How does the Mexican Insurance market work? Javier Rodríguez Gómez Re- + Insurance Consultant September 28th, 2015 1
Mexico: Demography and Economy Mexico s population is 122 million inhabitants, in a territory of around 2 0 Mio of sq. km. Source: INEGI 2
Mexico: Demography and Economy Evidently, the income distribution has been a big problem. In 2010, 62% of mexican families (Income Group D+, D and E) had an Income up to USD 892/month. Five years after, due to a recent 25% devaluation, the USD income of the whole population is smaller. Source: AMAI / NIELSEN 2010 3
Mexican Insurance Market Composition Associated 88 Companies Domestic 29 Foreign 59 Specialized 58 Multi-line 30 Motor 41 Life 47 Personal Accidents 42 P & C 49 Pensions 9 Health 14 There are 105 companies, from which 88 are associated under AMIS (Asociación Mexicana de Instituciones de Seguros). The regulatory changes as from 1994 (incl. NAFTA) eliminated all operation barriers for foreign investment. As a result now a days there are 59 foreign insurers with a branch operating in Mexico. Source: AMIS 4
Mexican Insurance Market Composition 1990 2014 20% 80% 65 % 35 % Domestic Foreign Total Premium 2014: USD 26,2 Billion Domestic Companies 35% Foreign Companies 65% Source: AMIS 5
Market Share 2014 Source: AMIS 6
Premium and Claims 2014 (Non Life w/o Motor) Source: AMIS 7
Premium and Claims 2014 (Engineering) Source: AMIS 8
Mexico, Brazil & LA: 2011 Written premium / Branch. 80% 70% 69% 60% 53% 58% 50% 47% 40% 30% 37% 31% 24% 26% 36% 40% 20% 17% 15% 15% 10% 0% Vida Fianzas y Crédito Daños sin Autos Salud Autos Accidentes Pensiones y Accid. Trab. 9% 3% 0% SOAT México Brasil Source: Fundación Mapfre, El Mercado Asegurador Latinoamericano, 2010-2011, Instituto de Ciencias del Seguro, December 2011. 9
Insurance Market Penetration (Premium / GDP) As from 2002 the Market Penetration has steadily grown up, but.. until 2014 the market has finally reached 2.05% (USD 26.2 Bio) Source: FinanciAmis 10
Insurance Market Penetration (Premium / GDP) Mexico is the 15 th largest economy worldwide, but is 58 th place in terms of insurance market penetration. Mexico has a lower penetration than the Latin America region as a whole. Source: Sigma, Swiss Re. World Insurance 2014 11
Insurance Market Penetration (Premium / GDP) 8% 7% 6% 7% Mexico has a lower penetration than the Latin America region as a whole. 5% 4% 3% 4% 4% 4% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 0% PR CHI ARG BRA VEN PAN REG COL ECU SAL URU CR MEX HON PER NIC PAR BOL DOM GUA Source: Latinoinsurance 12
Non Life (w/o Motor) It is estimated an increase in MEX PESOS for 2015, but. the recent devaluation will reduce the USD Premium in 8.47% 5.000 Premium 4.500 4.000 4.011 Millions of dollars 3.500 3.000 2.500 2.000 1.500 1.000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: AMIS 13
Engineering vs Non Life (w/o Motor) 5.000 Premium 4.500 4.000 4.011 3.500 3.000 2.500 2.000 1.500 1.000 696 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: AMIS Engineering Non Life (w/o Motors) 14
Non Life (w/o Motor).... 3.000 H. Wilma 2.991 Claims H. Odile 2.720 2.500 H. Dean Tabasco Flood H. Alex H. Karl Mexicali EQ TS Manuel TS Ingrid 2.000 1.825 1.830 1.858 Millions of dollars 1.500 1.000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: AMIS 15
Engineering vs Non Life (w/o Motor).... Millions of dollars 3.000 2.500 2.000 1.500 1.000 H. Wilma 2.991 Claims H. Dean Tabasco Flood H. Alex H. Karl Mexicali EQ TS Manuel TS Ingrid 1.825 1.830 1.858 H. Odile 2.720 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: AMIS Engineering Non Life (w/o Motors) 16
Insurance Market Development 17
Insurance Industry Structure Direct Premiums Market has grown almost every year during the last decade. Source: EstadiscAMIS 18
Insurance Industry Structure Market Participation However, market composition by line of business has not suffered major changes. Source: EstadiscAMIS 19
Evolution of technical reserves in the Mexican Market MILLIONS OF DOLLARS 65.000 60.000 55.000 50.000 60,941 2.952 8.389 45.000 40.000 35.000 30.000 25.000 49.600 20.000 15.000 10.000 5.000 0 1.265 3.484 12.480 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Unearned Premium IBNR reserve Prevision reserves Source: AMIS 20
Market Combined Ratio 21
Overall Combined Ratio 100,00 100.08 99.75 97.27 100.88 101.17 103.31 100.98 100.06 98.60 95.31 93.10 94.58 95.29 PREMIUM 75,00 50,00 25,00 0,00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Coverage Claims costs Administrative costs Source: AMIS 22
Retention Combined Ratio (w/o Life) 100.08 99.75 97.27 100.88 101.17 103.31 100.98 100.06 98.60 95.31 93.10 94.58 95.29 100 75 50 25 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 XL Cost Claims costs Administrative costs Source: AMIS 23
Retention Combined Ratio (Non Life w/o Motor) 100 112.38 104.79 102.13 102.53 98.30 103.51 104.04 93.79 94.29 93.68 82.11 87.39 89.30 80 60 40 20 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 XL Retained Claims Costs Administrative Costs Source: AMIS 24
Retention Combined Ratio (Engineering) 100 113.49 107.13 100.92 103.81 87.60 92.22 114.72 104.29 89.71 88.71 78.00 81.30 86.93 80 60 40 20 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 XL Retained Claims Costs Administrative Costs Source: AMIS 25
Reinsurance 26
Non Life Insurance Premiums Current figures 70.000 60.000 Ceded Premium Retained Premium Written Premium 50.000 Millions of pesos. 40.000 30.000 20.000 10.000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: FinanciAMIS (IV quarter figures 2005 2014) 27
Non Life (Premium and Claims, w/o Motor) 60.000 50.000 40.000 30.000 20.000 10.000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Written Premium Ceded Premium Retained Premium Ceded Claim Retained Claim Direct Claim Source: AMIS 28
Non Life Ceded Premiums (w/o Motor) 14.000 Agro Credit Miscelaneous Fire Marine Liability CAT 12.000 Millions of pesos. 10.000 8.000 6.000 4.000 2.000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: FinanciAMIS (IV Quarter figures 2005 2014) 29
attention your for Thank You 30