At a Glance: Brazil's biggest insurance profit generators

Friday, December 1, 2017

Insurers operating in Brazil saw their combined net profits fall in the first nine months of this year, due to the persisting effects of the country's two-year economic recession and continued reductions in the benchmark interest rate.

Insurance companies, including health and pension operations, reported total net profits of 9.85bn reais (US$3.01bn) in January-September, which was nearly 8% down from the same period of last year, according to figures from insurance regulator Susep compiled by local consultancy Siscorp.

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The country's prolonged recession and high unemployment, which have only recently appeared to be on the road to recovery, are is still affecting the insurance sector.

In addition, the central bank's sustained cuts in the benchmark interest rate have undermined insurers' results due to lower returns on their investment portfolios.

Currently, the Selic base rate is at 7.50% per year, the lowest level since 2013, when it reached 7.25%. With inflation below the central bank target, the base rate is expected to fall even more and remain at a low level through 2018.

Brazil's insurance industry is highly concentrated, even though there are over 100 active local and international players, with insurers linked to major local banks Banco do Brasil, Bradesco, Itaú Unibanco and Caixa Econômica Federal dominating the segment in terms of profits and premiums.

BNamericas takes a look at the top five biggest profit generators in the sector in January-September.

No. 1

Bradesco Seguros, the insurance arm of private bank Bradesco, posted a net profit of 3.2bn reais in January-September period, down 5% year-on-year.

No. 2

Grupo Segurador Banco do Brasil e Mapfre (BB Mapfre) - a joint venture between Brazil's state-run Banco do Brasil and Spanish insurer Mapfre, saw its net profit fall 7% in the period to 1.99bn reais.

No. 3

Insurance arm of state controlled Caixa Econômica Federal, was the only top insurance operator to post higher profits in the period, with net earnings at 1.14bn reais, up 12% versus January-September 2016.

No. 4

The insurance unit of Itaú Unibanco posted net profits of 1.08bn reais in the period, down 42% year-on-year.

No. 5

And the fifth biggest profit generator was Zurich Brasil - a subsidiary of Zurich Insurance Group, with earnings of 546mn reais in the first nine months of the year, down 17% from the same period of last year.