clients and demand for these services and products in the company’s home markets.
horizons or contact segments of the client base they had not yet reached. It will also provide them with tools and values that will help them better position themselves in local markets where they are experts but do not
increased the reinsurer’s global span.
international market in order to have better access to the new clients we are approaching and to help us develop our international portfolio,” she says.
“The latter will give us better access to the South Cone Market
(Argentina, Chile, Uruguay and Paraguay) where we have operated for many years, but where we recognise better representation is needed to tend to the local demand.”
reinsurers and Patria Re is no different, says Carlou.
“We want to be an actor in the international market, not only to diversify our geographic spread, but also because we believe that in order to be a without losing perspective; we need to keep in sight that Latin America is part of a larger picture.
“On the other side, if we believe in offering quality capital to our clients,
we need to assess any consideration that might present a risk to the services we provide. So we have opted to work on proper hedging for the sovereign risk we are exposed to.”
Finally, Carlou explains that over the last two years the reinsurer has actively worked on strengthening the institutionalisation of the company.
“We have done this on two fronts. On the one hand, we have integrated into the Peña Verde group, a move that will promote synergies, economies governance,” she says. “On the other hand, we have completed compliance with the new Solvency II regulation which is now in force in Mexico.”
TRENDS IN LATAM The new Solvency II regulation is expected to drive appetite for reinsurers in Latin America, despite the challenges of soft rates, slow GDP growth and economic volatility.
“Although the insurance sector in the most advanced economies of
Latin America (Mexico, Chile, Colombia and Peru) has grown at higher rates than GDP, growth in the reinsurance markets will remain modest,” Carlou says.
“The soft reinsurance cycle will linger in 2016, but solvency regulation
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“We intend to broaden the scope of the specialty branches and operations we currently provide to better serve the needs of the market we operate in.”
in these countries will tend to favour reinsurance as a cost-effective form of additional capital.”
However, Carlou says that she expects the volatile economic environment to continue well into 2016.
“US monetary policy will continue to generate volatility across asset Europe’s problems with Greece and the general economy are not solved, oil prices will remain low, and the Chinese economic slowdown keeps going,” she explains.
Carlou adds that, in Mexico, oil prices and the slow pace of public
she believes that the Chinese crisis is increasing risk aversion for emerging emerging markets.
“Our expectation is that being a closed economy, the way out of
recession for China is not straightforward. The compounded effect on the external and internal context for Mexico is generating further obstacles in the implementation of the public infrastructure investment programme,” she says.
“The one concern is that investment was supposed to promote economic
growth, which has not happened so far, with expected GDP increase for 2015 at circa 2 percent. Without economic growth, discontent over legal reforms that disrupted the status quo will simmer.”
The penetration of foreign capital into Latin America continues to
increase steadily, despite a reduction in the number of reinsurers used by foreign companies and an increase in security requirements.
“Market softness has harmed premium rates and relaxed conditions, increasing the covers being offered,” Carlou says.
She adds that while it may drive demand for reinsurance, she also has concerns over the implications of the introduction of new solvency requirements.
“In Mexico, the implementation of Solvency II will pose tremendous
challenges for the regulator which, if not met, could translate into an enormous risk for the market,” she said. She also noted that Solvency II- type regulation is being considered by other countries in Latin America, particularly Colombia, Peru and Chile.
Ingrid Carlou is CEO at Patria Re. She can be contacted at
icarlou@patriare.com.mx November 2015 | INTELLIGENT INSURER | 43
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