Kiln entered the Brazilian reinsurance market earlier this year following the licensing of Lloyd’s as an admitted reinsurer. Marcelo Raposo has returned to Rio de Janeiro as Kiln’s general representative there.
How do you feel about being back at home?
I was born in Rio de Janeiro and I started out as a broker in the city in 1980, specialising in aviation. But after only four years I came to London, first as a claims broker, then to the placing side, and finally as a producing broker. It was meant to be a two year secondment but I stayed in London for 25 years! Of course I always visited my clients in Brazil frequently in that time. But it is good to be home.
What changes have you noticed in Rio as a reinsurance hub?
Well, the reinsurance business in Brazil was effectively a state monopoly from 1944 until reform came in 2008 so you can’t compare Rio with London or other centres. There is a partial opening now whereby 60% of cessions is reserved for local reinsurers. Local reinsurers’ secured rights to participate drops from 60% to 40% on January 1 2010, so there’s a long way to go before the market is fully open.
Most major reinsurance brokers are represented now in Brazil, but not all major reinsurers. Along with a few other Lloyd’s companies, Kiln is an admitted reinsurer and as such writes its Brazil business in London.
Insurance growth in many countries around the world has been hit by an economic downturn. How has the insurance industry fared in Brazil?
Brazil has not been affected by the recent crises in the same way as other countries. In fact, economic growth here has been amazing thanks to the stabilisation of the currency in the nineties. But the primary insurance market faces challenges including, for example, the need for more trained and qualified managers in the local industry. Fortunately, insurance has become popular with graduates – but the sector still needs more qualified people.
Specifically, does reinsurance liberalisation present problems for fast
growing insurers?
The opening of the reinsurance market coincided with the financial crisis. This presents a problem. In the past, insurers in Brazil never had to worry about credit risk. Cessions went to the state reinsurer. This compulsory cession meant that insurers were effectively backed by the Brazilian government. Now, following the credit crunch, they have to consider credit risk when selecting alternative reinsurance partners.
How significant was Lloyd’s opening an office in Brazil?
Lloyd’s decision to open here means a lot for Brazil’s insurance market because its brand and reputation for security is well known. Lloyd’s opening in Brazil means a lot to the city of Rio de Janeiro. But it was important to Kiln because it facilitated our entrance to Brazil. By creating a professional platform in Rio, Lloyd’s made it so much easier for Kiln to enter the Brazilian market.
How has Kiln been received by the primary market?
We intended initially to operate in the aviation market but I’ve been surprised at the level of enquiries for Kiln’s other specialities – from bloodstock to energy and manufacturing. But then Brazil has such a diverse and fast growing economy, I guess it shouldn’t be so surprising.
