This report is being written at a time when the Global Financial Crisis - which arose as a result of theevaporation of inter-bank liquidity - appeared to be moving towards a resolution. The governments of theUK, the US and most of the larger countries in the euro area have all announced plans to make fundsavailable - in one form or another - to their respective commercial banking sectors. As yet, it is too earlyto identify the impact of the crisis on particular emerging markets. However, in the regular section whichdiscusses the changes which we are making to the report, we include a lengthy analysis which attempts toidentify the key issues. In essence, in the emerging markets (and, indeed, the developed countries) of theAsia-Pacific, commercial banks and insurers appear to be well placed to deal with the crisis. The same isbroadly true of commercial banks and insurers in the various countries of the Middle East and NorthAfrica. In Latin America, Chile, Brazil, Mexico and Colombia appear better placed than Argentina,Venezuela, Bolivia and Ecuador. South Africa’s situation appears to have much in common with that ofBrazil; by contrast, Nigeria faces some of the same challenges as those that confront Venezuela. Thepositions of most countries in Central and Eastern Europe, however, are alarming.
It has not been practicable for us to collate the latest figures for assets and premium income this quarter.The global financial situation has been changing so rapidly that most numbers would have become out ofdate. Nevertheless, we expect that, in coming months, it will become obvious that credit growth isslowing dramatically in most of the countries whose commercial banking sectors are profiled in BMI’sreports. We will amend the figures - and indeed our forecasts - accordingly.
Nevertheless, we believe that the figures which we had compiled last quarter provide insights as to howthe various insurance sectors will fare in the current, extremely uncertain, environment. We havetherefore left them, and the comments on the Key Issues, essentially unchanged.
The global financial crisis is likely to affect the various segments of the global insurance industry indifferent ways. In many countries - especially in Europe - the coming recession points to softness in thenon-life segment. In many cases, the numbers of policies may fall so there should be downwards pressureon premiums. By contrast, the main problem for the life segment - in almost all countries - is the extremevolatility of financial markets. Over the longer-term, though, the fortunes of life insurance will recover -thanks to the secular growth of organised savings in most countries. China, where the larger insurancecompanies continue to achieve double digit growth in premium income, is a good example of this. Someparticular niches should also do well in the current environment, such as legal liability insurance.
In Latin America, we profile 21 companies. These are AEGON, AGF, AIG, Allianz, AXA, Cardif,CNP, Generali, HDI-Talanx, HSBC Insurance, ING, Liberty Mutual, MAPFRE, MetLife, NewYork Life, Prudential Financial, QBE, RSA, the Hartford, Principal Financial and Zurich.We also look at various local firms that are active. In general, they are small-to-medium sized operationsby world standards. However, several of the leading Brazilian insurers would rank as extremely largeeven in a major market.
For almost all the countries whose reports we are updating, we are also able to include actual data forIn 2007, total premiums in Argentina rose by 25% to ARS18,617mn. Non-life premiums rose by 25% toARS12,926mn, while life premiums rose by 25% to ARS5,691mn.
Between now and the end of the forecast period, we expect that annual non-life premiums will grow byARS12,595mn, while annual life premiums should increase by ARS2,278mn. Growth in non-lifepremiums should be driven by the general growth in nominal GDP plus a rise in non-life penetration fromthe current level of 1.77% to 2.00%. Growth in life premiums should be driven by the change in theoverall population and a rise in life density from US$46.33 to US$60.00 per capita.BMI’s Insurance Business Environment Rating is 51.4.
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