Senior Managing Director of A.M. Best America Latina, Andrea Keenan presents the challenges of Latin America's insurance market. This presentation is from the Latin American Reinsurance Group Seminar.

1. Andrea Keenan
Senior Managing Director – Industry Relations
Challenges in Latin American
Insurance Market
Latin American Reinsurance Group Seminar 2015
05 June 2015

2. Challenges: Dynamic Layers
2
Global
Property
Insurance
Cycles
Capital
Markets
Trends
Influx of
Competition
Regional
Economy
Heterogeneity
Government /
Politics
Local
Size
Consumer
Education
Data Availability
LARG – Asunción, Paraguay

3. Challenges: Dynamic Layers
DD Month YYYY 3
Global
Property
Insurance
Cycles
Capital
Markets
Trends
Influx of
Competition
Regional
Economy
Heterogeneity
Government /
Politics
Local
Size
Consumer
Education
Data Availability
LARG – Asunción, Paraguay

4. Global: Property Cycle
DD Month YYYY 4
Global Reinsurance: Catastrophe Rate on Line Index
LARG – Asunción, Paraguay

5. Global: Capital Markets
5
• Capacity continues
to increase.
• A growing percent of
that increase is from
capital markets.
• Challenge to the
future structure of
the insurance
industry.
Third party capital as a percent of total
reinsurance capacity
LARG – Asunción, Paraguay

6. Global: Foreign Competition
6
-10
-5
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013
Mature Markets Emerging Markets L. America & Caribbean
%GrowthTotalPremiums
LARG – Asunción, Paraguay

7. Global: Foreign Competition
7
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
NumberofDeals
RO South Am
Central America
Peru
Mexico
Colombia
Chile
Brazil
Argentina
Sources: Bloomberg and AM Best research
Acquisitions in Latin America where target is from outside the region.
LARG – Asunción, Paraguay

8. Challenges: Dynamic Layers
DD Month YYYY 8
Global
Property
Insurance
Cycles
Capital
Markets
Trends
Influx of
Competition
Regional
Economy
Heterogeneity
Government /
Politics
Local
Size
Consumer
Education
Data Availability
LARG – Asunción, Paraguay

9. Regional: Economy
LARG – Asunción, Paraguay 9
• Exposure growth
difficult to predict
• Not consistent
across the region
• Advantage for
larger companies
who can diversify
• Underwriting loses
precision in
fluctuating inflation
Inconsistent GDP growth, year over year

10. Regional: Heterogeneity
10
Regional strategies must account for differences in:
• Size
• Politics and Development
• Regulation
• Cultural Norms
• Business / Tax Environment
Each market is unique. No such thing as a simple “Latin
America” strategy.
LARG – Asunción, Paraguay

11. Regional: Government &
Politics
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
ARG
BOL
BRA
CHL
COL
DOM
ECU
SLV
GTM
JAM
MEX
NIC
PAN
PER
URY
VEN
Order and Security Fundamental Rights Absence of Corruption Overall Score
LARG – Asunción, Paraguay 11

12. Challenges: Dynamic Layers
12
Global
Property
Insurance
Cycles
Capital
Markets
Trends
Influx of
Competition
Regional
Economy
Heterogeneity
Government /
Politics
Local
Size
Consumer
Education
Data Availability
LARG – Asunción, Paraguay

13. Local: Size
13LARG – Asunción, Paraguay

14. Local: Size
14LARG – Asunción, Paraguay

15. Local: Consumer Education
15
• Financial education
– Benefits of insurance not widely understood
– Trust builds off of
• Brand reputation
• Rule of law / faith in system
• Claims paid swiftly else risk reputational damage
LARG – Asunción, Paraguay

16. Local: Data Availability
16
• Price accuracy and efficiency
• Catastrophe modeling
• Regulatory submissions
• Capital models / risk based management
• Enterprise risk management
• Financial information on counterparties / insurers
• Investment strategies also reliant on data
LARG – Asunción, Paraguay

17. Challenges: Dynamic Layers
17
Global
Property
Insurance
Cycles
Capital
Markets
Trends
Influx of
Competition
Regional
Economy
Heterogeneity
Government /
Politics
Local
Size
Consumer
Education
Data Availability
LARG – Asunción, Paraguay

18. However…
18
• Latin America is an exciting environment for all
companies, including those in insurance.
– Insurance is a risk-bearing business and should
pave the way for other industries to bear these
challenges.
• Political risk insurance
• Agriculture insurance
• Credit insurance
• Challenges, once identified, can all be addressed and,
to some extent, mitigated.
LARG – Asunción, Paraguay
Every challenge is also an Opportunity.

19. Sense of Opportunity
19
• ***video insert here
LARG – Asunción, Paraguay

20. Panel Discussion
June 2015 20LARG – Asunción, Paraguay

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21LARG – Asunción, Paraguay