Life insurance market samy hazan-btg_pactual_meeting_04_2014

Samy Hazan - Yasuda & Maríitma Seguros

Life Insurance Market in Brazil

BTG Pactual Investor’s Meeting – April 14

Samy Hazan – Head of Life Insurance

Agenda

Insurance Market in emerging economies – overview


Main opportunities and Growth Drivers in the Life Insurance Segment

Financial Performance of relevant product lines (Life)

Market agenda and key challenges for Life and Pension

Q&A

Agenda



Main opportunities and Drivers in the Life Insurance Segment



Q&A

S O M P O J A P A N

Global market size overview [USD trillion]

Insurance in emerging markets has grown by 17% in the last years, gaining significant share in the global market

Source: Swiss Re, Ernst & Young Terco

CAGR

2005-2011

3,8%

17%

• Insurance in emerging markets is experiencing

rapid growth, due to a combination of

macroeconomic and social circumstances:

– High GDP and GDP per capita growth

– Current low penetration of insurance (high

potential to grow further)

– New customers entering the market due to a

process of social inclusion

– Consumer confidence has risen significantly

in most emerging markets in the last decade –

stimulating consumption

– Changes in the demographic profile of

populations (e.g.: aging)

• Insurance market in many developed countries is

slowing down, mainly due to 2 factors:

– Developed economies were heavily affected

by the 2008 global crisis

– Demographic factors in developed

countries are limiting growth - such as the

Life insurance market in Europe

1) North America, Western Europe, Japan and newly industrialized Asian economies, Australia and

New Zealand

9% 10% 12% 13% 15% 15%8%

87%

4,2

90%

3,7

2011 2010

100% 4,1

Developed

countries1)

2005 2007 2006

Emerging

countries

88%

2008

92%

3,4

91%

2009

4,1

85%

4,3

85%

4,6 4,9%

Samy Hazan - Yasuda Seguros

S O M P O J A P A N

Brazilian market size overview

0 10.000 20.000 30.000 40.000 50.000 60.000

Russia

Italy

Germany

France

UK

Mexico

Brazil

United States

14

India

10

8

6

4

2

Australia

South Africa

UAE

Malaysia Singapore

Hong Kong South Korea

China

Japan

Turkey

Poland

12

Insurance

Penetration [%GDP]

GDP per Capita

[Nominal U$ Dollars]

Market maturity Insurance penetration vs GDP per Capita [2010]

Brazil

2020?

Brazil shows one of the highest insurance market growth rates, but what do we need to boost insurance penetration in the economy?

Source: Sigma Report 2011, Swiss Re, IMF, Ernst & Young Terco

UK

France

Germany Italy

4

2 27

14

11

India

South Korea

China

Turkey

Japan 10

26

UAE

0 1 -1

South Africa

-3 -2

Australia Singapore

12

Malaysia

3

Mexico

Brazil

United States

2

4 9

Poland

5 10

8

6 7 8

6

Russia

Hong Kong

Brasil

2020?

Insurance

Penetration [%GDP]

Real Growth in 2010 [%]

What made other markets/geographies grow ? 1. Economic stability and per capita income growth 2. Clear and stable regulation 3. Product innovation and segmentation 4. Alternatives distribution channel 5. Reinsurance

S O M P O J A P A N

LatAm - Brazil has posted the largest growth rate in US dollars since 2007 (average 18%), above Colombia 15% and Chile 14%

BR/USD Exchange rate as Dec 31 each year

Source: Ernst & Young Terco

YoY change % Life and Non Life Insurance in selected LatAm markets

28 25 26 29 36

43

54

65 67 74

81 90

101

115

130

16 15 16 20 23 29

36 42 43 47

51 57

64 71

80

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11E '12E '13E '14E '15E

Life Non-life

Latin America insurance market size (GPW US$bn)

CAGR ’01-’15E: 12.0% 45

11

3

6

3 1

37

13 12

4 6

2

Life Non-life

Selected countries (2012 GPW US$bn)

CAGR ’01-’15E: 11.6%

Source: Mindpower Solutions–Latin America insurance market outlook to 2015 Source: Swiss Re (2012)–"World Insurance in 2012“, latest available report

