Boston, MA -- (SBWIRE) -- 09/11/2012 -- Key Insights And Key Risks

The Brazil Insurance Report considers the prospects for life and non-life insurers in the country. As of mid-2012, the latest data from Brazil's leading insurance companies, in relation to calendar 2011 and Q112, confirms our view that the country is home to one of the world's most dynamic and rapidly growing insurance sectors. Overall premiums are growing at double-digit rates because: a) the openness of the market to entry by major multinationals, b) the growth in the numbers of households that can afford to buy insurance (and/or to save for the long-term) and c) the continuing downwards trend in inflation, interest rates and risk premiums attached to investment,.

To a greater extent than their counterparts in other large emerging markets, the Brazilian majors are ready to undertake (very) large scale corporate deals. Bank distribution accounts for about 40% of all insurance sales in the country and, as such, is often a key to success: this explains the strategic partnerships between Zurich and Santander and between MAPFRE and Banco do Brasil, as well as the long-standing commercial links between Porto Seguro and Itau Unibanco. The banks have the imagination to recognise the opportunities that are available from 'open architecture'- the distribution of products that are sourced from unrelated suppliers. However, we also stress the various players are taking active and positive steps to develop their own brands, to invest in platforms and systems, to improve underwriting and profitability and to introduce new products.

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The extremely upbeat reports that were published over the course of H112 confirm our view that prospects for the life segment are more exciting than those for the non-life segment. The recent results published by the leading Brazilian insurance companies (mainly in November last year) point to rises in life premiums (conventional life insurance, pension plans, VGBL and PGBL products, as well as Capitalizacao savings bonds) of around 20% or more relative to the corresponding periods of 2010. The details of the results point to strong (ie in excess of 30%) returns on capital and improvements to margins thanks to discipline in pricing of risks and claims management. Over the medium-term, the only constraint on growth is the ability of Brazilian insurers to raise new capital to support this business: the insurance sector will remain a major beneficiary of financial stability.

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