Swiss Re AG (SREN.VX) has identified Brazil and Mexico as two of its five key global markets for high growth in coming years--as economic growth in Europe and North America dwindles--according to Margo Black, head of reinsurance for the firm in southern Latin America.
The Brazilian reinsurance market is "very competitive" and pricing is lower than in other countries, in part because Brazil doesn't usually face natural or climate disasters, Ms. Black said in an interview.
Elsewhere in Latin America, Swiss Re already has established a solid presence in Mexico from its acquisition of Reaseguros Alianza SA in the late 1990s. The business there has seen steady low growth, but Ms. Black said that the plans are now to ramp up activity at a faster pace. Swiss Re has also won approval to set up an office in Colombia.

The Brazilian reinsurance market is growing faster than insurance, which is in turn growing faster than the economy, Ms. Black said. "There's enough business for everybody," said Ms. Black, who joined Swiss Re in May 2012 from rival Willis Group Holdings PLC.

The local market for reinsurance premiums was BRL2.85 billion in 2012, down 13% from 2011, according to industry regulator the Superintendence of Private Insurance, or Susep. The number of players in the market increased to 13 from eight, with Brazilian government-controlled reinsurer IRB-Brasil Resseguros SA's market share slipping to 61% from 63%

Swiss Re reported premiums of BRL15.4 million since it set up its offices in Brazil in June of last year following regulatory changes.

Brazil offers two key opportunities for growth in infrastructure investments and its expanding middle class, Ms. Black said.

Brazil will host the 2014 soccer World Cup and 2016 Summer Olympics, which Ms. Black said are driving infrastructure projects, although opportunities go "way beyond" those events.

The government recently presented a portfolio of projects that require some $235 billion in infrastructure improvements considered vital for Brazil's economy, which slowed to growth of 0.9% last year from 7.5% in 2010.

Economic stability over the last 15 years has lifted millions of Brazilians out of poverty, and consumer demand has been an important driver of economic growth.

Ms. Black said that once people have bought material goods, then they start to look for other products, such as life assurance and household insurance.

The executive also expects the privatization of government-owned IRB to go ahead after a couple of failed attempts in the past decade. However unlike in 2001, when Swiss Re was a potential candidate to bid, Ms. Black now expects Brazilians to lead that effort and sees Swiss Re participation unlikely.
Brazil's reinsurance industry was finally opened to competition in 2008 after a number of false starts, although, IRB remained under firm state control. There was an additional upheaval in 2010, when the government imposed rules that effectively required firms to set up local subsidiaries with their own capital in order to operate properly in the Brazilian market.

Swiss Re now believes that the market should start to settle down. "I would like to think there will be no more big surprises," Ms. Black said.