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Argentina Insurance Report Q2 2010
Business Monitor International, Feb 2010, Pages: 75
The Argentina Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Argentina's insurance industry.
This report differs from its predecessors in several respects. In the analysis of competitive conditions, the report provides a much more comprehensive ranking of insurance companies in the major segments from the point of view of the organisation that is providing the data (in practice almost always the national insurance regulator or the national insurance trade association). In Argentina, for instance, the three largest insurance providers in Q109 – in terms of gross written premiums – were Federación Patronal, La Caja, and MAPFRE, with 6.2%, 6.2% and 4.0% market share, respectively. Over time, we hope to derive insights from observing how market shares change. We emphasise though, that a decline in share of gross written premiums is not automatically a bad thing and is often the result of a deliberate corporate decision to focus on more profitable business lines.
We include a discussion of developments within regional markets, on the basis of results published by major cross-border companies and the latest information provided by regulators and/or trade associations. One highlight has been the performance over the first nine months of 2009 of Spain’s MAPFRE, arguably the leading cross-border insurance group in Latin America. Life premiums written in Latin America for the period were EUR715mn, up 24.2% year-on-year (y-o-y), with 10% growth in the Argentine market.
Writing in January 2010, we have been able to ensure that the report includes actual data for 2008. According to the regulator, the Superintendencia de Seguros de la Nación (SSN), total non-life premiums amounted to ARS22,377mn in the 12 months to June 30 2009, up from ARS17,769mn in the year to June 30 2008. Life and retirement savings premiums combined amounted to ARS6,539mn in the year to June 30 2008, but only ARS5,699mn in the year to June 30 2009.
In the year to June 30 2014 the corresponding figures should be ARS73,057mn, with non-life premiums of ARS53,594mn and life premiums of ARS19,463mn. In terms of the key drivers that underpin the forecasts, we forecast that non-life penetration will fall from 1.65% in 2009 to 1.64% in 2014, and that life density will rise from US$39 to US$92.
BMI's proprietary Insurance Business Environment Rating for Argentina (IBER) is 53.0 out of 100. In absolute and local currency terms, Argentina’s non-life segment has almost trebled in size since the end of 2005. Meanwhile, the life segment has grown by less than one-third. Given Argentina’s history of financial instability and the hugely controversial nationalisation of the private pension funds in late 2008 it is perhaps not surprising that the perennially under-developed life segment has lagged behind. Nevertheless, life premiums grew by 25% in 2007 and a very respectable 15% in 2008.
However, 2009 was the year in which the growth of life insurance stopped. As of January 2010, the latest figures from the SSN, indicated that gross written premiums in the life segment over the 12 months to the end of November 2009 were ARS5,445mn. The implication of this is that the projection of life premiums for 2009 (ARS5,620mn) might be a little optimistic. In terms of gross written premiums, it appears that the life segment shrank by around 14% in 2008 in local currency terms and by more in US dollar terms. Meanwhile, the non-life segment continues to grow apace. The SSN’s figures indicated that non-life premiums in the 12 months to the end of November 2009 were ARS23,965mn, or a little more than the ARS22,942mn that the author projects for 2009. In other words, it appears that non-life premiums in 2009 were about 30% higher than they had been in 2008.
The SSN’s latest figures for market shares (in relation to the year to June 30 2009) highlight three aspects of Argentina’s insurance sector. First, the overall market remains extraordinarily fragmented. La Caja – the local subsidiary of Generali – is the largest player in terms of total premiums with an overall share of about 8.5%. Three other groups – Sancor, MAPFRE and Federación Patronal – each have market shares of between 6% and 8%, while HSBC La Buenos Aires, La Segunda, La Meridional, Provincia Seguros, Zurich and San Cristóbal each have market shares of between 3% and 5%. Most of the 176 companies identified by the regulator as being active in the middle of 2009, including separately shown subsidiaries providing life insurance/retirement products and work risks insurance (ART, to use its Spanish initials) are tiny. In terms of net worth, the largest two insurers – Sancor and La Caja – are the largest, with funds of ARS368mn and ARS341mn, respectively, at the end of June 2009. The net worth of each of the next eight largest companies ranged between ARS180mn and ARS275mn. For all the recent growth, Argentina’s insurers are small organisations by virtually any standard. Second, rankings within insurance lines vary markedly, as the following table shows. Third, growth rates have varied quite markedly between companies, as the table below shows.
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