Agenda



Main opportunities and Drivers in the Life Insurance Segment



Q&A

S O M P O J A P A N

7

Total Premium in Brazil reached R$ 173 billion in 2013, driven by personal lines segment

1) Não considera saúde Nota: Seguros Gerais considera: Automóveis, Patrimoniais, DPVAT, Transportes, Habitacional, Responsabilidades, Riscos Financeiros, Marítimos, Rural, Aeronáuticos, Riscos Especiais Fonte: FENASEG, SUSEP, Análises Booz & Company

* 2013 Dados de JAN A NOV anualizados

Inrurance Market in Brazil (excluding Health)1

Total – R$ billion

CAGR (08-13)

%

11% 11% 11% 11% 11% 12% 10% 9% 8% 8% 7% 4% 42%

46% 47%

48%

52% 52% 38% 34%

34%

33%

31% 32%

2008 2009 2010 2011 2012 2013

85 95

111

129

157

173,5

General Insurance ((P&C)

Life Insurance (VGBL, Life, PA)

Pension (PGBL)

Capitalização

11%

20%

-4%

17%

+ 15%

*

S O M P O J A P A N

Brazilian market size overview

The Brazilian insurance market will grow ~15% per year until 2020, both life and non-life insurance show solid growth

Source: Cnseg, IMF, Ernst & Young Terco

14,5%

CAGR

2011-2020

14,9%

13,3%

1) VGBL, PGBL, Pension, Life and Health 2) Auto, Property, Others

69,1130,2

42,537,7Non - Life 2)

Life 1)

2020f

677,6

547,4

2015f

353,6

284,6

2011

199,9

157,4

2010

172,1

134,5

2009

150,9

32,9

118,0

CAGR: 15%

CAGR:

15%

CAGR:

14%

MAIN GROWTH DRIVERS

Life & Health

• Fast rates of population aging

• Deficiencies/restrictions of Public Social Security

System

• Increase in corporate plans as employee benefits

• Increase in the formalization of the economy –

increasing penetration in small and medium

companies

• Increase in average premiums, with the addition of

extra services and assistances

Non-Life

• Growth of the automotive fleet

• Growth of consumption levels

• Government and private investments (infrastructure

and productive investments)

• New products (e.g.: extended warranty)

Additionally to macroeconomic and demographic drivers, Brazilian customers have been educated to be more concerned

about risks through cultural references and advertising in the last years

Agenda






Q&A

S O M P O J A P A N

The sharp rise in Brazil’s per capita income has been shifting consumer habits towards more sophisticated products

Source: Ernst & Young Terco

Brazilian per nominal capita income and customer habits [USD]

2.611 3.696

19.0041)

10.993

1990 2000 2010 2020f

1) Forecast 2) Foreign Direct Investments

• The Real Plan succeeded in drastically

reducing inflation

• Unemployment rates still high after the

plan

• Lack of positive economic perspectives,

despite the recently achieved stability

•Low insurance consumption

•Insurance bought on a “need basis”

•Predominance of auto, health and other

traditional products

•Predominance of high income

consumers

• Consumer confidence grew during the

decade, despite a confidence crisis

triggered by Lula’s election

• Decreased unemployment

• Increased per capita income

• Good economic perspectives and

Investment grade, boosted FDI2)

•Rise in insurance consumption

•Increase in the demand for family

protection insurance, such as life

insurance and unemployment insurance

•Rise in middle class consumption

• Announced public investments generate good

growth perspectives

• Low unemployment rates

• Increased purchasing power

• Interest rates cuts and government incentives

softening the effects of the global crisis

•Increase in demand for more segmented

products among high and middle class

consumers

•Rise in low cost basic insurance demand for

lower classes

Stabilization Period Strengthening the Economy Promising future

S O M P O J A P A N

-2

0

2

4

6

8

10

12

14

16

18

20

2005 2006 2007 2008 2009 2010 2011 2012 2013

GDP

Life

Auto

Real GDP growth X Real Life Premiums Growth X Real Auto Premiums Growth (%) Life and Auto premiums growth rates % deflated by IPCA

Life 6,7X real GDP on average

Auto 5,6X real GDP on average

Real GDP growth rates %

Life insurance real growth rates have shown no correlation with real GDP growth, raising > 6X GDP since 2005

