S&P Issues Report on Latin American Reinsurance

January 5, 2005

Standard & Poor’s Ratings Services has issued a report entitled, “The Latin American Reinsurance Industry: Underdeveloped, With Potential,” which points out that the “underdeveloped Latin American reinsurance markets are a result of local market dynamics and conditions.”

S&P said that, “although reinsurance utilization is low in the region, with aggregate utilization ratios of approximately 30 percent for nonlife and 10 percent for businesses, the expected $13 billion in ceded premiums for 2004 still represents an attractive option to international reinsurers.”

“The opening of the market could help the development of the insurance industry in Brazil, bringing investments and product diversification. Nevertheless, this is not likely to happen in the short to medium term,” noted S&P credit analyst Tamara Berenholc.

In the report, S&P indicated that “the dominant presence of international reinsurers is explained by their underwriting capacity, management know-how, and product diversification.

“This situation is clearer as per the catastrophic exposure in the region, mainly in Mexico, Central America, Peru, Chile, and Colombia, where reinsurance utilization for catastrophic risks is significantly higher, and local primary insurers are particularly dependent on international reinsurance capacity.

“The Brazilian reinsurance market remains as a monopoly. The opening of the market could help the development of the insurance industry in Brazil, bringing investments and product diversification. Nevertheless, this is not likely to happen in the short to medium term. ”

The report is available to subscribers of RatingsDirect, Standard & Poor’s Web-based credit research and analysis system, at:
www.ratingsdirect.com.

If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or send an e-mail to: research_request@standardandpoors.com.

Ratings information can also be found on Standard & Poor’s public Web site at: www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. All Standard & Poor’s research information is accessible for 24 hours after publication on the public Web site.

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