MEET THE MARKET 2015
Ambassador Alex Ellis
< Picture to go here > Inga Beale CEO Lloyd s 3
The Navigators Group, Inc. Lloyd s Meet the Market 2015 Rio De Janeiro Stephen Coward President, Navigators Technical Risk Joint Active Underwriter, Syndicate 1221 16th April 2015 4/22/2015 4
Navigators experience in Brazil Co-location in Lloyd s has had tangible benefits Sourcing business locally Strong trading relationships between people who are trusted friends Relatively low cost base Reinsurance pricing conditions in Energy, Engineering & Marine have been very challenging: Extreme over supply of capacity Low interest rates Premium rate reductions -10% to 25% in 2014; -5% to 30% expected in 2015 Market share being sought by some players seemingly at almost any price New opportunities associated with PAC programme haven t materialised Slow down due to 50% drop in oil price over past year The Navigators Group, Inc. 5
Outlook Short-term prospects (1-2 years) remain gloomy for underwriters Treaty & Facultative reinsurance trading conditions unlikely to turn Formation of Lloyd s Consortia for Rio (pooling the capacity of several Syndicates behind a single decision) Navigators is leading the first Rio consortium - Offshore Energy with $100,000,000 capacity on behalf of Amlin, Aegis, Argo & Novae. Mid-term (3-5 years hence) things should improve. Why? Pricing correction is inevitable Many players have combined ratios >100% which is unsustainable Beneficial fall out from Petrobras corruption scandal; radical changes to the business model and practices are predicted Foreign investors and contractors will be active in a regulatory transparent and compliant new world The Navigators Group, Inc. 6
The path to a brighter long-term outlook Favourable outcomes will require Continued patience (on all sides of the trading relationship) Technical know-how (bringing worldwide reinsurance experience and knowledge to Brazil) Consistency Economic & political stability A viable oil price (>$70/barrel) for the full exploitation and realisation of Brazil s enormous Oil & Gas cornerstone Persistence: committed and professional specialty reinsurers will not give up easily! Thank you & obrigado The Navigators Group, Inc. 7
T h e B r a z i l i a n M a r k e t
CONTENTS Shared Connections Allied World & Brazil Brazil s Market Results Prospects for Brazil Brazilian Companies Overseas Closing Remarks
SHARED CONNECTIONS Economic The number of investment projects by Brazilian companies increased by 30% in the last three years Trading - The UK s trading relationship with Brazil goes back over 200 years Cultural - British railway engineers introduced Forró, the dance fall all to Brazil Sport Of the 3m 2014 World Cup tickets sold, perhaps 66,000 were sold to Brits
ALLIED WORLD & BRAZIL We have been writing Brazilian business since 2002 We service Brazilian business using Lloyd s Syndicate 2232 We opened a Miami based Service Company, with locally based underwriters, in 2014 to service Latin American business Our premium is up 184% from 2010
ALLIED WORLD & BRAZIL We have a broad Direct & Facultative product suite for Brazil and wider Latin America Casualty Excess & Umbrella General Liability Workers Compensatio n & Employers Liability Professional Lines Directors & Officers Errors & Omissions Single Project Architects and Engineers Mergers and Acquisitions Property Contractors All Risks Erection All Risks General Property Specialty Aviation Marine Cargo & Stock Throughput Marine Liabilities