Auto growth rates tend to be more inverse to GDP, as GDP goes up, auto growth rates tend to go down and vice versa

%

Source: SUSEP

S O M P O J A P A N

4%

6%

8%

10%

12%

14%

'01 '02 '03 '04 '05 '06 '07 '07 '08 '09 '10 '11 '12 '13 '14

Life Insurance Key Growth Drivers

Real regular average income Consumer Credit Outstanding growth and Credit Life Growth %

Source: Central Bank and SUSEP

45 51 70 108 150 218 290 318 442

561 567 585

84 83 101 141

187 262

378 390

527

650 640 673

129 134 171 249

337

481

668 708

970

1.212 1.207 1.258

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13

Consumer Corporate

Total credit outstanding (US$bn)

Source: Brazilian Central Bank

Note: Largest range of data available

Lowest historical

unemployment rate

recorded by IBGE

Jan-14

4.8%

Source: IPEA, IBGE

Unemployment rate

Source: IBGE and Brazilian Central Bank; 1 Spot annual rate, 2 LTM inflation rate

1

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2006 2007 2008 2009 2010 2011 2012 2012

Consumer Credit

Credit Life

Low unemployment rate, credit expansion and higher consumption power and

disposable income have been driving Life insurance growth in Brazil

3,2% growth Dec/13 x Dec/12

S O M P O J A P A N

Low unemployment and real earnings gains increased the confidence of families in the period.

However, the high level of debt, rising interest rates on consumer credit and inflation persistence

kept the intention of consumption at a lower pace compared to last year

Household Consumption Intension

ICF below 100 points: indicates a sense of dissatisfaction

ICF above 100 (with a limit of 200 points): indicates the degree of satisfaction in terms of employment, income and consumption capacity

Source: CONFEDERAÇÃO NACIONAL DO COMÉRCIO – CNC.

S O M P O J A P A N

The Brazilian insurance market is poised for growth

Sustained personal disposable income growth… …with room for growth as per capita spending catches up

9.840 8.100

6.770 5.760 4.960 4.320

37.800

19.840

5,3% 5,2%

4,0% 3,9% 3,7%

3,0%

1,6%

(0,1)%

Life Insurance Key Growth Drivers

EU Peru Mexico Colombia Brazil US Chile

2014E private consumption per capita (US$)

Col. Brazil

Average difference

of $31,175

Average = 6,625

Mexico Peru US EU Argentina Chile

CAGR 10–14E real growth in personal disposable income

Average = 4.2%

Sources: EIU, Individual country central banks Sources: EIU, Individual country central banks

Income to

maintain

living

standard

Mortality

Protection

GAP

US$ 2,5 bn

Savings

Life Insurance

The large mortality protection gap presents a

sizeable opportunity in life insurance

Source: Swiss Re (2013)–“Global insurance review 2013 and outlook 2014/15”, latest available report, EIU

Agenda






Q&A

S O M P O J A P A N

Stock price performance since 2012 (January = 100%)

70%

80%

90%

100%

110%

120%

130%

140%

150%

160%

Jan-12 Mar-12 May-12 Jul-12 Oct-12 Dec-12 Feb-13 May-13 Jul-13 Sep-13 Dec-13 Feb-14

Source: Factset, as of March 3rd, 2014

Brazilian insurers have continued to outperform the market in recent months

Banks Brokers / Insurers- ex BB Seguridade

+41% BB Seguridade

+34% Brokers /

Insurers ex-

BB Seguridade

(7%) Banks

(18%) Ibovespa

The Brazilian insurance market continues to present profitable growth opportunities, reflected in the public valuations of traded insurance companies, despite short term macro volatility

S O M P O J A P A N

Industry analysis

Performance of relevant product lines Premiums written

Claims expenses

Selling expenses

• Strong premium growth in all these categories

• Claims ratios dropping and/or very low

• Underwriting gains increasing and very high on credit life

Life – group (billions)

0

2

4

6

8

10

PA – group (billions)

Credit life (billions)

Individual Life (billions)

PA Individual (billions)

0

1

2

3

4

5

0

2

4

6

8

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

S O M P O J A P A N

Industry analysis – Premium breakdown - High potential for underwriting gains

Source: SUSEP database (year ending 2013)

