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New Report Available: Mexico Insurance Report Q1 2014


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2013-12-08 14:21:37 - Recently published research from Business Monitor International, "Mexico Insurance Report Q1 2014", is now available at Fast Market Research

As of late 2013, it is clear that Mexico continues to be regarded by leading multinational insurers as a market that is too large to be ignored. Many of the positive trends that are evident elsewhere in Latin America are present in Mexico. Nevertheless, strong competitive pressures in both segments and competition from the US insurance sector continue to keep a lid on growth. Several challenges need to be addressed if Mexico's life insurance segment is to reach its full potential.

Key Insights and Key Risks

Recent developments continue to highlight both strengths and weaknesses in Mexico's insurance sector. In the non-life segment, premiums have grown at single digit rates, in real terms, in most lines other than accident and health (which

expanded more rapidly), throughout 2013. But for the renewal of PEMEX's multi-year omnibus cover, non-auto related property & casualty premiums have been contracting in real terms. Life premiums have also grown at a respectable rate. For many insurers, profitability has improved as a result of tighter control of costs and losses and/or higher prices.

Full Report Details at
- www.fastmr.com/prod/752049_mexico_insurance_report_q1_2014.aspx

We doubt that there will be radical changes in the life segment unless: a) a sustained education programme effectively promotes life insurance and long-term savings; b) shifts in the distribution of household incomes mean that there is a dramatic increase in the number of households that can afford to buy the offerings of the life insurance companies; and c) at least one of the major players develops an innovative product that captures the imagination of the masses. The rapid rise in micro-insurance in Brazil over the last 18 months or so provides an indication of what could be achieved.

In some markets, development of insurance is hampered by desperate competition for business - regardless of profitability - from large numbers of undersized companies. This is emphatically not the case in Mexico. Unlike other emerging markets, the two main segments stand out in terms of the importance of companies present; insurance firms operating in Mexico are substantial by most standards and backed by well-capitalised financial institutions. Indeed, the discipline and innovation shown by the leading providers of motor insurance are clear strengths of the overall insurance sector.

Various deals in the last year or so highlight how Mexico is still seen as a key opportunity by many multinational players. The first is the formation of the bancassurance joint venture across all of Latin America between Zurich Insurance Group and Santander. This deal takes advantage of three trends: rising demand for non-life insurance in economies that are developing relatively fast, the growth in organised savings and the further development of bancassurance as a very important distribution channel. Although Mexico's life segment remains in competition with its vastly larger counterpart in the US, all three trends are present in the country (Zurich is underwriting non-life risks as well).

A second deal is GrupoSura's purchase of the pension and asset management business of ING across South America and its life insurance businesses in Peru and Chile. This transaction is unusual in that it produces a regional player that is not a multinational based in North America or Europe. One aspect that has not been emphasised is that ING's pension operations in Mexico made up a substantial part of the business that was sold.

A third deal, announced 2012, is HSBC's sale of its property and casualty insurance business in Mexico to AXA. This is part of a broader move by HSBC to focus on core activities, and is accompanied by a 10-year bancassurance deal in Mexico and other countries with the French insurer. This deal further increases AXA's leadership in the non-life segment and in the only country in the region in which AXA has a substantial operation. In July 2013, Generali, too, announced that it would sell its Mexican interests (in this case to JV partner Banorte) in order to boost capital and to focus on opportunities in other Latin American countries.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

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.

For more information about these or related research reports, please visit our website at www.fastmr.com or call us at 1.800.844.8156.


Author:
Bill Thompson
e-mail
Web: www.fastmr.com
Phone: 18008448156

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