Competitive pricing and ample opportunities characterise LatAm market

Competitive pricing conditions are the main challenge facing reinsurers in the LatAm region, according to Juan Calvache, senior vice president, Latin America for Brit Global Specialty USA.

Calvache was hired last year to expand Brit Global Specialty USA’s US facultative property reinsurance platform into the Latin American and Caribbean markets.

“Over the past 15 months our main focus has been to gain access to the market in Brit’s specialty lines, namely property facultative and, in recent months, casualty business,” he said.

“The number of competitors now working in the region has been growing and that creates good opportunities for our clients, who have a broader number of reinsurers to choose from, but it puts pressure on pricing.”

He said that Brit Global Specialty USA’s main focus is on developing its portfolio in countries where there is a lot of facultative activity, such as Chile, Peru, Colombia, Mexico and Central America.

He added that rising and additional taxes in some LatAm countries are putting pressure on the market. In addition, Chile has added red tape in the form of additional documents that reinsurers have to present in order to avoid taxes.

“Facultative business is very transactional so this change makes it more difficult for each business to obtain the documents they require,” he said.

In addition, the political environment in countries such as Argentina, Ecuador and Venezuela—all important markets—makes it difficult to develop business fully.

Calvache expects that market conditions will be a major topic of conversation at FIDES, as will the drive by several reinsurers to diversify from the traditional property lines of business.

“I’m sure there will be conversations around how reinsurers can support clients in different lines of business,” he said.

He added that over the coming year, Brit Global Specialty USA will use its Miami operation as a platform for the company to develop some of the other lines of business it manages as a group, taking these into the LatAm market.

“As a specialty lines reinsurer we see a lot of opportunity in this region and we are using our Miami platform to develop Brit’s lines of business. We are looking for the right underwriters to help us do this.”

He added that this takes place against a backdrop of relatively low penetration, with many lines of business ripe for development

“We expect, for example, to see interesting developments on the construction side in the next three to five years as well as in lines of business such as marine and inland transit. We are looking closely at opportunities to keep developing from our platform in Miami.

“The company is very committed in the region. We currently have four underwriters in Miami working the whole LatAm region and listening to our clients to see how we can assist them with their reinsurance needs. We have great expectations for this part of the world.”