Eduardo Nakao, the CEO of IRB-Brasil Re, the government-controlled former reinsurance monopoly holder, recently acknowledged that the IRB’s reinsurance prices have hit a nine-year low and reportedly attributed the decline to increased competition from foreign reinsurance competitors. In particular, Mr. Nakao reportedly noted that many clients have used the reinsurance market’s opening as a justification for demanding lower prices, but noted that the IRB was better prepared than most companies to compete at lower prices given its knowledge of the market garnered from its 70 year monopoly. Mr. Nakao reportedly also indicated that, although prices are down, the IRB expects them to recover to “an equilibrium level” in the future.
In other Brazilian news, Sompo Japan recently completed its US$ 173 million acquisition of 54.7% of Brazilian insurer Maritima Seguros through Sompo’s Latin American subsidiary, Yasuda Seguros. Maritima, the tenth largest insurer in Brazil, concentrates its business in the areas of life and automobile insurance and had been soliciting offers from foreign companies since early this year (see here).
Banco Popular y De Desarollo Comunal recently received authorization from the Costa Rican insurance authorities to create a subsidiary to market insurance products in the Costa Rican market. The new subsidiary will initially market the insurance products offered by the Instituto Nacional de Seguros, but the authorization received does permit the group to sell products offered by other insurance companies that enter the market in the future.
Rafic Souki, a Venezuelan legislator and member of the subcommittee charged with drafting the nation’s new insurance law, reportedly recently responded to critics of the bill, in particular as it applies to foreign insurance companies. Mr. Souki reportedly asserted that the principal purpose of the new law is to protect the consumer from unfair practices, and rejected claims that the law is designed to increase foreign participation in the market. He reportedly further questioned the motives of the “principal enemies” of the new law, which he identified as the local banking and insurance associations, asserting that under the current system these entities charge high prices for insurance and then “come up with a thousand reasons to avoid payment.” As to foreign participation in the market, Mr. Souki reportedly acknowledged the need for certain large local companies to access the greater capacity offered by foreign insurers and asserted that the new law will balance the interest of such companies, local insurers and foreign insurers for the ultimate good of the Venezuelan citizens.