Brazil Insurance Report Q2 2011: New research report available at Fast Market Research

Feb. 26, 2011 - PRLog -- Writing in January 2011, we estimate that total premiums in the Brazilian insurance industry amounted to BRL178,671mn in 2010. This comprises of non-life premiums of BRL121,462mn and life premiums of BRL57,209mn. In 2015, we expect the corresponding figures to be BRL301,043mn, BRL205,938mn and BRL95,105mn respectively. Underpinning our forecasts are key drivers that include non-life penetration rising from 3.61% of GDP in 2010 to 3.86% in 2015, and life density growing from US$159 per capita in 2010 to US$260 by 2015.

We have also factored in health insurance premiums. Details are sourced from Agencia Nacional de Saude Suplementar (ANS), the health insurance regulator. For BMI's purposes, the non-life segment includes the consolidated insurance figures published by the industry regulator, Superintendencia de Seguros Privados (SUSEP), except for VGBL products, which are a sub-set of personal lines that belong to the life segment. We consider that the Brazilian non-life segment also includes the health insurance premiums disclosed by ANS. At the time of writing, SUSEP has published data for the first seven months of 2010, which we have incorporated into our estimates for the whole year.

We consider the life segment to consist of three elements: VGBL premiums, private pension contributions (which are dominated by premiums for PGBL products) and contributions to capitalizacao savings bonds. The development of the Brazilian insurance sector during the first seven months of 2010 is shown in the table below. BMI's proprietary Insurance Business Environment Rating for Brazil is 67.5.

Brazil's financial infrastructure has undergone substantial improvements over the last few years. The insurance sector is also benefiting from the general improvement in investors' perceptions of risks associated with the country. A continuing trend in lower long-term interest rates and stronger currency helps in the development of non-life insurance and greater availability of long-term local currency assets is helpful for the development of organised savings.

Brazil's financial services sector is made up predominately of organisations that are, by global standards, easily large enough to achieve substantial economies of scale. This has been reinforced by the purchase by Itau Holding Financiera of the smaller Uniao de Bancos Brasileiros (Unibanco), creating the largest bank in the southern hemisphere in terms of assets. The Itau/Unibanco combination comprises of the fully owned insurance operations of Unibanco and those of Itau within a huge financial services empire that has an extensive branch network in Brazil. We will keep track of whether they are able to achieve substantial rationalisation benefits within their insurance operations and whether these gains flow mainly to shareholders or customers.

The merger roughly coincided with the sale of troubled US insurance group AIG's stake in a joint venture with Unibanco back to the Brazilian bank. This deal is noteworthy because despite AIG's need to raise cash to repay funds borrowed from the US treasury, relatively few of its insurance businesses have actually been sold. AIG's Nan Shan operation in Taiwan is the other large insurer that has been divested.

These deals and the sector as a whole make Brazil one of the most exciting of any of the countries whose insurance sectors are profiled by BMI.

Brazil's insurance industry contains many of the leading global insurance groups. They are challenged by the links between the large local groups and the banking networks but not insurmountably. ING's minority holding in SulAmerica means the group probably has the strongest position among the foreign players and the broadest spread in terms of product lines. Several other foreign groups have focused on particular niches, such as AEGON's partnership with Mongeral, with a common philosophy, as well as an orientation towards long-term savings products. Allianz's results highlight growth outside the major cities and from non-life lines in particular.

Issues To Watch

Macroeconomics

This already large and fairly sophisticated insurance sector relies on a continuation of lower long-term interest rates and a stronger currency to maintain its superior long-term growth.

Resumption Of Growth In Life Segment

Throughout 2010, the life segment's rapid expansion resumed after a slowdown in 2009 and we expect this to continue.

Itau's Strategy Following Unibanco Merger

The combination of these two large financial services groups should provide substantial rationalisation benefits and improve overall competitive advantage. Together they represent an attractive potential distribution partner for other insurers.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/126838_brazil_insurance_report...

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.