BEST’S SPECIAL REPORT
European Non-Life and Life Insurers
Our Insight, Your Advantage.
Issue Review
September 25, 2015
There is a
greater focus
on emerging
markets to
enable faster
growth, higher
margins and
more capital
efficient
businesses.
European Insurers Continue Overseas
Expansion Drive but More Focused in
Approach
European insurers are developing their overseas operations as they come under investor
pressure to improve margins at a time when traditional domestic markets remain mature
and saturated. As insurers also face investment challenges from the very low interest rate
environment, well-capitalised companies are increasingly looking for innovative ways to
deploy capital.
In the past year, there have been many instances where reinsurers have returned capital to
shareholders; for example through special dividends, increased pay-outs or share buy-backs.
Medium-sized companies have also used excess funds to finance the recent wave of mergers
or acquisitions. While there has been some industry consolidation involving larger primary
groups, for these companies the need to create scale is not a key driver and instead there is a
greater focus on emerging markets to enable faster growth, higher margins and more capitalefficient businesses.
As Exhibits 1 and 2 show, European insurance markets have tended to be stagnant, with
muted premium growth in 2014. Italy was an exception owing to a sharp increase in demand
for life products, with 23% growth, against a 3% decline for non-life business. Insurance
Exhibit 1
European Insurers & Emerging Markets –
European Union Economies – Key Data (Economic) (2014)
Country
France
Germany
Italy
Spain
United Kingdom
Gross Domestic
Product (USD billions)
2,846.89
3,859.55
2,147.95
1,406.86
2,945.15
Population
(millions)
63.9
81.1
60.0
46.5
64.5
Real GDP per
Capita (USD)
44,538
47,590
35,823
30,278
45,653
Change in Real
GDP (%)
0.36%
1.61%
-0.42%
1.39%
2.55%
Insurance Market
Penetration (%)
9.5%
6.6%
9.1%
5.1%
11.9%
Notes: Premium figures given in US dollars to allow for comparison across currencies and are based on the average exchange
rates for the financial year.
Sources: International Monetary Fund, World Economic Outlook Database, April 2015; Swiss Re, sigma No4/2015; A.M. Best data
and research
Analytical Contact:
Carlos Wong-Fupuy
Tel: +44 (0) 20 7397 0287
[email protected]
Writer and Researcher:
Yvette Essen
Tel: +44 (0) 20 7397 0322
[email protected]
Editorial Manager:
Richard Hayes
Tel: +44 (0) 20 7397 0326
[email protected]
SR-2015-716
Exhibit 2
European Insurers & Emerging Markets –
European Union Economies – Key Data (Insurance) (2014)
Market
Total Premium Ranking Total Total Premium
2014 (USD Premium 2014
Growth 2014
Country
billions)
(Global)
(%)
France
270.52
5
5.1%
Germany
254.64
6
2.8%
Italy
194.74
7
15.3%
Spain
71.47
14
-0.7%
United Kingdom
351.27
3
7.9%
Life Premium
Growth 2014
(%)
7.2%
3.3%
23.1%
-2.5%
7.4%
Non-Life
Premium Total Premium
Growth 2014
Growth 2013
(%)
(%)
1.6%
6.7%
2.3%
6.6%
-2.7%
17.3%
0.9%
0.7%
8.7%
-1.1%
Notes: Premium figures given in US dollars to allow for comparison across currencies and are based on the average exchange
rates for the financial year.
Source: Swiss Re, sigma No4/2015 and No3/2014
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Special Report
European Non-Life and Life Insurers
penetration was 11.9% for the United Kingdom, and while it was 5.1% for Spain, this is still
considerably higher than for many other countries outside of the European Union (EU), albeit
not growing.
In general, there are certain countries that are proving particularly attractive to European
insurers because of their low insurance penetration and growing gross domestic product
(GDP). In the emerging market economies targeted by the largest European participants,
insurance penetration tends to be in the low single digits. A.M. Best has highlighted some of
the major countries identified by European insurers, noting that in Asia Pacific, besides China,
no single country dominates (see Exhibits 3 and 4). Economic development is expected to
encourage the emergence of a middle class, which in turn is projected to increase demand for
life products – particularly savings offerings – and non-life insurance, such as retail insurance
linked to motor and household protection.
