Mexico Insurance Report Q4 2011
Includes 3 FREE quarterly updates
On balance, Mexico’s proximity to the US is a challenge rather than an opportunity for its insurance sector, as well as financial services more generally. The larger companies, some of which are affiliates of major multinational banks or insurance companies, are essentially in competition with rivals to the north of the border.
That is, of course, to the extent that they want to do business with Mexican companies or households that can actually afford insurance. A structural weakness is that too many households do not have the resources to consider any form of organised savings.
Changes in the competitive landscape appear to be driven mainly by how various protagonists see opportunities across Latin America in general rather than in Mexico in particular. The strategic distribution partnership between Santander and Zurich across the region is an example of this.
At first glance, the absolute size of Mexico’s insurance sector might indicate that it is an attractive commercial opportunity. However, a comparison with its counterpart in Brazil is revealing. Brazil’s population is about 75% larger than that of Mexico. However, in terms of gross premiums in 2011, Brazil’s life segment is about four-times the size of that of Mexico. When health insurance premiums are included (as they are by BMI), the Brazilian non-life segment is by that metric about seven-times the size of that of Mexico. We continue to think Mexico’s insurers are constrained by a number of structural challenges – such as a high percentage of households who cannot afford any form of insurance. However, the more fundamental problem is competition.
In the non-life segment, competition is reflected in the lack of pricing power that has meant it has been difficult for the main companies to achieve premium growth in excess of nominal GDP growth. In good years, penetration has tracked sideways at low levels. In bad years, it has gone backwards. Official data show that in Q111 there was a surge in premiums for maritime and transport coverage. However, for the other lines, growth in real terms has been pedestrian. If there are opportunities, they are with niche products or with government-linked customers such as PEMEX that will buy insurance locally, rather than in the US or global markets, if they can.
The numbers for Q111 suggest there has been a surge in life premiums, which were 14.5% higher in real terms than they were in Q110. We would like to see additional data for Q211 and Q311 before concluding that a new growth trend is emerging. Life insurance is in competition with other organised savings, such as private pensions, in Mexico and the huge variety of offerings from the US.
On balance, Mexico’s proximity to the US is a challenge rather than an opportunity for its insurance sector, as well as financial services more generally. The larger companies, some of which are affiliates of major multinational banks or insurance companies, are essentially in competition with rivals to the north of the border.
That is, of course, to the extent that they want to do business with Mexican companies or households that can actually afford insurance. A structural weakness is that too many households do not have the resources to consider any form of organised savings.
Changes in the competitive landscape appear to be driven mainly by how various protagonists see opportunities across Latin America in general rather than in Mexico in particular. The strategic distribution partnership between Santander and Zurich across the region is an example of this.
At first glance, the absolute size of Mexico’s insurance sector might indicate that it is an attractive commercial opportunity. However, a comparison with its counterpart in Brazil is revealing. Brazil’s population is about 75% larger than that of Mexico. However, in terms of gross premiums in 2011, Brazil’s life segment is about four-times the size of that of Mexico. When health insurance premiums are included (as they are by BMI), the Brazilian non-life segment is by that metric about seven-times the size of that of Mexico. We continue to think Mexico’s insurers are constrained by a number of structural challenges – such as a high percentage of households who cannot afford any form of insurance. However, the more fundamental problem is competition.
In the non-life segment, competition is reflected in the lack of pricing power that has meant it has been difficult for the main companies to achieve premium growth in excess of nominal GDP growth. In good years, penetration has tracked sideways at low levels. In bad years, it has gone backwards. Official data show that in Q111 there was a surge in premiums for maritime and transport coverage. However, for the other lines, growth in real terms has been pedestrian. If there are opportunities, they are with niche products or with government-linked customers such as PEMEX that will buy insurance locally, rather than in the US or global markets, if they can.
The numbers for Q111 suggest there has been a surge in life premiums, which were 14.5% higher in real terms than they were in Q110. We would like to see additional data for Q211 and Q311 before concluding that a new growth trend is emerging. Life insurance is in competition with other organised savings, such as private pensions, in Mexico and the huge variety of offerings from the US.
Contents
Executive SummaryTable: Total Premiums, 2008-2015
Key Insights And Key Risks
SWOT Analysis
Mexico Insurance Industry SWOT
Mexico Political SWOT
Mexico Economic SWOT
Mexico Business Environment SWOT
Life
Latin America Life Sector Overview
Table: Latin America’s Life Premiums, 2008-2015 (US$mn)
Mexico’s Life Sector Update
Life Insurance Industry Forecast Scenario
Table: Life Premiums, 2008-2015
Growth Drivers And Risk Management Projections
Population
Table: Insurance Sector Key Drivers – Demographics, 2008-2015
Non-Life
Latin America Non-Life Sector Overview
Table: Latin America’s Non-Life Premiums, 2008-2015 (US$mn)
Mexico Non-Life Sector Update
Non-Life Industry Forecast Scenario
Table: Non-Life Premiums, 2008-2015
Growth Drivers And Risk Management Projections
Macroeconomic Outlook
Table: Mexico Economic Activity, 2006-2015
Political Stability Outlook
Table: Latin America Security Ratings
Healthcare
Health Insurance
Epidemiology
Table: Insurance Sector Key Drivers – Disability-Adjusted Life Years, 2008-2015
Motor
Table: Insurance Sector Key Drivers – Autos, 2005-2015
Insurance Risk/Reward Ratings
Table: Mexico’s Insurance Risk/Reward Ratings
Table: Latin America Insurance Risk/Reward Ratings
Competitive Landscape
Latin America Competitive Landscape
Major Players In Mexico’s Insurance Sector
Table: Non-Life Insurance Company Rankings By Gross Written Premiums, 2009
Table: Life Insurance Company Rankings By Gross Written Premiums, 2009
Company Profiles
Local Company Profiles
Banamex Seguros
Seguros Bancomer
Grupo Nacional Provincial
Qualitas
Seguros Inbursa
Regional Company Profiles
Allianz
BNP Paribas Cardif
CNP
Generali
HSBC Insurance
ING
Liberty Mutual
Mapfre
MetLife ALICO
New York Life
Prudential Financial
QBE
RSA
Zurich
BMI Methodology
Insurance Risk/Reward Ratings
Table: Insurance Risk/Reward Indicators And Rationale
Table: Weighting Of Indicators Skip to top