Insurers are vying for the opportunity to provide coverage to the massive infrastructure project that kicks off Brazil's 2014 World Cup preparations. And with Brazil's economy growing, the market as a whole is attracting insurers, despite some regulatory set-backs.
It will be the first time since 1950 that the World Cup -- consisting of 64 matches and watched by millions across the world -- takes place in Brazil. With 1 million people expected to visit the country for the tournament, major construction projects are under way in each of the 12 host cities. Some $29.4 billion is being pumped into the projects, mostly public money with some private investment, according the Brazilian government.
"All of this infrastructure needs to be built," said Luis Maurette, president and chief executive officer of Liberty Seguros, Liberty Mutual Group's Brazilian subsidiary. "The opportunity is immense for the market as a whole."
Highways need to be improved, hotels built, airports upgraded, and, of course, the stadiums need remodeling. The last major stadium was built in the 1960s, and all of them must be brought up to standard for FIFA, the international governing body for soccer.
Zurich Financial Services Group has already written reinsurance coverage for construction projects in Usinas de Jirau and San Antonio, and for three stadiums that will host the World Cup.
Travelers Cos. invested $410 million for a 43% stake in Brazil's leading writer of surety insurance, JMalucelli Participacoes em Seguros e Resseguros S.A., with an eye on not only the Cup, but the 2016 summer Olympic Games, which Brazil is also hosting (BestWire, June 20, 2011). The country is also hosting the 2013 FIFA Confederations Cup, a tournament often considered a dress rehearsal for the World Cup. Travelers believes the surety segment -- which plays an integral role in guaranteeing construction and development projects -- will benefit from the event-related construction boom.
And Liberty Seguros was recently named the "official insurance provider" of the World Cup, gaining rights to an extensive marketing package geared specifically to the Brazilian market.