Recently published research from Business Monitor International, "Mexico Insurance Report Q1 2013", is now available at Fast Market Research

Boston, MA -- (SBWire) -- 02/12/2013 --Key Insights And Key Risks

The Mexico Insurance Report considers the prospects for both life and non-life insurers in the country. Recent developments continue to highlight both strengths and weaknesses. In the non-life segment, premiums have grown at double-digit rates, in real terms, in most lines other than accident and health, through H112. 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.

We doubt that there will be radical changes in the life segment unless and until: 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.

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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. Compared to other emerging markets, both the main segments stand out for the importance of companies that are substantial by most standards and backed by well-capitalised financial institutions.

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.

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