Exhibit 3
European Insurers & Emerging Markets –
Emerging Market Economies – Key Data (Economic) (2014)
Country
Brazil
Chile
China
Colombia
India
Mexico
Poland
Russia
Turkey
Gross Domestic
Product (USD billions)
2,353.03
257.97
10,380.38
384.90
2,049.50
1,282.73
546.64
1,857.46
806.11
Population
(millions)
202.8
17.8
1,367.8
47.7
1,259.7
119.7
38.0
143.7
76.9
Real GDP per
Capita (USD)
11,604
14,477
7,589
8,076
1,627
10,715
14,379
12,926
10,482
Change in Real
GDP (%)
0.15%
1.84%
7.36%
4.55%
7.17%
2.13%
3.30%
0.62%
2.90%
Insurance Market
Penetration (%)
3.6%
4.2%
3.2%
2.5%
3.4%
2.1%
3.2%
1.4%
1.4%
Notes: Premium figures given in US dollars to allow for comparison across currencies and are based on the average exchange
rates for the financial year.
Sources: International Monetary Fund, World Economic Outlook Database, April 2015; Swiss Re, sigma No4/2015; A.M. Best data
and research
Exhibit 4
European Insurers & Emerging Markets –
Emerging Market Economies – Key Data (Insurance) (2014)
Country
Brazil
Chile
China
Colombia
India
Mexico
Poland
Russia
Turkey
Market
Total Premium Ranking Total Total Premium
2014 (USD Premium 2014
Growth 2014
billions)
(Global)
(%)
85.44
13
3.3%
10.92
40
-6.8%
328.44
4
17.3%
9.51
41
-5.6%
69.89
15
7.2%
27.24
25
-0.4%
17.24
33
-4.7%
25.74
27
-9.4%
11.60
39
-6.9%
Life Premium
Growth 2014
(%)
2.8%
-8.4%
15.4%
-21.2%
6.4%
1.0%
-11.0%
6.1%
-16.2%
Non-Life
Premium Total Premium
Growth 2014
Growth 2013
(%)
(%)
3.8%
0.5%
-4.5%
4.2%
19.5%
14.1%
3.2%
13.4%
10.4%
-1.0%
-1.7%
13.9%
0.7%
-6.0%
-11.0%
9.2%
-5.4%
14.6%
Notes: Premium figures given in US dollars to allow for comparison across currencies and are based on the average exchange
rates for the financial year.
Source: Swiss Re, sigma No4/2015 and No3/2014
A.M. Best’s analysis of the ten largest European insurance groups ranked according to gross
written premium (GWP) and their expansion strategies outside their core markets (see
Exhibit 5) has identified the following territories as particularly important. The key high
growth markets (HGM) can be split into Asia Pacific, Central Eastern Europe (the CEE), Latin
America and Turkey. For the purposes of this report, HGM refers to typically underdeveloped
insurance markets, characterised by their low penetration but fast-growing economies (usually
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emerging economies), which the main European insurance groups have clearly identified as
areas for expansion and can be measured separately in their segmental reporting.
Exhibit 5
European Insurers & Emerging Markets – Large Insurance Groups’
Regional Focus in Key High Growth Markets (2014)
Rank
1
2
3
AMB No
85085
85014
85124
4
86976
5
6
7
85925
86056
93310
8
9
10
84651
85909
85419
Company
AXA S.A.
Allianz SE
Assicurazioni
Generali S.p.A.
Zurich Insurance
Group Ltd.
Prudential plc
CNP Assurances
Credit Agricole
Assurances1
Talanx AG
Aviva plc
MAPFRE S.A.
Country of
Domicile
France
Germany
Italy
Gross Premium
Written (2014)
(EUR millions)
86,267
73,883
66,236
Switzerland
45,068
•
UK
France
France
41,959
30,643
29,377
•
Germany
UK
Spain
27,903
27,694
22,401
Asia
Pacific
•
•
•
Central
Eastern
Europe
•
•
•
Latin
America
•
•
•
Turkey
•
•
•
•
•
•
•
•
•
•
•
•
Notes:
1: Out of EUR 30bn, international business was EUR 4bn from six countries (namely European countries and Japan)
Asia Pacific
In Asia Pacific, China stands out as attractive to European insurers, including AXA and
Prudential, with its GDP growth of 7.4% in 2014 and vast population. China is the fourth
largest insurance market in the world, but is still considered to offer great potential. There
is a strong savings culture, and the expanding middle class is forecast to lead to greater
demand for life insurance and savings, with consumers seeking to protect their cars and
household assets.
However, a number of challenges face insurers operating in China, including regulatory
hurdles whereby there are limits on foreign investment resulting in a lack of full control.
