plenária iii resseguro - dez anos de mercado local ... · 2. colombian insurance market. 3....

Plenária III – Resseguro - Dez Anos

de Mercado Local – Próximos Passos

Colombia: an opportunity for business

1. Latin America socio-economic overview.

2. Colombian insurance market.

3. Reinsurance regulation in Colombia.

4. What Colombian insurers expect from reinsurers.

5. What reinsurers can expect from Colombian insurance

market.

6. Final remarks.

Summary

Latin America socio-economic

overview

$1,77

$1,14

$0,58

$0,29 $0,24

$0,19 $0,10

$0,03

-3,8%

2,5% 2,4%

3,1%

2,3%

3,3%

0,2%

3,0%

-5,0%

-4,0%

-3,0%

-2,0%

-1,0%

0,0%

1,0%

2,0%

3,0%

4,0%

$0,00

$0,20

$0,40

$0,60

$0,80

$1,00

$1,20

$1,40

$1,60

$1,80

$2,00

Brazil México Argentina Colombia Chile Perú Ecuador Paraguay

GD

P G

row

th r

ate

Trillo

ns U

S D

olla

r

GDP (Current USD$) GDP Growth

GDP (Current USD$) and GDP Growth (%-right) 2015:

Source: World Bank. Fasecolda

Latin America GDP

Socio-economic overview

$23.367

$20.364

$16.988

$15.391

$13.829

$12.529 $11.474

$9.198

$0

$5.000

$10.000

$15.000

$20.000

$25.000

Chile Argentina México Brazil Colombia Perú Ecuador Paraguay

GDP per capita (US Dollars) 2015:


5%

5%

6%

6%

7%

7%

9%

0% 2% 4% 6% 8% 10%

Brazil

Mexico

Peru

Paraguay

Venezuela, RB

Argentina

Colombia

Unemployment rate 2014:


Unemployment rate*:

0

2

4

6

8

10

12

14

ene

ro

abri

l

julio

octu

bre

ene

ro

abri

l

julio

octu

bre

ene

ro

abri

l

julio

octu

bre

ene

ro

abri

l

julio

octu

bre

ene

ro

abri

l

julio

octu

bre

2012 2013 2014 2015 2016 2017

Une

mp

loym

en

t %

Colombia Brazil

Source: World Bank. DANE. IBGE. Non-stationary unemployment series for Brazil

50,9

47,4

44

45

46

47

48

49

50

51

52

53

En

e -

Ma

r

Ma

r -

Ma

y

Ma

y -

Ju

l

Ju

l -

Se

p

Se

p -

Nov

No

v-E

ne

En

e-M

ar

Mar-

May

Ma

y-J

ul

Ju

l-S

ep

Se

p-N

ov

Nov 1

2 -

Ene 1

3

En

e -

Ma

r 13

Ma

r-M

ay 1

3

Ma

y-J

ul 1

3

Ju

l-S

ep

13

Se

p -

Nov 1

3

No

v 1

3 -

En

e 1

4

En

e -

Ma

r 14

Ma

r -

Ma

y 1

4

Ma

y -

ju

l 1

4

Ju

l -

se

p 1

4

Se

p -

no

v 1

4

No

v 1

4 -

en

e 1

5

En

e -

Ma

r 15

Ma

r -M

ay 1

5

Ma

y -

jul 1

5

Ju

l -

se

p 1

5

Se

p -

no

v 1

5

No

v 1

5 -

en

e 1

6

En

e -

ma

r 16

Ma

r -

ma

y 1

6

Ma

y -

ju

l 1

6

Ju

l -

se

p 1

6

Se

p -

no

v 1

6

No

v 1

6 -

en

e 1

7

2011 2012 2013 2014

Pe

rce

nta

ge


Informal labor rate in Colombia (%)


Fiscal reform


207,8

127,0

48,2 43,4 31,4 31,1

17,9 16,1 6,6

0,9%

1,3%

0,9%

1,0%

1,3% 1,3%

1,0%

1,5%

1,3%

0,0%

0,2%

0,4%

0,6%

0,8%

1,0%

1,2%

1,4%

1,6%

0

50

100

150

200

250

Bra

zil

Mé

xic

o

Co

lom

bia

Arg

en

tin

a

Perú

Ve

nezu

ela

Ch

ile

Ecu

ad

or

Pa

rag

ua

y

Po

pu

latio

n g

row

th

Mill

ion

s o

f p

eo

ple

Population and population growth (%-right axis) 2015:


