Switzerland's Zurich Insurance Group expects Latin America to account for almost half of its new emerging market life insurance business by the end of next year as solid economic growth and growing prosperity boost demand for insurance policies.
Zurich's chief executive officer, Martin Senn, said on Tuesday the company expected 40-50 percent of its new life insurance business to come from emerging markets by the end of 2013, from about a quarter currently. The company estimates more than 40 percent of that new business will come from Latin America.
"A big part of that additional growth will come out of Latin America," Senn said in an interview on the sidelines of the World Economic Forum on Latin America. "We are very optimistic about the region."
Zurich currently draws only 20 percent of its operating income from emerging markets, but the company is keen to increase its exposure to fast-growing Latin America and Asia to balance risks given a likely relapse into recession in Europe and below-potential growth in the United States, the company's biggest single market. "This puts us in a very strong position globally because there's no insurance company which has these sort of strengths in all those continents and with that we have a certain resilience, as Europe is going through economic difficulties, we have important diversification in terms of our business portfolio," Senn said.
Zurich, Europe's fourth-biggest insurer, reported $980 million in new life insurance business in 2011, up 14 percent from 2010. The life business had an operating profit of $1.35 billion last year. Zurich has agreed to a deal with Spain's Banco Santander to sell life insurance, pension and general insurance policies in branches in Brazil, Mexico, Chile, Argentina and Uruguay, and Senn said this was one reason for optimism about the outlook for the region.
He was not worried by slightly slower economic growth in Latin America's biggest economy, Brazil, nor in China, where the company recently sold down its stake in New China Life Insurance, a firm controlled by the Chinese government.
Instead, slower growth might give infrastructure time to catch up and fan demand for insurance policies to protect newly-built roads, schools and stadiums, Senn said. A growing middle class has also increased demand for asset protection.
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