State-sponsored entities continue to be dominant. Due to regulatory restrictions, European
insurers tend to be present on a regional basis through licences in particular provinces and
via joint ventures, as opposed to through a nationwide strategy. Going forward, insurers
will be wary of the health of China’s economy and the pace of its future growth, particularly
given the volatility in the Shanghai Composite Index over the past few months.
Elsewhere in Asia Pacific, India and Indonesia both offer various attractions, particularly due
to their large populations. For example, Prudential and Allianz are participants in India, with
Aviva announcing in August 2015 its intention in the following six months to increase its stake
in Aviva India (its joint venture with Dabur Investment Corporation) from the previous 26% to
49% now that foreign direct investment (FDI) limits are permitted at this level. As with China,
expansion drivers in Southeast Asia include economic growth, an emerging middle class and
high savings rates, as well as the introduction of compulsory lines of business.
Nevertheless, these countries all come with their own challenges. For example, A.M. Best
notes that while in India, the insurance sector has been further liberalised, FDI beyond 26%
is still subject to government approval. Insurers accessing Malaysia and Indonesia may need
to consider a takaful platform, given the large Islamic communities in these countries. The
Philippines is viewed as offering potential as it has low insurance penetration, although market
participants may have to access the country through microinsurance, which typically involves
significant administrative costs and depends on government-sponsored programmes.
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Central Eastern Europe (the CEE)
In the CEE, Russia has historically drawn the interest of several major European insurers. The
main driver of insurance growth has been the roll-out of compulsory business (largely motor
and medical). Previously, higher oil prices have resulted in more corporate risks, an area
where some insurers see potential. As there has tended to be insufficient internal capacity,
infrastructure risks have typically gone to the international (re)insurance markets.
In recent years, there has been an attempt to raise the standards in the Russian insurance
sector, moving away from being an overcrowded and highly competitive market, in which
many domestic companies were not proper insurers but tax optimisation vehicles. Significant
increases in minimum capital requirements have driven industry consolidation and resulted in
the disappearance of smaller players with low levels of capital.
The Russian insurance market, however, now faces new challenges. Motor insurance is
particularly difficult and several insurers have exited this line of business following the
extension in 2012 of consumer protection laws to insurance contracts, which has led to a
substantial increase in fraud. The recent volatility in commodity prices has weighed heavily
on the insurance sector, as has political uncertainty, with sanctions remaining a latent issue.
In the second quarter of 2015, Russia’s economy contracted by 4.6% year-on-year, its largest
drop in six years. The Central Bank of the Russian Federation has been taking an aggressive
stance on interest rates in a bid to protect the strength of the rouble. Meanwhile, currency
devaluation has caused real incomes to drop, leading to lower consumer spending.
European insurers have also explored opportunities in Poland, and to a lesser extent Ukraine,
the Czech Republic and Romania. As Poland is part of the EU, ease of doing business is a key
factor, as well as the proximity of the country and its strong economy. A number of the largest
European insurers are present in Poland, although the dominant company continues to be
state-owned Powszechny Zakład Ubezpieczeń (PZU Group).
Latin America
Latin America is considered a hotspot by European insurers and reinsurers. Virtually all the
companies followed by A.M. Best, both non-life and life, have a strategic plan to obtain a
foothold in this region. Key players include MAPFRE and Zurich.
The size of Brazil’s and Mexico’s economies and population, along with their emerging middle
classes, have resulted in these two countries attracting strong interest. Brazil’s insurance
market is the largest in Latin America, although there is a divergence of performance.
For example, the “Big Four” European reinsurers – Munich Re, Swiss Re, Hannover Re and
SCOR – have all been very successful in Latin America. There is a significant difference,
however, between primary insurers and reinsurers, which can provide a value-added service
and structure reinsurance protection in a more profitable way as they face less competition.
For primary companies, motor is the predominant line of business, but rates remain
inadequate. Companies are reporting losses, re-pricing risks and shrinking their motor books.
While the Brazilian market has enjoyed gradual liberalisation, at the same time, the European
insurers that have been more successful have relied on distribution agreements with banks,
which are partly or fully government-owned. These include tie-ups between Banco do Brasil
and MAPFRE, and CNP Assurances and Caixa Econômica Federal (one of Brazil’s largest banks).