13,2

14,7

15,8

17,5

18,8

19,6

19,9

20,8

21,4

0 5 10 15 20 25

Chile

Brazil

Colombia

Argentina

México

Venezuela

Perú

Ecuador

Paraguay

Socio-economic outlook:

Birth rate 2014 (per 1.000 people): Colombia:

Brazil:

Pyramid population 2014


Colombian Insurance Market

Insurance penetration in Colombia

2,2%

2,7%

2,8%

3,1%

2,9%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

2008 2009 2010 2011 2012 2013 2014 2015 2016

Colombia LATAM Emerging markets

Premiums as % of GDP

Source: SIGMA, Swiss Re. Superfinanciera de Colombia. Fasecolda

1,0%

1,4% 1,3%

1,5%

0,0%

0,2%

0,4%

0,6%

0,8%

1,0%

1,2%

1,4%

1,6%

1,8%

2008 2009 2010 2011 2012 2013 2014 2015 2016

Colombia Latam Emerging Markets

Life premiums as % of GDP



Non-life premiums as % of GDP

1,2%

1,4%

1,8%

1,4%

0,0%

0,2%

0,4%

0,6%

0,8%

1,0%

1,2%

1,4%

1,6%

1,8%

2,0%

2008 2009 2010 2011 2012 2013 2014 2015 2016

Colombia LATAM Emerging Markets



Insurance density in Colombia

$120 $118

$142

$165

$191

$214 $200

$162 $160

$186 $186

$220

$259 $275 $282 $286

$251

$87 $89 $106

$114 $120 $126 $133 $135

$0

$500

$1.000

$1.500

$2.000

$2.500

$3.000

$3.500

$0

$50

$100

$150

$200

$250

$300

$350

2008 2009 2010 2011 2012 2013 2014 2015 2016

Colombia LATAM Emerging markets US dollar rate

Total premiums per capita. US dollars


Life premiums per capita. In US dollars

$57 $54

$64

$75

$88

$111

$97

$77 $80

$72 $74

$91

$108

$119 $121 $120

$105

$48 $51

$61 $61 $63 $65 $68

$71

$0

$500

$1.000

$1.500

$2.000

$2.500

$3.000

$3.500

$0

$20

$40

$60

$80

$100

$120

$140

2008 2009 2010 2011 2012 2013 2014 2015 2016

Colombia LATAM Emerging markets Pesos per dollar



Non-life premiums per capita. In US dollars

$63 $63

$78

$90

$102 $103 $103

$85 $81

$114 $112

$129

$151 $156

$161 $166

$146

$39 $38 $45

$53 $57

$61 $65 $64

$0

$500

$1.000

$1.500

$2.000

$2.500

$3.000

$3.500

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2008 2009 2010 2011 2012 2013 2014 2015 2016

Pe

so

s p

er

dolla

r

US

D

Colombia Latam Emerging markets Exchange rate



Nationality of insurance companies capital in Colombia

Nat

ion

alit

y Colombia (14)

Private (12)

Public (2)

Abroad (25)

U.S. (10)

E.U. (12)

Other (3) Blend (7)

Source: Fasecolda.

Ratio of capital available to guarantee solvency

0

0,5

1

1,5

2

2,5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total Life insurance companies Non life insurance companies

Inclusion of market risk in the

capital requirement

1,8 Average capital

available to prove

solvency by

industry.

Source Superintendencia Financiera de Colombia. Fasecolda

Ceded premiums

Source: Latino Insurance. Terra Brasis. Fasecolda

Ceded premiums in Latam (in US$ billions-2015):

$2,5

$2,0

$1,7

$1,1

$0,7

$0,4 $0,3

$0,0

$0,5

$1,0

$1,5

$2,0

$2,5

$3,0

Mexico Brazil Colombia Argentina Ecuador Chile Peru

US

$ B

illio

ns

Ceded premiums

20% 20% 20%

17% 17% 18%

19%

37% 37% 36% 36% 34%

36% 37%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2010 2011 2012 2013 2014 2015 2016

Industry Non life

Ceded premiums as % underwritten premiums:

SourceSuperintendencia Financiera de Colombia. Fasecolda.

