Surety industry to grow 12% in 2003

Mexico's surety industry is expected to issue contracts worth 218bn pesos (US$20bn) this year, a 12% increase from last year, while premiums should grow 23% to 3.7bn pesos, surety association Afianza chairman Adolfo Christlieb told local daily El Financiero. Next year premium growth should be above inflation, Christlieb said. Suretyship is a specialized line of insurance whereby one party guarantees performance of an obligation by another party. Mexico has become a very attractive market for international surety companies, according to Christlieb, with 80% of local surety companies having a foreign shareholder. In many cases these shareholders insure 95% of the value of the surety contracts issued by their local company. In other news, surety companies and four major public entities are close to signing an agreement to reduce litigation and disputes. The participating institutions are the national treasury, social security agency IMSS, the federal capital government, and Mexico's national electricity monopoly CFE. Through the accord the surety industry hopes to reduce misunderstandings over the terms, conditions, documentation, and procedures of surety contracts, Christlieb said. Surety companies have about 500,000 contracts with the public sector and derive 55% of their premium income from business with the government, according to Christlieb.