Insurers have also attempted to establish themselves in other Latin American countries,
namely Chile and Colombia. Both are considered attractive as they are perceived to have stable
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regulatory environments, a natural advantage to large global companies. Chile’s economy has
been stronger than Brazil’s, with a 1.8% growth in GDP in 2014, compared to Brazil’s modest
0.2% rise. However, there is less opportunity for insurance demand as Chile and Colombia
have smaller economies than Brazil, although Brazil is facing worsening economic conditions,
with inflation at 9.6% (a level not seen since 2003). In July 2015, the Banco Central do Brasil
raised interest rates to a policy rate of 14.25%, the sixteenth rise in two years.
Meanwhile, despite their material size, Venezuela and Argentina are less of a focus for overseas
insurers as they suffer from perceived severe political and economic instability that affect
foreign exchanges and there are potential restrictions to the movement of capital.
Turkey
Many of the major European insurers are present in Turkey, including AXA, Allianz, Talanx
and MAPFRE. Its relative proximity to Europe is a draw, and the liberalisation of the insurance
market and few restrictions have previously provided opportunities to buy Turkish companies,
largely on the non-life side. Turkey’s insurance market has been largely privatised. However,
performance overall has been challenging as it is dominated by motor insurance. In particular,
motor third-party liability is very competitive.
Compared to the other markets that European insurers have identified as core areas for
growth, Turkey is small and in 2014 was ranked the 39th largest insurance market in the world.
Common Challenges Faced with International Expansion
A.M. Best notes that while previously some European insurers were expanding in many
territories, nowadays they are being more focused and cautious regarding specific regions as
not all overseas strategies have proven successful. The major participants are demonstrating
increased discipline, for example, by attempting to shrink their exposures to underperforming
risks and cut back on business subject to the most aggressive price competition. While
European insurers appreciate they need to take a longer-term view to establish themselves in
new territories, there have been some regions where an exit strategy has been adopted.
Some of the common challenges encountered by European insurers have been identified above
in the evaluation of specific risks facing different countries. These include market competition
and limited control of joint ventures, as well as political and economic risks within a given
territory. Furthermore, there is the danger of treating each region as a homogenous bloc,
which in many cases is misleading.
Insurers may face regulatory risks, for example, a need to invest their assets locally, but
financial markets may not be as mature as in a company’s domestic territory. In relation
to regulatory capital requirements, A.M. Best does not expect these to be a challenge for
European insurers as many of the emerging markets identified are either liberalised and open,
or apply less onerous requirements compared to European standards. Therefore, operating
overseas may offer capital efficiency advantages, although at the same time insurers must
reserve adequately for additional risk exposure, such as for natural catastrophes. They must
also account for the fact that many (re)insurers have less sophisticated risk modelling and
pricing tools for such events.
Where an insurer is involved in a takeover, merger or joint venture with a local entity, there
could be integration difficulties linked to cultural differences and ease of doing business. A
company that is being taken over may not be listed and can often be family owned, leading
to potential issues regarding valuations and the future role for existing management. In many
cases, it will have become a target because of underperformance, leading to a debate as to
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whether a turn-around strategy should involve existing staff with local knowledge, or new
senior appointments from Europe. A.M. Best also notes that in many instances, acquisitions are
made largely to obtain licences in a given country.
While countries with low insurance penetration are often regarded as offering potential
growth, lack of insurance demand is a challenge. Frequently, insurers engaging in overseas
expansion are large and want to create sufficient scale to justify their presence, so competition
and margins can become squeezed. Shareholder and investor perceptions can differ
significantly, and expectations must be managed accordingly.
European Insurers’ Strategies and Performance
A.M. Best’s in-depth analysis of the ten largest European insurance groups’ performance in
key HGM compared to overall performance can be seen in Exhibit 6. The data is based on
2014 results and is a snapshot of the year’s performance, but is in general, reflective of the
challenges and opportunities insurers face in emerging territories.
While the biggest insurers tend to consider overseas expansion to be key, there are some
exceptions. For example, Credit Agricole Assurances, the seventh largest European insurer, has
no noteworthy presence in territories that its rivals consider to be HGM. Meanwhile, growth
outside domestic markets is fundamental for others. In 2014, both MAPFRE and Prudential
relied on emerging markets for almost half of their business, while a third of Zurich’s life and
Talanx’s non-life premium originated from HGM.
In general, margins for life business tend to be broadly higher for emerging markets when
compared to a company’s total life margins. This reflects the types of products being offered in
HGM, mainly unit-linked based, short-to-medium term and with small guarantees and options.
These are often less capital intensive due to the high proportion of investment risk being
borne by the policyholder.
