74
Country Snapshot: Brazil Demographic Data ....76
Section 1: Population... 76
Table: Demographic Indicators, 2005-2030 .. 76
Table: Rural/Urban Breakdown, 2005-2030 . 77
Section 2: Education And Healthcare .. 77
Table: Education, 2000-2003 .. 77
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Table: Vital Statistics, 2005-2030... 77
Section 3: Labour Market And Spending Power ... 78
Table: Employment Indicators, 1999-2004. 78
Table: Consumer Expenditure, 2000-2012 (US$) . 78
Table: Average Annual Wages, 1996-2002. 79
BMI Methodology .80
Insurance Business Environment Ratings ... 81
Table: Insurance Business Environment Indicators And Rationale ...... 82
Table: Weighting Of Indicators ...... 83
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