An 8.2-magnitude earthquake was reported by the U.S. Geological Survey (USGS) about 40 miles off the northern coast of Chile yesterday evening. More than 60 aftershocks were reported following the initial event, one of which was measured of magnitude 6.2. Shaking was felt as far away as La Paz Bolivia, over 290 miles (470 km) away.
Posts Tagged ‘Latin America’
Here we bring together recent GC Capital Ideas stories that have focused on emerging markets.
Demand for Asia Pacific Catastrophe Reinsurance at a Record High in 2013: Total Asia Pacific catastrophe limit purchased in 2013 increased for the tenth year in a row, but once again failed to keep pace with strong gross domestic product growth in the region, according to a new report released today by Guy Carpenter.
Capital Stewardship Option: M&A - Grow/Diversify by Territory: With growth opportunities limited in mature markets, many insurers are looking to emerging markets for future expansion, in particular China, Southeast Asia and Central and Latin America.
Opportunities in Latin America: A Microscopic Look: While markets in some developed countries are demonstrating signs of recovery from the economic uncertainty of the last few years, and the growth in some developing markets is slowing, emerging countries remain attractive for insurance companies seeking opportunities for profitable growth. Latin America is an especially significant emerging region - it is rich in natural resources, geographically close to the United States and all of its governments are democratic. Before entering and engaging in business in this region, it is necessary for companies to be familiar with the economic environment, political situation, regulations, trends and risks that may be encountered.
Joan Lamm-Tennant, PhD, Global Chief Economist and Risk Strategist, and Stefano Dominedo, Vice President
While markets in some developed countries are demonstrating signs of recovery from the economic uncertainty of the last few years, and the growth in some developing markets is slowing, emerging countries remain attractive for insurance companies seeking opportunities for profitable growth. Latin America is an especially significant emerging region - it is rich in natural resources, geographically close to the United States and all of its governments are democratic. Before entering and engaging in business in this region, it is necessary for companies to be familiar with the economic environment, political situation, regulations, trends and risks that may be encountered.
Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist and member of Marsh & McLennan Companies (NYSE: MMC), reports that reinsurance market rates on line (ROLs) continued to be driven by an influx of capital from third-party investors at the July 1 renewals, in spite of catastrophe losses reaching approximately USD20 billion during the first six months of 2013 (above the ten-year average for the period). In a briefing released today, Guy Carpenter comments that robust catastrophe bond, sidecar and collateralized reinsurance activity throughout the year has for the first time pushed pricing in the capital markets to “decouple” or breakaway from levels set by the traditional market. This has in turn prompted downward pressure on overall traditional market pricing.
Guy Carpenter is pleased to announce that Aidan Pope has been named “Latin America Reinsurance Broking CEO of the Year” at the Reactions Latin America Awards 2013. Mr. Pope is CEO of Latin America and Caribbean (LAC) Operations for Guy Carpenter and is also on the firm’s Board of Managers.
Thirty-five percent of insured natural catastrophe losses between 2009 and 2011 were located in Asia while only 33 percent were in the United States. Australia and New Zealand also saw a marked increase in natural catastrophe insured losses during this period, with 19 percent of the total. This is in stark contrast to the long-term trend of more than three-quarters of all insured natural catastrophe losses occurring in the United States.
The macroeconomic environment continues to be top-of-mind among insurance leaders. With growth in global real gross domestic product (GDP) slowing from 4.1 percent in 2010 to 3 percent in 2011, insurance leaders continue to experience significant headwinds challenging profitable growth. As reported by Swiss Re, insurance overall direct premiums declined 0.8 percent in real terms in 2011. Nevertheless, pockets of opportunities do exist and will continue in the near term. Stabilizing social/political conditions, investments in infrastructure and demographic progression continue to fuel strong positive GDP growth and increasing insurance penetration in emerging economies. In these economies, overall direct premiums increased 1.3 percent in real terms in 2011, with non-life premiums increasing 9.1 percent.
Although improvements in ERM practices meant (re)insurers were better prepared for the major catastrophes of 2010 and 2011 than those in 2005, the global nature of these losses has prompted some companies to review their perception of risk. This international loss trend, along with insurance growth in emerging market regions, is driving the need for better and more comprehensive tools for modeling risk. It also reinforces the need for (re)insurers to carefully consider how and where they diversify their business geographically and the adequacy of pricing in these territories.
As the marketplace becomes increasingly competitive, and economic and socio-political conditions stabilize in many emerging markets, these territories will become more central to carrier companies’ strategies. However, pursuing growth opportunities in such developing economies brings new and different risks. There are growing concerns about increasing exposure and vulnerability to natural hazards in such growth regions. Writing business that is catastrophe exposed at adequate prices and terms is crucial for profitable growth in new markets, and it is important that (re)insurers maintain underwriting discipline when entering emerging economies.
The trend of increasing non-peak zone insured losses has coincided with rapid economic growth in emerging economies. During the last decade, developing nations have driven global economic growth, symbolized by China becoming the second-largest economy in the world. Increasingly stable economic and socio-political conditions in many countries in Asia, Latin America, the Middle East, Eastern Europe and Africa have supported growing investment in these regions because of the attractive opportunities for companies seeking long-term growth.