BMI’s Brazil Insurance Report has been written at a time that the global financial crisis, which arose as a result of the evaporation of inter-bank liquidity, appeared to be moving towards a resolution. The governments of the UK, the USA and most of the larger countries in the euro area have all announced plans to make funds available, in one form or another, to their respective commercial banking sectors. As yet, it is too early to identify the impact of the crisis on individual emerging markets. However, in a later section of the report, we include a lengthy essay that attempts to identify the key issues. In essence, commercial banks and insurers in the emerging markets (and, indeed, the developed countries) of the Asia-Pacific region appear to be well placed to deal with the crisis. The same is broadly true of commercial banks and insurers in the various countries of the Middle East and North Africa. In Latin America, Chile, Brazil, Mexico and Colombia appear better placed than Argentina, Venezuela, Bolivia and Ecuador. In Africa, South Africa’s situation appears to have much in common with that of Brazil, however by contrast Nigeria faces some of the same challenges as those that confront Venezuela. At the more negative end of the spectrum, the banks and insurers in most countries in Central and Eastern Europe are in far from robust positions.

It has not been practicable for us to collate the latest figures for assets and premium income this quarter.

The global financial situation has been changing so rapidly that most projected figures would have become out of date. Regardless of this, we expect that in coming months it will become obvious that credit growth is slowing dramatically in the commercial banking sectors in countries that BMI profiles.

We will amend the figures, and indeed our forecasts accordingly.

Nevertheless, we believe figures compiled last quarter provide insights as to how the various insurance sectors will fare in the current, extremely uncertain environment. We have therefore left them, and comments on the Key Issues section of the report essentially unchanged.

The global financial crisis is likely to affect the various segments of the global insurance industry in different ways. In many countries, especially in Europe, the coming recession points to softness in the non-life segment. In many cases, the numbers of policies may fall and there should be downwards pressure on premiums. By contrast, the main problem for the life segment in almost all countries is the extreme volatility of financial markets. Over the longer-term however, the fortunes of life insurance will likely recover thanks to the secular growth of organised savings in most countries. China - where the larger insurance companies continue to achieve double digit growth in premium income - is a good example of this. Some particular niches should also do well in the current environment, such as legal liability insurance.

In Latin America, we profile 21 companies. These are AEGON, AGF, AIG, Allianz, AXA, Cardif, CNP, Generali, HDI-Talanx, HSBC Insurance, ING, Liberty Mutual, MAPFRE, MetLife, New York Life, Prudential Financial, QBE, RSA, the Hartford, Principal Financial and Zurich.

We also look at various local firms that are active. In general, these are small-to-medium sized operations by world standards. However, several of the leading Brazilian insurers would rank as extremely large even in a major market.

For almost all the countries whose reports we are updating, we are also able to include actual data for calendar 2007: this was not the case for our Q208 reports.

In 2007, total premiums in Brazil rose by 16% to BRL141,748mn. Non-life premiums rose by 15% to BRL105,784mn, while Life premiums rose by 21% to BRL35,964mn.

Between now and the end of the forecast period, we expect that annual non-life premiums will grow by BRL 48,138 million, while annual Life premiums should increase by BRL10,336 million. Growth in Non-life premiums should be driven by the general growth in nominal GDP. However, there should be slight slippage in Non-life penetration from the current level of 4.20% to 4.00%. Growth in Life premiums should be driven by the change in the overall population and a rise in life density from US$94.47 to US$130.00 per capita.

BMI’s Insurance Business Environment Rating for Brazil is 66.9.