Annual Report 1997/1998 - Munich Re

Munich Re Report of the Board of Management
Latin America In the business region Latin America our premium income shows a
big increase to DM 699m (379m) in 1997, owing to the inclusion of
American Re’s business. The results were again positive, as we were
not affected by major catastrophe losses. For 1998 we expect another
Gross premiums in DM m
increase in our premium income. The result should again be
satisfactory.
392
440
346
379
1993 1994 1995 1996 1997
Gross premiums by country
699
Colombia 23% (14%)
Argentina 12% (12%)
Chile 12% (7%)
Other countries 31% (37%)
Economic development in
Mexico (in %)
40
30
20
10
0
10
Economic growth
Inflation rate
Unemployment rate
Growth in insurance
Mexico 22% (30%)
20
1994 1995 1996 1997
The economic and financial situation in Latin America improved
further. This continent remained largely unaffected by the currency
turbulences in the Far East; the economies of Mexico and Argentina in
particular showed high rates of growth. Substantial inflows of capital
from abroad and an increase in domestic investments were positive
signs. The privatization of the social insurance systems and the
opening of the economies progressed further.
These favourable developments make the Latin American continent
one of the most attractive growth markets for insurance. Consequently
insurers and reinsurers from the US and Europe in particular are
increasingly establishing local presences there.
We are strongly promoting the development of our business through
investments in our own organization. Of particular importance are our
local offices, which have been established in Latin America for many
years and which we have continually expanded.
Competition in Latin America is being further fuelled by foreign
insurers and reinsurers. There has been an absence of natural
catastrophes in the last few years, so that prices have fallen and
conditions have deteriorated. The property classes of business are
largely stagnating. By contrast, insurances of the person and special
classes like agricultural insurance are showing substantial growth
rates.
We have taken advantage of the business opportunities, especially
in the main markets.
In Brazil we are preparing for the forthcoming abolition of the
reinsurance monopoly by reinforcing the staff of our office in São
Paulo. We have meanwhile established good contacts with nearly all
the Brazilian insurance companies.
30