CBMU Annual Conference

12/19/2012 1

IUMI Facts & Figures Committee & ALSUM - Latin American Marine Underwriters Association

November 27, 2012

Marine Insurance in Latin America

Erika A. Schoch

12/19/2012 2

IUMI Facts & Figures Committee & ALSUM - Latin American Marine Underwriters Association

Let's go Back in Time – Sept, 2011

12/19/2012 3

12/19/2012 4

Agenda

Economical background

Latin America Insurance premium

Latin America Insurance details per market

Type of coverages

Latin American Real GDP Growth

12/19/2012 5

-10%

-5%

0%

5%

10%

15%

02 03 04 05 06 07 08 09 10 11

Brazil Chile Colombia Mexico Peru

Source: Swiss Re Economic Research & Consulting

Inward and Outward Foreign Direct Investment Stock (2002-2011)

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-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Brazil Chile Colombia Mexico Peru

(in mio USD)

Source: Swiss Re Economic Research & Consulting

24%

20%

22%

23%

19%

0% 5% 10% 15% 20% 25% 30%

Peru

Mexico

Colombia

Chile

Brazil

Investment Rate as part of the GDP

12/19/2012 7

Latin American Investment Rate 2011

14.5

58.2

22

Exports by sector (%)

12/19/2012 8

34

27.9

35.221.8

64.2

10

6.3

16.7

74.5

16.7

49.5

10.7

Brazil

Peru

Colombia

Chile

Mexico

Agriculture prod. Fuels and mining prod.Manufactures

Source: Swiss Re Economic Research & Consulting

Sovereign ratings

Country Foreign Currency Long Term Foreign Currency Short Term

Moody's S&P Fitch Moody's S&P Fitch

Brazil Baa2 BBB BBB NR A-2 F2

Chile Aa3 A+ A+ NR A-1 F1

Colombia Baa3 BBB- BBB- NR A-3 F3

Mexico Baa1 BBB BBB WR A-2 F2

Peru Baa1 BBB BBB NR A-2 F2

12/19/2012 9

Source: Bloomberg – Proinversion

Economic Freedom & Doing Business Index

Nr. Economic Freedom Index (186 countries)

1 Hong Kong

7 Chile

42 Peru

45 Colombia

54 Mexico

99 Brazil

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Nr. Ranking Doing Business(183 Countries)

1 Singapore

37 Chile

43 Peru

45 Colombia

48 Mexico

130 Brazil

Source: Economic Freedom Index, Doing Business

Marine insurance growth in Latin America

2,289

27,444

2010 (in USD mio)

Latin America

Rest of the World

(7.7%)

12/19/2012 11

2,639

29,183

2011 (in USD mio)

Latin America

Rest of the World

(8.2%)

Source: IUMI, ALSUM

12/19/2012 12

Agenda

Economical background

Latin America Insurance premium

Latin America Insurance market

Type of coverages

Latin American Marine Insurance Premium

20112010

20092008

-200 400 600 800

1,000 1,200 1,400

1,600

1,800

2,000

CargoOffshore

12/19/2012 13

(in Mio. USD)

• Economical & Legal Environment• Social & Political Environment• Infrastructure• The New "Sexy" • Market competition• Lack of marine knowledge• Excess of Confidence• LA Classic Marine Risks

Source: ALSUM

12/19/2012 14

Agenda

Economical background

Latin America Insurance premium

Latin America Insurance market

Type of coverages

Brazilian Marine Market Analysis

2…

2…2…

2…

-

200

400

600

800

Cargo HullMarine Liab.Offshore

(1)

(in Mio. USD)

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(1) Before 2011 Marine Liab. were included within the Hull LoB

• Economical & Legal Environment• Political & Social Environment• Size of the market• Protectionism vs PAC 1 & 2 (2)

• Infrastructure• Auto-sufficient • Coinsurance• Quick learner • Nat Cat Exposures• LA Classic Marine Risks

(2) PAC = Programa de Aceleração de Crescimento Source: ALSUM

Chilean Marine Market Analysis

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2011

2010

2009

2008

-

20

40

60

80

100

Cargo Hull Offshore & Marine Liab.: No data available

(in Mio. USD)

• Economical & Legal Environment• Political & Social problems• Infrastructure• Nat Cat Exposure • Technical vs Commercial Rates • Coinsurance (in Hull)• London Market Attention• LA Classic Marine Risks

Source: ALSUM

Colombian Marine Market Analysis

12/19/2012 17

2011

2010

20092008

-

20

40

60

80

100

120

140

CargoHull

(in Mio. USD)

Offshore & Marine Liabilities : No data available

• Economical & Legal Environment• Political & Social Environment• Infrastructure• Technical vs Commercial market• Nat Cat Exposures• LA Classic Marine Risks

Source: ALSUM

Mexican Marine Market Analysis

12/19/2012 18

2011

2010

20092008

-

100

200

300

400

Cargo HullOffshore

(in Mio. USD)

Offshore data is best estimatesMarine Liabilities: No data available

• Economical & Legal Environment• Political & Social Environment• Infrastructure• USA• Size of the market• Nat Cat Exposures• Classic Marine Risks

Source: ALSUM

Peruvian Marine Market Analysis

12/19/2012 19

2011

20102009

2008

-

20

40

60

80

CargoOffshore

(in Mio. USD)

Offshore data is best estimatesMarine Liabilities: No data available

• Economical & Legal Environment• Political & Social Environment• Infrastructure• A "Fishy" market• Market competition• Nat Cat Exposures• Classic Marine Risks

Source: ALSUM

Venezuelan Marine Market Analysis

2011

2010

2009

2008

-

30

60

90

120

150

Cargo HullOffshore

(in Mio. USD)

12/19/2012 20

2011 data is best estimatesMarine Liabilities: No data available

• Economical & Legal Environment• Political & Social Environment• Infrastructure• Currency / Exchange Rate Control• LA Classic Marine Risks

Source: ALSUM

12/19/2012 21

Agenda

Economical background

Latin America Insurance premium

Latin America Insurance market

Type of coverages

Classic Marine Risks in Latin America

12/19/2012 22

Low

High

Impact to the marine insurance industry

Nr of losses- +

Robbery

Theft

Turnover

Nat Cat

General Average

Accumulations

Strike

Piracy

Market risk perception: Conscious Less conscious

12/19/2012 23

Source: IUMI

Let's Come Back to the Present – Sept, 2012

THANK YOU

12/19/2012 24

Special thanks to ALSUM and Swiss Re Economic Research & Consulting for their statistical Input