AJG working to consolidate position in LatAm

Over the coming year Arthur J Gallagher will consolidate its investment in Latin America, says Lionel Soffia, Arthur J Gallagher’s CEO of Latin America. The company will grow its reinsurance and retail operations organically and by acquisition, with the aim of being in the top five companies in the region within the next five years.

Peru will be one of its centres of growth, building on the strong reinsurance operation it already has there by establishing a retail operation. A similar move is underway in Colombia, where the company recently bought a retail operation to complement its reinsurance operation.

“We are also looking to Brazil, even though the economy is suffering at present,” said Soffia. “It is a market we want to be in and in the next year we want to put a flag in Brazil for both retail and reinsurance. We also have wonderful partners in Mexico, and we want to keep growing with them.”

The company’s growth in Latin America is part of its global growth strategy, he added. He sees much potential for growth in the Latin American insurance market, where the per capita spending on insurance is relatively low.

“The current economic slowdown in the region is a challenge, and this will affect insurance growth over the next couple of years. Most of the income in the region is very tied to commodity prices and we see that being the case into the future. Also there are the political challenges in some countries to consider.”

However, he anticipates greater governmental and political stability in the future.

“Another challenge is the soft market, which in some way makes things more difficult when you have an economy which is not growing. I still see much potential in the region and a lot of need for infrastructure and energy investment in many of these countries—especially Chile, Peru, Colombia and Mexico. Those are the countries where we think we can keep going the way we had planned, regardless of the challenges.”

Soffia sees key opportunities in the energy and construction industries and the opening up of markets in Latin America to free trade, making it possible to insure a lot of casualty and liability risk that until now has gone uninsured. He also expects demand from companies for D&O cover as a more global economy comes into play within the region.

“Most of the regulators in Latin America have been active and quite closed to the different actors in insurance but I don’t see it as a challenge. For us as investors in the region it brings more transparency and makes things clearer in the long run, so I don’t see the regulatory changes affecting us significantly as a broker.”

Soffia expects mergers and acquisitions and the economy in the region to be hot topics at FIDES, along with the arrival of new players as space is created by the mergers.

“Usually when you have a player that exits as a result of being bought it is replaced, so it will be a good opportunity to see who will be the new players coming into the region.”