Citi (NYSE: C) is seeking to grow its insurance business in Central America as part of its strategy to offer a full range of financial services in those countries, Raúl Anaya, Citi head of operations in Central America and the Caribbean, told BNamericas
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"Insurance is a business we're interested in developing in countries where we have a presence but also where we don't," said Anaya.
In 2007, Citi expanded its footprint in Central America - where it handled some US$1bn in banking assets at end-2006 - by snapping up the main units of two regional financial services groups with a combined client base of 2.25mn and combined assets of US$6.6bn at the time of purchase.
In March 2007, the New York-based firm closed the acquisition of a number of companies from Grupo Financiero Uno for an undisclosed sum. And in May that year, the company completed the purchase for US$1.51bn of almost all the subsidiaries of Grupo Cuscatlán from Panama-based Corporación UBCI, the subsidiaries' holding company.
The three businesses - Citi, Cuscatlán, Uno - are complementary as each specializes in different business segments. While Citi's portfolios are filled with corporate clients, Uno's units focus on the credit card business and Cuscatlán has tapped the SME sector and retail customers.
The US firm decided to merge and rebrand its Central American acquisitions under the Citibank name. So far, Citi has completed the merger of the units acquired from UBCI and Uno in Honduras and El Salvador and expects to finish the pending mergers in Costa Rica, Guatemala, Panama and Nicaragua before the end of this year.
On the insurance front, Citi bought El Salvadorian insurance company SISA and one of the two pension fund managers operating in the country, AFP Confía.
"We want to boost both companies [SISA and AFP Confía]," said Anaya, who believes the merger of the Citi-Cuscatlán-Uno units could lead to significant growth in cross-selling of financial products and services.
The general plan for Central America is to offers a range of financial products and services, including personal banking, corporate banking, investment banking, treasury services, insurance.
"We want to grow as a financial services group. We don't want to lead in just one segment," Anaya said.
STRATEGY
The six Central American insurance markets Citi is targeting generated combined premiums of US$2.25bn in 2007, statistics from five Central American insurance regulators and Costa Rica's Instituto Nacional de Seguros show.
These markets offer opportunities for both personal lines and corporate insurance, Anaya said.
As for distribution, the executive said the bancassurance scheme matches with the products the bank provides to both individual and corporate clients.
"The bancassurance model is something we haven't used and are going to develop significantly," Anaya said.
Citi's Latin American operations reported second quarter net profits of US$658mn, a 16% decline compared to 2Q07. Groupwide, Citi posted a US$2.5bn net loss for the second quarter after recording a US$5.1bn net loss in the first quarter.
