2011 Brazilian Insurance

1. 2011 Brazilian Insurance Outlook
Samy Hazan – Marítima Seguros
February 1, 2011
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2. 2011 Brazilian Insurance Outlook
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3. Brazilian Insurance Market – Growth ‗09 – ‗10
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4. Positive Trends for 2011 Brazilian Insurance Market
» General improvement in investors‘ perceptions of risks associated
with the country.
» 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
» Greater availability of long-term local currency assets is helpful
for the development of organized savings.
» Credit growth is driving private consumption – historically the most
significant driver of real GDP growth (boosted by government
stimulus)
» For non-life insurance, cars and housing offer high growth potential,
as both these markets are under-penetrated.
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5. The locus of optimism and growth has
changed permanently for emerging markets
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6. Events Shaping Brazilian Insurance Market
» The upcoming Olympic Games 2016 have boosted public spending on
infrastructure projects, helping in increasing the employment levels and the
income levels, further boosting the insurance market.
» Brazil as the host of the World Cup in 2014 will further spur infrastructure
investment and employment health.
» US and Euro economic weaknesses will take a toll on export levels. However,
higher than anticipated Chinese demand should boost export growth both this
year and next.
» Banco do Brasil‘s entre into the market (with new partner Mapfre) could trigger
competitive pressures.
» The Itaú/Unibanco merger - noteworthy as part of a changing competitive
landscape
» Porto Seguro and Itau Unibanco merger of their residential and auto-insurance
operations became Brazil's largest auto and residential insurer, with more than
three million auto policies and more than one million residential policies, and the
third largest Brazilian insurer overall.
Source: Mondaq, Brazil: Growing Pains In A Newly "Opened" Reinsurance Market, March 2010
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7. Brazilian Non-Life Insurance Market
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8. Brazilian Insurance Non-Life Market Considerations
» Insurance is of high importance to the customers and, in most cases,
not a legal requirement (except for DPVAT, compulsory people injury
liability for automobiles)
» However, consumer loyalty in the sector is low with many willing to
shop around (leveraging new technologies) for the best deal, prices
and comprehensive cover.
» According to Fitch, the Brazilian insurance market remains the largest
in the Latin American region, with total written premiums reaching
94bn Reais (US$55.8bn) in January-September, excluding health
insurance.
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9. Brazilian Insurance Outlook – A look at 2010
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10. Latin America - Non-Life Insurance Premiums Growth
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11. Brazilian Non-Life Insurance – Market Projections
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12. Brazil Life Insurance Market
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13. Brazilian Life Insurance – Trends and Factors
» The life insurance segment accounts for approximately 51% of premium
revenues
» Complementary healthcare is typically one of the first things that individuals
buy when purchasing power increases.
» The growth of the Brazilian middle class should continue to drive the
complementary health market, as should the ―formalization‖ of the economy
(companies that pay taxes generally provide better benefits to employees,
including complementary health care).
» To stimulate competition and reduce prices for personal lines insurance, the
Brazilian government removed the previously existing prohibition against life
insurers selling home and personal casualty insurance. The regulatory
change is the first step in the implementation of the "Minha Casa, Minha
Vida" (My House, My Life) program created by Article 79 of Law No. 11.977.
. Source: Goldman Sachs, Brazil: Insurance: Multi-Line, March 2010
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14. Life Insurance in Brazil – Trends and Factors
Life insurance has been the fastest growing segment of the
insurance industry
R$ million, share of the industry as of 2009
Source: Goldman Sachs, Brazil: Insurance: Multi-Line, March 2010
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15. Brazilian Life Insurance – A look at 2010
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16. Latin America Life Insurance Premiums Growth
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17. Brazilian Life Insurance – Market Projections
PROJEÇÃO MERCADO - PESSOAS
AGRUPAMENTO PESSOAS
Prêmio de Contribuição
Período Cresc. Mix Sinistralidade Comissionamento
Seguros Marginal
2007 10.602.434 15% 42% 25% 34%
REALIZADO
2008 12.081.881 14% 15% 38% 24% 37%
2009 13.706.425 13% 15% 36% 23% 40%
2010 15.349.796 12% 15% 35% 25% 39%
ESTIMADO
2011 16.973.473 11% 15% 35% 25% 40%
2012 18.595.036 10% 15% 35% 25% 40%
2013 20.247.567 9% 14% 35% 25% 40%
As informações estimadas de Prêmios de Seguros foram realizadas de acordo com o PIB , para as estimativas
de Sinistros e Comissionamento é realizada de acordo com os valores históricos e as tendências do mercado.
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18. Important Issues & Threats Facing Insurers:
» Increasing costs of regulation;
» Internal Controls;
» Solvency II – New (more) capital requirements;
» New international accounting standards – IFRS;
» New risks (cyber risks, climate change; longevity; media;
others);
» Long-Term Reduction in Investment Earnings
 Lower interest rates ahead;
 Implication: Industry must be prepared to operate in environment
with investment earnings accounting for a smaller fraction of
profits;
+
 Need to Improve overall Operational Efficiency
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19. Analyst Perspective
Effective implementation of predictive modeling to enhance risk
selection and pricing — lead to greater profitability and growth in
market share:
» More-granular insight into customers
» Greater operational performance
» Better claims performance
» Reduced losses, leakage and underwriting risks
Source: Gartner Research: Top 10 Technologies With the Greatest Impact for the Property
and Casualty Insurance Industry, 2010,
Kimberly Harris-Ferrante
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20. THANK YOU! – SAMY HAZAN
samy@maritima.com.br
Twitter: samyseg
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