Boston, MA -- (SBWIRE) -- 06/11/2014 -- The results of the leading Brazilian insurance companies in relation to 2013 totally vindicate our view that Brazil is 'one of the most exciting and dynamic insurance markets globally. A deteriorating, but far from disastrous, economic environment has apparently had no adverse impact on the leading life insurers, non-life insurers or specialty health insurers. Both sectors are benefiting from positive 'demand pull' and 'supply push' factors. Both the major segments are being boosted by first-time users of insurance products. Some of the life companies have reported surging sales in VGBL, PGBL and (especially) Capitalizacao savings bonds over the last year.
The risk-return profiles of these products are clearly perceived as being superior by the policy-holders. In the non-life segment, numbers of policy holders in even basic sub-sectors such as motor vehicle insurance and property insurance are also growing quite rapidly. The 'supply push' factors are easy to identify. The insurance companies are innovative in terms of product development and dynamic in terms of distribution strategies. This is at a time that the vast majority of them are able to leverage benefits of scale, brand and association with major financial institutions. We see no reason why the positive trends will not continue through 2014 and 2015 and into the later years of the forecast period. We will likely be revising our forecasts upwards in coming months. In the short-term, likely softness of the BRL will continue to constrain the growth of premiums in US dollar terms.
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We remain of the view that Brazil is one of the more exciting and dynamic markets for life insurance globally, and that growth is being driven by secular trends on which short-term macro-economic problems appear to be having little impact. The favourable trends include a steady increase in the numbers of households who can afford to save via life insurance and a faster growth in general understanding of the benefits of long-term savings. The major life insurance companies have also contributed to the growth - through innovations in products, passing on of benefits of cost savings to customers, development and promotion of brands and imaginative distribution solutions.
- The slowing of Brazil's economy and the increase in interest rates and inflation did not have an adverse impact on the insurance sector in 2013 and early 2014.
- However, figures in US dollar terms have been compressed by currency movements (i.e. the general weakness of the BRL).
- Some companies reported that premiums in particular lines fell during 2013: this was typically the result of a desire to focus on profits rather than on market share for its own sake.
- In the non-life segment, many of the leaders reported higher prices and volumes in auto-related lines in 2013: other personal lines generally experienced good growth as well.
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