BRAZIL S MARKET RESULTS Growth in the reinsurance market continues to outpace the local primary market 90 80 70 60 50 40 30 20 10 0 Local Market Premium (BRL bn) 50.5 58.2 66.2 78.5 83.9 2010 2011 2012 2013 2014 10 9 8 7 6 5 4 3 2 1 0 Ceded Reinsurance Premium (BRL bn) 2.3 1.2 2.0 2.6 2.6 2.4 1.0 1.3 1.5 2.7 2.9 2.7 2.6 3.0 3.5 2010 2011 2012 2013 2014 Other Local Reinsurers Foreign Insurers Ceded to IRB Source: TerraReports Terra Brasis Resseguros
BRAZIL S MARKET RESULTS The overall market has been profitable, with the results of local reinsurers consistently lagging 130% Brazilian Market Results Combined Ratio 110% 90% 70% 90% 91% 96% 104% 99% 94% 93% 106% 101% 122% 92% 87% 90% 91% 109% 50% 30% 10% -10% 2010 2011 2012 2013 2014 Overall Local Market IRB Other Local Re's Source: TerraReports Terra Brasis Resseguros
PROSPECTS FOR BRAZIL While the economic environment may be more challenging due to slower GDP growth, the fundamentals supporting the Brazilian insurance market remain positive: 5 th largest economy by 2030, up from 7 th today 8 th largest insurance market by 2020, up from 12 th today $1bn in profit by 2020 for the direct commercial market Source: IMF< Lloyd s, KPMG, PWC
BRAZILIAN COMPANIES OVERSEAS Brazilian investment abroad requires insurance partners with global capabilities Languages Licences Cultures Lloyd's, with its large network of local licences and global experience, can be this partner Brazilian investors already are helping develop Lloyd s and Brazil
CLOSING REMARKS The Brazilian insurance market remains attractive Foreign market participants remain a key partner in developing Brazil s insurance sector Consortia enable Lloyd s and managing agents to provide the Brazilian market with greater capacity and risk transfer expertise
London Darren Powell Senior Vice President Active Underwriter, Syndicate 2232 darren.powell@awac.com +44 207 220 0667 CONTACTS Miami Paul Obolensky Senior Vice President Underwriting Operations paul.obolensky@awac.com +1 (786) 362-8012
< Picture to go here > LLOYD S BRAZIL Marco Castro Lloyd s 2012
Perfil de Negócios Lloyd s Brasil Prêmios e Sinistralidade (Prêmios em milhões de US$) 2014 Mercado Brasileiro de Resseguros (Ranking Lloyd s vs Resseguradores Locais) (em milhões de US$) IRB 1,077 (35%) Prêmio Sinistralidade 322 (10%) ZURICH 242 (8%) 112% 255 298 349 314 322 ALLIANZ AUSTRAL 177 (6%) 133 (4%) 164 72% 193 55% 44% 39% 58% MUNICH MAPFRE 119 (4%) 103 (3%) 21% SWISS 85 (3%) 2008 2009 2010 2011 2012 2013 2014 Cresc. 18% 32% 17% 17% -10% 3% ACE J.MALUCELLI 75 (2%) 61 (2%) Lloyd s Brasil teve um modesto crescimento de 3% em 2014. Sinistralidade aumentou para 58%, indicando uma deterioração nas condições de mercado. Outros Locais Outros Admitidos & Ocasionais 134 (4%) Resseguradores Locais 566 (18%) Admitidos & Ocasionais Lloyd s continua sendo o maior ressegurador internacional no Brasil e 2º depois do IRB. Source: Market Intelligence calculations on Xchanging Lloyd s 20
Sindicatos com presença local Lloyd s 21
Sindicatos com presença local 2008 2014 Prêmio Lloyd s Brasil (Em milhões US$) 298 349 314 322 255 193 56% Lloyd s Total Sindicatos com presença local 164 41 73 79 107 118 141 44% 10 2008 2009 2010 2011 2012 2013 2014 Os sindicatos com presença local tem crescido consistentemente desde 2008. Os sindicatos com presença local representaram 44% do prêmio total do Lloyd s em 2014. Source: Market Intelligence calculations on Xchanging Lloyd s 22
Sindicatos com presença local 2008 2014 CAGR (Taxa de crescimento anual composta) (Em % do prêmio) Lloyd's 12% Sindicatos com presença local 55% Sindicatos sem presença local 3% Mercado de Resseguro 9% Forte crescimento dos sindicatos do Lloyd s com presença local no Brasil. Source: Market Intelligence calculations on Xchanging and SUSEP Lloyd s 23
Responsabilidade Social Corporativa 24
Lloyd s 25