Unlike the multinational groups, smaller local companies lacked the financial capacity to cope with risks on their own; nor did they have the wherewithal to professionally analyse and manage all the new risks. Spotting an opportunity, Swiss Re provided its life insurance clients in Latin America with all the necessary reservations calculations from Zurich, where the company’s offices had by then been computerised.


In addition, the company began to play a direct role in different


Latin American companies by acquiring stakes in them. For Swiss Re, the moment to establish a presence in the Latin American market with permanent representation offices had arrived.


Swiss Re contributed to the development and internationalisation of


the insurance and reinsurance lines in situ. It backed the local insurance sector in a highly competitive international setting and developed new products oriented to these promising markets. Swiss Re, as a driving force and partner, continues today to support co-operation and the exchange of expertise with local companies.


THE FUTURE IS BRIGHT With the open outbreak of the international debt crisis in 1982, some


Latin American countries started rethinking their politics of isolation. In the 1990s, a hitherto unseen level of foreign investment boosted the Latin American economy, which had its effect on the insurance sector and eventually also led countries to loosen and later to abandon the state monopolies in reinsurance.


In the 1990s, many Latin American economies surged. Following many


years of high inflation and declining standards of living, which also affected the insurance sector, the situation began to improve and markets began to deregulate. Supervisory legislations and monopolies were abolished and state-owned insurance companies were privatised.


The pioneer in this regard was Chile, which in the late 1970s


spearheaded the reforms. In addition, social security systems were reformed, and some countries established new international standards in their pension systems, with private insurance solutions. Although the main investors were US and Spanish investors, new opportunities for expansion for local insurance companies emerged, especially as a result of the 1991 MERCOSUR trade agreement, and networks of Latin American insurance companies arose and continued to develop with the help of international reinsurance.


The deregulation and opening of insurance markets in Latin America


meant that the number of foreign insurance companies nearly doubled. This created fierce competition in insurance. Foreign companies introduced new products and distribution channels. Through their ties with the banking world, they started offering bancassurance, a sector that in life insurance was to dominate in markets like Brazil. The international competition again increased the need for local companies to seek financial backing with foreign reinsurers.


Acquisitions played an important role in the expansion of Swiss Re’s


activities in the region. These acquisitions included Reaseguradora Alianza in Mexico and Reacol in Colombia. In different markets, Swiss Re succeeded in consolidating the ties it had established. With the 1996 opening of Swiss Re Brasil Serviços e Participações Ltda in São Paulo, it became one of the first international reinsurers to resume operations in Brazil. Since 2008, Swiss Re has had official authorisation to operate as a reinsurer in the country.


A REGION IN FOCUS In the 21st century, Latin America is, more than ever, a focal point of


the global economy. The Latin American economy has weathered the recent financial crisis well, especially thanks to the consolidation of its insurance industry and the general improvement in government accounts. Economists therefore expect above-average growth in these markets. Latin American companies have an ever-increasing international prominence and a growing demand for infrastructure and energy projects; in addition, the outlook for raw material and agricultural product exports has intensified the need for insurance and reinsurance coverage. There is also a growing demand for life insurance, as a consequence of higher living standards in the region.


Swiss Re has continually expanded its range of products in all of


these sectors and is offering a broad range of solutions tailored for Latin American markets, for example, in the insurance-linked securities insurance line, which helps mitigate major environmental risks. In Mexico, in 2006, Cat-Mex became the first government securitised earthquake risk, and it was expanded in 2009 thanks to the co-operation of the government and the World Bank within the framework of MultiCat Mexico, in order to offer a more effective solution for earthquake and hurricane risks.


After the devastating February 27, 2010 earthquake in Chile, Swiss Re


was one of the first reinsurers to act, and it disbursed some $600 million for reconstruction. But Swiss Re also promotes the development of micro- insurance products and supports, for example, ParaLife, which is active in Mexico and Colombia, through its reinsurance capacity and assistance in developing products and providing market orientation.


A great deal has changed in the 100 years that Swiss Re has been involved


in Latin America, but what has not shifted is our commitment to our clients and our desire to help maintain efficient, fair and stable insurance markets that aid the economic development of this very unique region.


Summer 2011 | INTELLIGENT INSURER | 47


“ The Latin American economy has weathered the recent financial crisis well, especially thanks to the consolidation of its insurance industry and the general improvement in government accounts.”


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