Abstract
As the Brazilian economy moves into the new year, it seems to us that the
much-praised resilience of the
consumer sector has been left behind in
2008. Although signs of a decelerating economy had already
started to
surface during the last two months of the year, our outlook for 2009 has
turned markedly more
bearish in January, as a series of negative economic
indicators started to appear. Industrial output
numbers are showing
worrying signs of a prolonged contraction, and sales figures, too, are
pointing to
retrenching domestic demand. This comes against the backdrop
of the global economic recession and the
ongoing financial crisis, leading
to yet another bout of weakness for global stocks. Such a backdrop will
hardly soothe the ongoing decline in confidence levels (both consumer and
economic), suggesting to us
that borrowing appetite in Brazil this year
will be kept to a minimum.
Latest data show that industrial production
took a decisive turn for the worse back in November, when
output
contracted by a staggering 11.5% month-on-month (m-o-m), marking a fall of
6.2% year-on-year
(y-o-y) that month. This was the largest y-o-y drop in
industrial output in Brazil since December 2001.
A key barometer of
Brazilian economic activity, in our view, has traditionally been the auto
industry.
Here too, the alarm bells are ringing. Vehicle output during
December collapsed to 102,053 units, from
193,062 units a month
earlier.
Infrastructure development projects will be supportive of
economic growth over the coming years, when
we expect a moderate recovery
in real GDP growth to 2.6% in 2010 and 4.4% in 2011.
Since the last
quarter, we have made two major changes to the data in this report. First, we
have – to the
greatest extent possible – incorporated hard
figures that have been made available by the regulator(s) and
trade
association(s) in each country. In some cases, therefore, we have begun to
include numbers that
pertain to the development of the insurance sector
through the early stages of the global financial crisis.
Second, we have
extended our forecasts out to 2013. In all cases, we have reviewed the key
growth
drivers – non-life penetration and life density
–incorporated in our forecasts.
The global financial crisis is
likely to affect the various segments of the global insurance industry in
different ways. In many countries, especially in Europe, the coming recession
points to softness in the
non-life segment. In many cases, the numbers of
policies may fall and there should be downwards
pressure on premiums. By
contrast, the main problem for the life segment in almost all countries is
the
extreme volatility of financial markets. Over the longer term however,
the fortunes of life insurance will
likely recover thanks to the secular
growth of organised savings in most countries. China - where the
larger
insurance companies continue to achieve double digit growth in premium income
- is a good
example of this. Some particular 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, New
York Life, Prudential Financial, QBE, RSA, the
Hartford, Principal Financial and Zurich.
We also look at various local
firms that are active. In general, these are small to medium-sized
operations
by world standards. However, several of the leading Brazilian
insurers would rank as extremely large
even in a major market.
BMI' s
Insurance Business Environment Rating is 66.4
| 
View Cart
