Posted on 25 Apr 2013 by Neilson
Reinsurance and insurance company Swiss Re sees Latin America markets as a growing part of its business, as it works to cover an expanding middle class, the corporate sector and governments, company chief executive Michael Lies said.
As the economies of most of Latin America post important growth rates, the Swiss-based company is aiming to increase income from premiums in the region, Mr. Lies told Dow Jones Newswires in an interview this week.
"You see a number of countries in Latin America that are having growth above the global average," he said, adding that this will help boost markets for products such as life insurance in Brazil and for natural catastrophe protection in Mexico and Colombia.
"Premiums in Latin America are less than 5% of total premium income, but it will definitely be part of the pace of growth that we want to achieve in the so-called emerging markets. We have now a little bit more than 15% worldwide (market share), and we want to go to 20% or 25% until the end of 2015," he said.
"So the contribution of Latin America will be at least proportional," he added.
Mr. Lies added that profits need to rise hand-in-hand with the projected growth in premiums.
"The growth in profitability should be at least half of the growth in premiums," he added. "The key issue for us is profitable growth."
With inflation controlled in most of Latin America, insurance companies have "massively" improved their underwriting abilities, he noted.
"They don't expect any hyper inflation to help them cover their bad underwriting policies," he said, adding that the " majority of good insurance companies in Latin America have very good underwriting capabilities."
The company aims to help make access to insurance a more simple procedure in the emerging markets.
"Our common target with insurance companies is to increase our reach to people who are currently outside of the insurance industry," he said, adding that, "Our goal is to explain to the middle class of tomorrow that insurance can be very genuinely positive."
At the same time, Swiss Re is aiming to work with governments to see how they can increase their risk coverage and allow them to continue to provide social programs and carry out other spending.
"In Latin America there are a lot of natural risks that can be extremely disruptive, and interrupt programs that governments may have. What we are trying to do there is to offer some kind of stability so that disruptions don't destroy all of the good initiatives that are happening," he added.
He said that if less than 30% of the population in a nation is insured when a catastrophe happens, "then a lot of the burden will fall on the shoulders of the government."
The company is also working to directly provide insurance coverage to large worldwide companies though a "corporate solutions unit."
Mr. Lies was in Lima where he was taking part in the World Economic Forum meetings.
The company on Tuesday announced that a foundation that it runs is helping finance a study that aims to create a comprehensive picture of seismic risk in Latin America, focusing especially on Lima and on Quito, Ecuador.