Except for Group Life, which has posted 26% gross margin (more competition), all other lines have posted more than 45% gross margin being Individual Life the most profitable

Sales expenses

Net claims

Underwriting surpluses before G&A (DA)

Investment income

35% 37% 25%

16%

16% 16% 49%

18%

49% 47%

26%

66%

n/a n/a n/a n/a

Group PA Credit Life Group Life Individual Life

Commissions tend to be high in Credit Life and other lines because of market concentration

S O M P O J A P A N

18,8 19,5 22,9

28,1 31,8

38,8

46,1 53,6

70,5 73,7

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Pension Contributions R$ Billion VGBL + PGBL

Deficiencies/restrictions of public Social Security system in Brazil has driven private pension demand, contributions have quadrupled in the last 10 years.

Source: FENAPREVI – National Federation of Life Insurance Companies - www.fenaprevi.org.br

4,5%

CAGR: 18%

Resolução do governo obrigou os gestores a iniciar a substituição, a partir de maio/13, de aplicações de curto prazo e indexadas à Selic por títulos mais longos, como as NTN-Bs, atreladas ao IPCA

Agenda






Q&A

S O M P O J A P A N

Private Pension Market – Challenging times ahead …

Redução na taxa de juros vem pressionando receita de carregamento

Driver de valor: coberturas de risco e escala

Pressão ROE longo prazo

S O M P O J A P A N

Private Pension Market – Challenging times ahead …

Solvência II

Capital regulatório para VGBL e PGBL – pressão ROE das

empresas

Risco de Mercado

Taxa contratual Previdência (annuities)

LAT – Teste adequação passivo Previdência

S O M P O J A P A N

TEMAS “STATUS”

DISTRIBUIÇÃO / UTILIZAÇÃO DE MEIOS ELETRÔNICOS / SIMPLIFICAÇÃO

EDITADA A RESOLUÇÃO CNSP Nº 294/2013 - UTILIZAÇÃO DE MEIOS REMOTOS

NAS OPERAÇÕES RELACIONADAS A PLANOS DE SEGURO E DE PREVIDÊNCIA

COMPLEMENTAR ABERTA .

VGBL SAÚDE AGUARDANDO VOTAÇÃO DO PL Nº 7.052/2014 NO CONGRESSO NACIONAL.

SEGUROS DE PESSOAS EM REGIME DE CAPITALIZAÇÃO PROJETO DE REGULAMENTAÇÃO SENDO ELABORADO PELA FENAPREVI PARA

ENVIO E APRECIAÇÃO PELA SUSEP.

PATRIMÔNIO DE AFETAÇÃO ENCAMINHADA AO GOVERNO PROPOSTA PARA APRESENTAÇÃO DE PROJETO DE

LEI.

COMERCIALIZAÇÃO DE PRODUTOS LEVANDO EM CONTA TODA A SITUAÇÃO

FINANCEIRA DO CLIENTE – “SUITABILITY” / PRODUTOS PARA PROPENENTES

QUALIFICADOS

EM DISCUSSÃO ONO ÂMBITO DA COMISSÃO DE INVESTIMENTOS DA SUSEP.

EMPRÉSTIMOS: UTILIZAÇÃO DE RECURSOS DE PROVISÕES COMO GARANTIA

ACESSÓRIA, PARA MELHORIA DOS INDICADORES DE RESGATES

PL Nº 6.723/2013 (DEP. ONOFRE SANTO AGOSTINI. AGUARDANDO

APRESENTAÇÃO DE EMENDAS NA COMISSÃO DE FINANÇAS E TRIBUTAÇÃO DA

CÂMARA DOS DEPUTADOS.

ORIENTAÇÃO E EDUCAÇÃO FINANCEIRA / SECURITÁRIA E PREVIDENCIÁRIA UTILIZAÇÃO PELA FENAPREVI DE MÍDIAS SOCIAIS (FACEBOOK) E

IMPLEMENTAÇÃO DE “GAME” EDUCATIVO.