In 2014, Europe’s largest insurers have experienced mixed fortunes on their non-life operations, with
less of a clear pattern emerging when comparing the combined operating ratio (COR). Profitability
is not necessarily better in a HGM compared to a company’s domestic market. To an extent, this is a
consequence of factors in individual countries, for example with Russian business being particularly
challenging owing to competitive motor rates and pricing pressures for Brazilian risks.
Exhibit 6
European Insurers & Emerging Markets –
Focus on High Growth Markets (HGM) (2014)
Company1
AXA S.A.
Allianz SE
Generali S.p.A.
Zurich Insurance Group Ltd.
Prudential plc
CNP Assurances
Credit Agricole Assurances
2
Talanx AG
Aviva plc
MAPFRE S.A.3
P/C Share
HGM (%)
16.0%
9.0%
14.8%
12.3%
n/a
n/a
n/a
34.4%
n/a
48.8%
Combined
Ratio
HGM (%)
98.7%
111.3%
96.9%
104.6%
n/a
n/a
n/a
96.4%
n/a
95.3%
Combined
Ratio
Total (%)
97.6%
94.3%
93.8%
97.3%
n/a
n/a
n/a
101.7%
n/a
95.7%
Life Share
HGM (%)
17.5%
15.1%
5.9%
33.2%
48.1%
14.7%
n/a
18.6%
10.2%
47.7%
Life Margin
HGM (%)
49.0%
3.6%
21.9%
26.5%
52.0%
32.1%
n/a
6.9%
7.6%
17.7%
Life Margin
Total (%)
34.0%
2.4%
24.0%
22.1%
46.0%
11.9%
n/a
1.9%
4.1%
12.0%
Notes: Figures are not always comparable between companies because in some cases different assumptions were used.
1: All life indices based on APE except for Allianz, Aviva and MAPFRE (which are based on VNB, PVNBP and GWP/profits,
respectively).
2: Excludes reinsurance business from Hannover Re. Life HGM refers to the international segment which includes Italy.
3: MAPFRE excludes MAPFRE Re
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AXA
AXA’s HGM presence through its life and savings business is mainly in Asia (Hong Kong,
Thailand, Indonesia, China, Singapore, the Philippines and India). Its life and savings business
in HGM resulted in an annual premium equivalent (APE) of 17.5% in 2014, while new business
margins (NBM) was 49% in emerging markets – better than across the company which had an
average of 34%.
With regards to AXA’s non-life business, HGM was significant, accounting for 16% of revenues,
with a focus on Mexico, Turkey, the Gulf region, Colombia, Hong Kong, Morocco, Singapore
and Malaysia. The COR was slightly higher for emerging markets than the average across the
group at 98.7% versus a total of 97.6%.
Allianz
For Allianz, on the property casualty (P/C) side, the CEE and Latin America are its main
overseas areas, together representing 9% of total non-life business. However, in 2014 there
was a downscaling of its Russian operations, and a strong decline in Brazil (although this
was more than offset by Argentina and Colombia). Material pressures have become evident
in its emerging markets business. Allianz is taking corrective action in Russia after being
loss-making in the CEE, with a COR of 106.8%. This relates predominantly to its motor
portfolio in Russia, and the group is now exiting retail P/C to focus on corporate business.
Brazil’s COR was 125.5% reflecting IT issues and reserve strengthening, and re-pricing and
re-underwriting is ongoing. These factors resulted in the COR for HGM at 111.3%, compared
to a group COR of 94.3%.
On the life and health side, Allianz has a material presence in Asia-Pacific, with no country
dominating. Its presence in the CEE is relatively small, with recent growth focused largely
on investment products. Unlike its P/C business, Allianz is showing a much better margin on
new business in HGM than in more mature markets. For example, life and health revenues in
Asia Pacific were 8.5% of total group revenues, with a NBM of 3.2% compared to an average
of 2.4%.
Generali
Generali’s P/C business in the HGM of the CEE, Latin America and Asia represented almost 15%
of GWP in 2014. A.M. Best notes Asia still needs scale and Generali’s business in the CEE has
been much stronger than that of Latin America with CORs of 87.7% for the CEE versus 113.3%
for Latin America and 97.6% for Asia (although this was much better than the 120% achieved
in Asia in 2013 following large claims in Thailand and Japan). The average total COR for the
group was 93.8%, compared to 96.9% for HGM.
