PA - Banco Security

ASSOCIATED RISKS
Local Financial Risks
The fall in long and medium-term interest rates could affect the behaviour of assets backing
annuities and guaranteed-rate investment accounts when having to make investments in
shorter-term maturities, generating a medium-term operating deficit.
Mortality and Sickness Rates
An increase in sickness rates can generate a rise in claims under serious-illness policies in the
medium term and increases in claims under policies covering reimbursements of medical costs
in the short term. A reduction in adult mortality rates can reduce the expected results in the
annuities area, to the degree that companies do not adjust to the new mortality curve structure.
Industry Structure
The large number of participants in the industry can lead to company closures and mergers,
thus changing the present industry structure and producing adjustments to sales and operating
margin structures.
Reinsurance Industry
The tendency for reinsurance companies to concentrate could affect the variety of coverage
offered, ceasing to provide reinsurance cover for risks that are presently reinsured thanks to the
strong competition existing in this market in recent times.
Domestic Competition
The technical margins of branches of high retention in general insurance could continue to fall
due to the keen pricing competition which is occurring in the market.