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Mexico Insurance Report Q2 2011
Business Monitor International, Feb 2011, Pages: 70
The Mexico Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Mexico's insurance industry.
Writing in January 2011, we can see that premiums continued to increase at a slower rate in Mexico than in other Latin American markets in 2010. Data published by the country’s insurance regulator, Comisión Nacional de Seguros y Fianzas (CNSF) show that the US economic downturn had an adverse impact on demand for insurance in Mexico.
The CNSF figures show that compared to H109, the first half of 2010’s total premiums increased by just 0.3% to MXN121,067mn. Non-life premiums fell by 0.4% to MXN73,125mn, while life premiums grew by 1.3% to MXN47,942mn. We estimate total premiums in 2010 of MXN351,178. This includes non-life premiums of MXN208,425mn and life premiums of MXN142,754mn. In 2015, the corresponding figures a forecast to be MXN435,424mn, MXN300,833mn and MXN134,591mn. The modest increases in nonlife penetration and life density are forecast to be from 1.85% of GDP to 2.00% for non-life penetration, and from US$105 per capita to US$115 per capita for life density. BMI’s Insurance Business Environment Rating for Mexico, boosted by the openness of the market to foreign insurers, is 66.4.
Mexico’s insurance industry is still lagging behind other equivalent economies, partly because many Mexicans who can afford to use financial services provided by banks or insurance companies are willing and able to work with providers in the US instead. However, it does benefit from substantial competition, in part because of the reconstruction of the banking industry following the financial crisis in the mid- 1990s and despite the life sector being dominated by major foreign groups. According to CNSF, the five largest players in the life segment accounted for 70% of premiums written in H110. US insurance company MetLife was the largest, with a market share of 33%. It was followed by Grupo Nacional Provincial (GNP, 10%), BBVA/Bancomer (9%), Monterrey New York Life (9%) and Citi/Banamex (7%).
The non-life sector is even more fragmented than it was in 2009. According to the CNSF, the five largest players accounted for 47% of premiums. AXA’s operations in Mexico, enlarged by the purchase of ING Seguros in early 2008, were the largest of a foreign non-life insurer, with a market share of 14%. Spain’s MAPFRE, with a market share of 6%, was the only other foreign group in the top five. Other leaders included the Quálitas (7%), GNP (14%) and Inbursa (6%).
In all sectors, restrictive premium growth has almost certainly been caused by plenty of competition. When we look to their peers in other major Latin American countries such as Brazil or Chile, Mexican insurers seem to have suffered more at the hands of the troubled US economy.
Issues To Watch Fixed Income Markets In Mexico Mexican bond markets have remained a positive area and this is crucial at a time when premiums generally are slowing.
Growth Of The Life Segment Given the competitive pressures in the segment and the economic challenges still facing Mexico, we expect the segment to stagnate in 2011 and into the medium term.
Fire Insurance And Other Non-Life Lines We expected the surge in fire insurance and other lines to not be maintained and the CNSF figures for H110 show this to be true - there has been no growth in either segment. However, BMI’s forecasts for the Mexican economy and non-life penetration are consistent with a return to double-digit growth in 2011.
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