Insurance activity in Latin America continues to rise rapidly, but it's still far from being saturated—or even sufficient—the new head of Swiss Re's Miami-based office says in the latest edition of BestDay Audio.
Carlos Boelsterli is heading Swiss Re's new Miami outpost, the reinsurer's third regional office serving the Latin American market. Boelsterli is a speaker at A.M. Best's Insurance Market Briefing -- Latin America, set for June 28 and 29 in Miami. Visit http://conferences.ambest.com/latam for details and registration information.
The Swiss Re Miami office will offer treaty and single risk support and complement the offices in Mexico and Sao Paulo. It will also service Spanish Caribbean clients. Boelsterli said at least 40 people are expected to eventually work from the Miami office, joining the influx of insurers and reinsurers transforming Miami's financial district into a regional re/insurance hub.
"Latin America has been growing very rapidly. In the last 10 years, it's tripled its size from $40 billion to more than $120 billion," Boelsterli said. "That's attracting lots of attention, which is very good, bringing more competitors, increasing productivity and hopefully is going to help us solve one of the biggest problems we have in the region, which is the low penetration. Even with all that growth, penetration continues to be very low."
Reinsurers usually find their entry into markets by offering coverage against catastrophic losses, but Boelsterli said the Latin American reinsurance market is quickly moving into other areas as well. "One which is quite clear and tangible is infrastructure. These growing economies need more infrastructure and they need to renew the old ones, which is giving lots of opportunities in different areas. Something similar happens in agriculture. Latin America accounts for some 10% of the global agro exports."
Local insurers have to re-think their strategy to remain competitive in fast-growing markets. "All that growth has to be financed. There are lots of opportunities to bring capital and support the growth with capital. There will be increased activity on the mergers and acquisitions front," Boelsterli said. "Probably staying put is not viable anymore in the future. So local insurers will have to think if they want to grow, if they want to merge or if they want to specialize."
Brazil and Argentina's regulatory systems have drawn global attention, but Boelsterli said Swiss Re has responded by setting up a local operation in Brazil. "Being local but also being registered as an admitted reinsurer will allow us to play in the different fronts and hopefully make the best out of the opportunities of Brazil, which are actually great. When it comes to regulation, my belief is, of course, when you see the development we've seen during the last decade in Latin America, a big part of it has been the opening and liberalization of those markets. I believe that's the way to go."
Listen to the full interview at http://www.ambest.com/v.asp?v=boelsterli512.
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