Life inflows and technical reserves from the CEE, Asia and Latin America were 5.8% of total
life business. Generali took over full ownership of Generali PPF Holding in the CEE at the
beginning of this year, to enable it to speed up its pace in further developing and improving
its competitive position in the region. Generali has enjoyed a very strong performance in the
CEE, with an APE margin of 32.8%, compared to a group total of 24%. In April 2015, it made
executive changes to try to accelerate Generali’s growth ambitions in Asia.
Zurich
Zurich relies heavily on emerging markets for its life business, with a third (33.2%) of its
portfolio coming from Asia Pacific, the Middle East, and Latin America. Zurich is performing
well with life margins in its HGM of 26.5%, above that of the group (22.1%). In Latin America,
its main challenge will be its dependence on its distribution arrangement with Santander, as
the majority of its business from the region came through this channel.
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Zurich’s performance on the P/C side has been challenge, with a COR of 104.6%, compared
to a group total of 97.3%. To improve profitability, the company has completed the exit of
its Russia retail business and has taken re-pricing actions in Latin America but says further
improvements are required, especially in Brazil.
Prudential
Prudential’s Asian operations accounted for 48.1% of the life assurer’s APE in 2014. The
company has continued to grow in the region, and is not in any particular country but present
in Hong Kong, Indonesia, Taiwan, China, India and Korea. Prudential has found its Asian
operations to have light capital requirements, compared to its U.K. and U.S. businesses. Asian
products tend to be savings offerings, such as unit-linked investments with low guarantees
which are much more capital efficient with higher margins and shorter pay back periods.
Margins were consequently higher in Prudential’s HGM at 52% of APE, compared to 46% for
total life business.
CNP Assurances
CNP Assurances second largest market outside France is Brazil, where it offers largely nonlife insurance for motor and personal risks. CNP’s partner is Caixa Econômica Federal, the
country’s second-biggest state-owned bank. CNP has a target of at least 50% premium growth
by 2019 and a greenfield operation in Colombia.
Owing to low interest rates affecting traditional products in Europe, the contribution to profits
from its Latin American business is significantly higher than its income proportion. In Latin
America, premiums equated to 9.3% of group premiums while the APE new business margin
for business in this region was 32.1%. In comparison, the APE margin was 9% for France and
2.8% for the rest of Europe excluding France (mainly due to the impact of lower interest rates
on traditional savings products), with the APE for the total group at 11.9%.
Credit Agricole Assurances
Credit Agricole does not have a significant presence in emerging markets, with EUR 2.6 billion
of revenue at half-year 2014, from its “international” division out of a total of EUR 15 billion.
The French insurance group states its international markets include Italy, Japan, Spain, Greece,
Luxembourg and Poland. For the purposes of this analysis, A.M. Best has not considered these
countries to be high growth territories.
Talanx
Talanx’s retail international operations are in Brazil, Mexico, Poland and Turkey. The group
offers life business in Poland (and Italy) and non-life in the other markets. In 2015, Talanx
exited from Bulgaria and Ukraine selling businesses in both countries as there was no
expectation of short-term growth with markets shrinking over the last five years. In general,
the retail international business has performed well with a COR 96.4%, with the only
underperforming country Turkey posting a COR of 103.2%, improving marginally from 105.9%
in 2013.
Talanx considers Latin America to offer opportunities, particularly in Brazil and Mexico. In
February 2015 it acquired Inversiones Magallanes, Chile, paying EUR 180 million in cash,
making Talanx the fifth largest composite insurer and second biggest motor insurer in the
country.
Aviva
Aviva’s growth markets of Poland, Turkey and Asia expanded by 25% in 2014 and now make up
22% of the insurer’s value of new business (VNB). However, A.M. Best notes that this growth
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was from relatively low levels. China’s VNB increased by 100% due to strong sales of protection
business.
MAPFRE
MAPFRE is heavily dependent on emerging markets with 48.8% of its P/C and 47.7% of its life
business coming from HGM. It has established itself as the market leader in non-life in Brazil
and Puerto Rico and in 2014, experienced a significant increase in business volumes in Brazil,
resulting from Banco do Brasil’s sales campaigns. Premiums from its operations in Brazil, Latin
America and Asia Pacific (which includes China and the Philippines) represented 40.7% of
premiums in 2014.
These high growth regions, plus Turkey, contributed more than a half of total profits, equating
to 55.2% of MAPFRE’s results before tax and minority interests. MAPFRE’s CORs for all regions
were below 100%, with an average of 95.7%. The exception was for its North American
business at 102%.
9
Special Report
European Non-Life and Life Insurers
Published by A.M. Best Company
Special Report
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