Page 290 - XXV Asamblea General Miami 2012

What about reinsurance cession? Suretyship is a line that requires much reinsurance cession,
high participation of reinsurers; the sureties’ capacity is somehow limited. Cession peaked
in 2009 (57%) and then dropped, but was still higher than in 2005-2007. That is, reinsurers’
participation in this line is essential, and there are cases like Panama, which had the highest
ratio of premiums to GDP and 80% of ceded premiums, and smaller countries, like El Salvador,
which ceded 29% of premiums; remember that the average was 51%.

In 2012 there were interesting changes in the premium market share by country compared
to 2011 when the surety market amounted to USD 2,225 million. In 2011 Brazil achieved top
market share; in 2012 Mexico ranked first despite its market share drop from 22% to 21.5%,
but its top position was due to Brazil’s decline. Colombia, which ranked third, climbed to the
second place (up from 17% to 18.8%), and Brazil, third in 2012, dropped from 23% to 18%.
Argentina and Venezuela followed (11% each) and maintained their 2011 position in the
ranking. It is worth noting that in the case of Venezuela we used surety premium figures
projected at December 2012, because we know the total number of premiums written in 2012
but not broken down by line, since these data are released at the end of the year only. So,
the same percentage as last year has been generally used, but with a higher premium rate,
as we know that the rates have increased. Almost 80% of the market is concentrated by the
aforementioned five countries, followed by Panama, Ecuador and Puerto Rico, and then the rest
of the countries.

Surety bonds in Latin America: Premium market share by country in 2012 (2011)

Ecu P Ri Other** Mex
5.0% (4.4%) 2.2% (2.3%) 6.9% (6.6%) 21.5% (22.5%)
Pan
5.2% (5.9%)

Ven
11.0% (8.8%)

Arg* Bra Col
11.3% (9.5%) 18.2% (23.0%) 18.8% (17.0%)

Figures at December 2012 except for El Salvador (Sept. 2012, 12 months ), Paraguay (June 2012), Dominican Rep., Puerto Rico (Dec. 2011) &
Venezuela (figures projected at December 2012) / Fidelity bonds are not included.
*Argentina: Fiscal year closing: June / Puerto Rico: Nonresident companies’ figures are included.
** Bolivia, Dominican Republic, Chile, El Salvador, Guatemala, Honduras, Nicaragua, Paraguay (fiscal year closing in June), Peru & Uruguay are included.

The following graph includes the ranking of the top forty companies. Due to the drop in Brazil’s
premiums, the top-ranking company in 2011, Malucelli or Travelers, ranked third in 2012 and the
two Mexican companies, Aserta and Monterrey New York Life, climbed to the first and second
places, respectively.

288 Asociación Panamericana de Fianzas / Panamerican Surety Association