Ceded premiums

7%

35%

36%

41%

48%

56%

64%

67%

75%

79%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Auto insurance

Other

Transportation

Liabilities

Bond insurance

Employment practices

Fire

Earthquake

Engineering

Trade credit insurance

5%

27%

42%

50%

50%

51%

55%

60%

72%

78%

0% 20% 40% 60% 80% 100%

Auto insurance

Transportation

Liabilities

Other


Bond insurance

Earthquake

Fire


Engineering

2010 2016


Source: Superintendencia Financiera de Colombia. Fasecolda.

Ceded premium: Brazil and Colombia for some non-life

lines of business.

5%

28%

38%

81%

58%

52%

0,9%

23%

39%

23%

0% 20% 40% 60% 80% 100%

Auto insurance

Transportation

Liabilities


Property

Bond insurance

Brasil Colombia

2014 2016


Source: Superintendencia Financiera de Colombia. Superintendencia de Seguros Privados de Brasil. Fasecolda.

7%

36%

41%

79%

66%

48%

1%

23%

37%

25%

0% 20% 40% 60% 80% 100%

Auto insurance

Transportation

Liabilities


Property

Bond insurance

Brasil Colombia

XoL reinsurance cost as percentage of premiums

3,7%

3,4% 3,2%

2,9% 3,1%

2,7%

5,4%

5,0% 4,9% 5,0% 4,8%

4,0%

0%

1%

2%

3%

4%

5%

6%

2010 2011 2012 2013 2014 2015

Total Non-life

XoL cost as % underwritten premiums

Source: Superintendencia Financiera de Colombia. Elaboración: Fasecolda.

1%

1%

2%

3%

5%

6%

6%

9%

14%

19%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

Auto insurance


Other

Bond insurance

Liabilities

Engineering

Transporting

Fire


Earthquake

XoL cost as % underwritten premiums:


XoL reinsurance cost as percentage of premiums

Reinsurance companies in Colombia

49

24

18

15

10 9 8 8 6 5 5 4 4

2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

10

20

30

40

50

60

U.S

.A.

ING

LA

TE

RR

A

BE

RM

UD

A

SU

IZA

AL

EM

AN

IA

IRL

AN

DA

FR

AN

CIA

RE

INO

UN

IDO

MÉ

XIC

O

ES

PA

ÑA

BR

AS

IL

LU

XE

MB

UR

GO

PA

NA

MÁ

IND

IA

LIE

CH

TE

NS

TE

IN

BÉ

LG

ICA

JA

PO

N

PE

RÚ

CO

RE

A

ISL

AS

CA

IMÁ

N

ITA

LIA

HO

LA

ND

A

AU

ST

RIA

CA

NA

DA

ES

LO

VE

NIA

ES

CO

CIA

CO

ST

A R

ICA

SU

EC

IA

NU

EV

A Z

EL

AN

DA

TU

RQ

UIA

CU

RA

ZA

O

GU

ER

NS

EY

PU

ER

TO

RIC

O

Número de compañías Porcentaje acumulativo

70% of

reinsurance

industry comes

from 7 countries

203 Reinsurance

companies

registered in

REACOEX

14 Offices in the

country

Source: Superintendencia Financiera de Colombia. Fasecolda.

Reinsurance companies rating

60

31

47

2

8

1

8

20

2 1 1 1 2 1 1 3 4

0

10

20

30

40

50

60

70

A A- A + A u A++ A3 AA AA- AA+ Aaa Au B+ B++ B++u Baa3 BBB BBB+

Standard&Poor´s, A.M Best, Fitch Ibca, Moodys.


Reinsurance regulation in

Colombia: Main aspects

REACOEX, RAIMAT, RAISAX

REACOEX

RAIMAT

RAISAX

It is a registry of foreign reinsurers that meet capital, solvency and qualification requirements, necessary to operate in Colombia

Registration of foreign insurers that offer insurance for maritime transport, international commercial aviation and launch and space transportation.

