September 28th, 2015

How does the Mexican Insurance market work?

Javier Rodríguez GómezRe- + Insurance Consultant

1

Mexico: Demography and Economy

Mexico’s population is 122 million inhabitants, in a territory ofaround 2’0 Mio of sq. km.

2Source: INEGI

Mexico: Demography and Economy

Evidently, the income distribution has been a big problem.

In 2010, 62% of mexican families (Income Group D+, D and E)had an Income up to USD 892/month.

Five years after, due to a recent 25% devaluation, the USDincome of the whole population is smaller.

3Source: AMAI / NIELSEN 2010

Mexican Insurance Market Composition

There are 105 companies, fromwhich 88 are associated under AMIS(Asociación Mexicana deInstituciones de Seguros).

The regulatory changes as from 1994(incl. NAFTA) eliminated all operationbarriers for foreign investment. As aresult now a days there are 59foreign insurers with a branchoperating in Mexico.

AssociatedCompanies

88Domestic 29Foreign 59

Specialized 58Multi-line 30

Motor 41Life 47

Personal Accidents

42

P & C 49Pensions 9

Health 14Source: AMIS 4

Mexican Insurance Market Composition

80%

20%

1990

Domestic Foreign

35 %

65 %

2014

Total Premium 2014: USD 26,2 Billion Domestic Companies 35%

Foreign Companies 65%

Source: AMIS 5

6Source: AMIS

Market Share 2014

Source: AMIS7

Premium and Claims 2014 (Non Life w/o Motor)

Source: AMIS 8

Premium and Claims 2014 (Engineering)

Mexico, Brazil & LA: 2011 Written premium / Branch.

Source: Fundación Mapfre, El Mercado Asegurador Latinoamericano, 2010-2011,Instituto de Ciencias del Seguro, December 2011.

37%

24%

17%15% 15%

9%

3%0%

31%26%

36%

47%

40%

53%

69%

58%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Vida Fianzas y Crédito Daños sin Autos Salud Autos Accidentes Pensiones y Accid.Trab.

SOAT

México Brasil

9

Insurance Market Penetration (Premium / GDP)

As from 2002 the Market Penetration has steadily grown up, but…..

until 2014 the market has finally reached 2.05% (USD 26.2 Bio)

10Source: FinanciAmis

Insurance Market Penetration (Premium / GDP)

Source: Sigma, Swiss Re. World Insurance 2014

Mexico is the 15th largest economy worldwide, but is 58th place in terms ofinsurance market penetration.

Mexico has a lower penetration than the Latin America region as a whole.

11

Insurance Market Penetration (Premium / GDP)

Source: Latinoinsurance

0%

1%

2%

3%

4%

5%

6%

7%

8%

PR CHI ARG BRA VEN PAN REG COL ECU SAL URU CR MEX HON PER NIC PAR BOL DOM GUA

7%

4% 4% 4%3%

3% 3%

2% 2% 2% 2% 2% 2% 2%2% 1% 1% 1% 1% 1%

Mexico has a lower penetration than

the Latin America region as a whole.

12

Non Life (w/o Motor) It is estimated an increase in MEX PESOS for 2015, but……. the recent devaluation will reduce the USD Premium in 8.47%

Source: AMIS 13

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

4.011

Mill

ions

of d

olla

rs

Premium

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

696

4.011

Engineering Non Life (w/o Motors)

Engineering vs Non Life (w/o Motor) … …

14Source: AMIS

Premium

0

500

1.000

1.500

2.000

2.500

3.000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2.991

1.825 1.830 1.858

2.720

Mill

ions

of d

olla

rs

H. Wilma

Non Life (w/o Motor) ….. …..

15

Claims

Source: AMIS

H. DeanTabasco Flood

H. AlexH. Karl

Mexicali EQTS ManuelTS Ingrid

H. Odile

0

500

1.000

1.500

2.000

2.500

3.000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2.991

1.825 1.830 1.858

2.720

Mill

ions

of d

olla

rs

Engineering Non Life (w/o Motors)

….. …..

16Source: AMIS

Engineering vs Non Life (w/o Motor)

Claims

H. Wilma

H. DeanTabasco Flood

H. AlexH. Karl

Mexicali EQ

TS ManuelTS Ingrid

H. Odile

Insurance Market Development

17

Insurance Industry StructureDirect Premiums

Market has grown almost every year during the last decade.

18Source: EstadiscAMIS

Insurance Industry StructureMarket Participation

However, marketcomposition byline of businesshas not sufferedmajor changes.

19Source: EstadiscAMIS

Evolution of technical reserves in the Mexican Market

Source: AMIS 20

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

45.000

50.000

55.000

60.000

65.000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

12.480

49.600

3.484

8.389

1.265

2.952

MIL

LIO

NS O

F DO

LLAR

S

Unearned Premium IBNR reserve Prevision reserves

60,941

Market Combined Ratio

21

Overall Combined Ratio

Source: AMIS 22

0,00

25,00

50,00

75,00

100,00

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Coverage Claims costs Administrative costs

100.08 100.0699.75 97.27 100.88 100.98101.17 103.31 94.5893.1098.60

PREMIUM95.31 95.29

Retention Combined Ratio (w/o Life)

Source: AMIS 23

0

25

50

75

100

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

XL Cost Claims costs Administrative costs

100.08 100.0699.75 97.27 100.88 100.98101.17 103.31 94.5893.1098.60 95.31 95.29

0

20

40

60

80

100

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

XL Retained Claims Costs Administrative Costs

Retention Combined Ratio (Non Life w/o Motor)

Source: AMIS 24

112.38 104.79 102.13 102.53 98.30 103.51 104.04 93.79 94.29 93.68 82.11 87.39 89.30

Retention Combined Ratio (Engineering)

Source: AMIS 25

0

20

40

60

80

100

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

XL Retained Claims Costs Administrative Costs

113.49 107.13 100.92 103.81 87.60 92.22 114.72 104.29 89.71 88.71 78.00 81.30 86.93

Reinsurance

26

Non Life Insurance Premiums

Source: FinanciAMIS (IV quarter figures 2005 – 2014) 27

Current figures

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mill

ions

of p

esos

.

Ceded Premium Retained Premium Written Premium

Non Life (Premium and Claims, w/o Motor)

Source: AMIS 28

0

10.000

20.000

30.000

40.000

50.000

60.000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Written Premium Ceded Premium Retained Premium

Ceded Claim Retained Claim Direct Claim

Non Life Ceded Premiums (w/o Motor)

29Source: FinanciAMIS (IV Quarter figures 2005 – 2014)

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mill

ions

of p

esos

.

Agro Credit Miscelaneous Fire Marine Liability CAT

ThankYou

foryour

attention

30