Market Agenda

Source: FENAPREVI

S O M P O J A P A N

OBRIGADO! [email protected]

ありがとう

mailto:[email protected]

S O M P O J A P A N

APPENDIX – MARKET DATA

S O M P O J A P A N

26

ESTATÍSTICAS – PLANOS DE CARÁTER PREVIDENCIÁRIO

2013

VGBL VGBL VGBL PGBL PGBL PGBL PLANOS

TRADICIONAIS PLANOS

TRADICIONAIS PLANOS

TRADICIONAIS FAPI FAPI FAPI

2012 2013 % 2012 2013 % 2012 2013 % 2012 2013 %

ARRECADAÇÃO

59.564.914,81 62.152.292,12 4,34% 7.447.157,26 7.825.365,68 5,08% 3.439.660,92 3.680.413,33 7,00% 9.443,95 7.125,45 -24,55%

CAPTAÇÃO LÍQUIDA

36.648.782,39 27.844.656,58 -24,02% 3.707.474,66 3.284.466,54 -11,41% 1.985.098,35 2.381.862,83 19,99% - 11.982,74 - 250,16 -97,91%

RESGATE

22.916.132,42 34.307.635,54 49,71% 3.739.682,60 4.540.899,14 21,42% 1.454.562,57 1.298.550,50 -10,73% 21.426,69 7.375,61 -65,58%

PORTABILIDADE

3.292.516,90 4.717.549,66 43,28% 2.562.124,52 2.463.094,87 -3,87% 4.727,74 92.092,77 1847,92% - - 0,00%

CARTEIRA

209.429.490,00 242.446.733,87 15,77% 75.182.746,00 80.738.752,68 7,39% 53.461.983,12 50.253.096,29 -6,00% 487.577,00 488.955,63 0,28%

PROVISÃO

209.429.352,00 241.384.127,34 15,26% 75.162.038,00 80.288.913,99 6,82% 40.741.727,78 41.216.903,74 1,17% 487.577,00 488.955,63 0,28%

59,56

36,65

22,92

3,29

62,15

27,84 34,31

4,72

- 10,00 20,00 30,00 40,00 50,00 60,00 70,00

Mil

hõ

es

VGBL

2012 x 2013

7,45

3,71 3,74 2,56

7,83

3,28 4,54

2,46

- 1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00 9,00

Mil

hõ

es

PGBL

2012 x 2013

Source: FENAPREVI

S O M P O J A P A N

27

Prêmio de Seguros (R$)

Ramo Jan/12 -Nov/12 Jan/13 - Nov/13 ∆%

Individual Coletivo Total Individual Coletivo Total Total %

Vida 833.171.659 7.623.688.190 8.456.859.849 1.197.179.201 8.697.126.252 9.894.305.453 17,00%

Prestamista 77.204.219 5.167.792.318 5.244.996.537 73.410.195 6.378.781.434 6.452.191.629 23,02%

Dotal Misto 1.009.359.493 0 1.009.359.493 1.131.919.707 0 1.131.919.707 12,29%

Acidentes Pessoais 392.519.867 3.547.590.105 3.940.109.972 534.534.874 3.876.498.553 4.411.033.427 11,95%

Eventos Aleatórios 162.630.540 396.388.189 559.018.729 197.223.472 466.168.149 663.391.621 18,67%

Doenças Graves ou Terminal 30.597.279 335.736.921 366.334.200 40.279.355 366.705.735 406.985.090 11,10%

Auxílio Funeral 10.607.377 144.771.056 155.378.433 13.596.618 318.187.236 331.783.854 113,53%

Viagem 18.012.961 43.319.189 61.332.150 41.152.988 53.283.466 94.436.454 53,98%

Desemprego/Perda de Renda 71.658.463 28.174.306 99.832.769 49.100.043 17.001.338 66.101.381 -33,79%

Educacional 1.645 24.805.880 24.807.525 2.754 33.805.030 33.807.784 36,28%

Dotal Puro 8.589.739 0 8.589.739 11.088.143 0 11.088.143 29,09%

Microseguro 0 0 0 6.877.111 0 6.877.111 100,00%

PCHV 1.460.267 48.195 1.508.462 1.722.843 45.742 1.768.585 17,24%

TOTAL 2.614.443.463 17.312.314.349 19.928.127.858 3.298.087.304 20.207.602.935 23.505.690.239 17,96%

Database: 11.2013

PRÊMIO DE SEGURO COMPARATIVO JAN A NOV

2013 X 2012

Source: FENAPREVI

Life insurance market samy hazan-btg_pactual_meeting_04_2014

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