Registration of foreign insurers that offer agricultural insurance.

REACOEX

Agency Minimum Rating

Standard & Poor´s BBB-

A.M. Best B+

Fitch BBB-

Moody´s Baa3

REACOEX registry does not relieve insurers to assess its reinsurers.

Insurers must evaluate its reinsurers' financial stability, the opportunity in

the payment of its obligations and its knowledge of the line of business.

IFRS, Solvency requirements and reinsurance

Solvency regime

Assets

Primary capital

Secondary capital

Capital Requirement

Underwriting risk

Asset Risk

Market Risk

IV

account receivable from reinsurance is include in the asset risk calculation.

Insurer’s board of directors and the reinsurance program

is to define, approve and follow up on the insurer risk retention policies and reinsurance contracting scheme. One of the Board of Directors responsibilities. The risk retention policies must have at least:

1. Diversification guidelines for reinsurers considered within the reinsurance program.

2. The financial ratings of the reinsurers that the insurer will accept, in force at the date of the reinsurance contract.



3. The variables that will be required by the insurer to evaluate the financial strength of the reinsurer, such as investment returns, level and access to capital, sources and liquidity level and its participation in total investments, Solvency, level of technical reserves and their composition.



4. The technical criteria with which reinsurers were chosen

5. Other relevant characteristics such as the follow-up of claims, loss ratios, gross and net premiums behavior, expenses behavior, hiring criteria of reinsurance brokers, etc.

The latest tax reform and

the old retention over ceded premiums

The most recent tax reform established a 1% withholding tax on premiums ceded in reinsurance.

Since 1991 insurers must retain a percentage of the ceded premiums.

What Colombian Insurers expect

from Reinsurers

The basic qualifiers

a. Financial strength (adequate rating, solvency, loss ratio, technical reserves, etc.)

b. Expertise and experience in the business (in the line of business).

c. Knowledge of the country’s legal and regulatory framework. A lot of things are changing.

d. Capacity.

These basic qualifiers are not enough

Elements that add value

1. Know-How. Knowledge transfer for a better business performance.

2. Additional services: The reinsurer as a source of ideas to improve innovation. Its experience in other markets may help the develop local products.

3. Fast response, agile and flexible interaction.

Partnership

i. Building trust for a long-term relationship.

ii. Win-Win contractual agreements.

iii. Creating synergies to grow together.

Direct contact

I. Local presence. Someone who speaks the language, understands the market and with knowledge of the local risks.

a) Basic qualifiers b) Elements that add value c) Partnership d) Direct contact

a b

c d

What reinsurers can expect from

the Colombian insurance market

• A highly competitive market.

• A regulatory environment that has strengthened companies'

equity.

• Human resource highly trained and knowledgeable about

the insurance business.

• A Supervisor concern about consumer protection and taking

actions with impact into the business.

Colombian insurance market. What to expect.

• An industry with a good interaction with the Supervisor and Regulator.

• A Supervisor and regulator improving its technical skills.

• A financial market moving toward Insurtech world. Insurance can not be an exception.

• IFRS, modifications to the investment, solvency and technical reserves regimes.

• A lot of international players looking for establishing operations of Insurance and Reinsurance.

Colombian insurance market. What to expect.

New technical reserves regime R

ese

rva

s T

écn

ica

s

Riesgos en curso

Prima no Devengada

Insuficiencia de Primas

Matemática

Matemática

Insuficiencia de Activos

Siniestros Pendientes

Siniestros Avisados Riesgos Laborales

Seguro Previsional

Siniestros Ocurridos no Avisados

Enfermedad

Laboral Riesgos

Catastróficos

Desviación de Siniestralidad

X

X X Reglamentado

o no requiere

reglamentación

Pendiente

Reglamentación

X

X

Contabilización de

las reservas

Actuario

Responsable

Final remarks

• Colombia has been experiencing profound social, economic

and political transformations.

• We believe that, despite enormous challenges, the country

will be strengthened and the insurance sector will do so.

• We invite you to know our country and our economy. There

are good business opportunities.

plenária iii resseguro - dez anos de mercado local ... · 2. colombian insurance market. 3....

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