Brazil's SulAmérica to adopt new price policy

By
Wednesday, December 6, 2017

The largest non-bank controlled insurance group in Brazil, SulAmérica, is reviewing its strategies on the pricing of its products in order to maintain its profitability in the coming quarters.

"We need to adopt strategies to compensate for the cut in the Selic base rate, which reduces our gains from investments," Sulamerica CFO Ricardo Bottas Dourado told BNamericas. "One of alternatives to be adopted is a new strategy regarding the prices of our products," he added.

Start your 15 day free trial now!

cta-arrow

Already a subscriber? Please, login

The country's banks and insurers are facing a challenging scenario to maintain their profitability, as the reduction in country's benchmark Selic interest rate is undermining returns on their investments.

In previous years, with the Selic rate in double digits, companies simply put their money into government bonds, guaranteeing a high level of return. However, with the slowdown in inflation, the central bank has embarked on an aggressive cycle of rate cuts and the Selic was expected to be cut to 7% per year on Wednesday, an all-time low.

"The good news is that inflation is under control and this generates a positive impact in our general expenses," added Dourado.

According to the executive, with the recovery of the Brazilian economy, the company is able to expand in all segments, although he expects certain volatility over the next year due to the presidential elections, scheduled for October 2018.

"From the financial side, we have no need to tap capital markets in the next year, so we will avoid a period that is likely to be highly volatility," said the executive.

SulAmérica operates through multiple insurance segments, such as health and dental, auto and other property and casualty. The company also offers life and personal accident insurance as well as asset management, private pensions and savings bond products.