Topics Online: After years of vigorous growth, Brazil’s economy is currently undergoing a recession and the government is in turmoil. At the same time, Brazil remains Latin America’s undisputed economic powerhouse. How do you see these developments?
Rodrigo Belloube: There can be no denying that the economy has cooled down after a period of dizzying growth. As we get back on track, I hope to see more moderate, steady and long-term growth. It’s understandable that the allegations of corruption aimed at high-ranking politicians and the presidency facing impeachment proceedings would worry investors. But we must bear in mind that corruption is nothing new, and the fact that more and more cases are surfacing shows that society is no longer willing to tolerate it. In about five years, I can envision Brazil as far more stable and sustainable than ever before.
At the moment, all eyes are on the Rio de Janeiro Olympics. Have the construction projects required to host the games, and of course the football World Cup in 2014, been a boon to the economy in general?
These major sporting events highlighted the need for certain investments. Many projects in areas like energy supply, airports and roads were long overdue anyway. Speaking as a Brazilian, I’d say many of the big investments in the facilities for the World Cup will see broader, long-term usage, especially in mobility. The new underground lines are a major step toward connecting the more affordable housing on the outskirts to the city centre where industry and service jobs are located. In addition, the airports have been expanded and sewage treatment improved. Society will profit from these infrastructure projects long after the events.
What role has insurance played in these changes?
Well, all of these projects and facilities require insurance for which we are able to offer our support. Over the past years, a lot of insurers and reinsurers have been crowding into the Brazilian market, perhaps overestimating the volume of available business. There has definitely been an oversupply of capacity. Based on our experience here, we are very close to the market and are able to see opportunities that others can’t.
Major energy and infrastructure projects have been key drivers of the insurance industry in Brazil. Is the trend continuing?
There’s a backlog of projects to be initiated over the next few years especially in terms of clean energy, for which the insurance industry is an important partner. For example, there is huge potential for hydropower development, particularly in the north of Brazil. Here, we’re very careful to ensure that the projects we underwrite are sustainable and environmentally compatible – especially in regions where the country’s vast jungles could potentially be affected. In addition, crop insurance remains underpenetrated, so there is a great deal of potential and we’re working with clients to develop innovative crop protection products. Incidentally, there is similar potential in motor and residential.
As of next year, Munich Re will have been present in the Brazilian market for two decades. What have been the advantages of this long-term engagement?
In fact, our involvement reaches back to 1951, but our permanent presence began with the establishment of a representative office in São Paulo in 1997, headed by our current CEO Nikolaus von Bomhard. This was all long before the liberalisation of the reinsurance market. At the time, we operated as a retrocessionaire of the monopolistic state reinsurer IRB (Instituto de Resseguros do Brasil S.A.). Yet from day one, our focus was on being close to clients. When reinsurance licences became available in 2007, it was only logical that we were the first to step up, becoming a fully fledged reinsurer with the status “ressegurador local” in 2008. In addition to substantial capacity, we have continuously supported Brazilian insurers and industries with innovation and sensitivity to regional needs through qualified local partners available for face-to-face consulting and a global network of experts to draw on. We work very closely with our clients and their clients to develop highly individual, tailored covers to enable their operational and strategic projects as well as for innovative, technology driven solutions and capital management deals.
Which specific aspects of our offering would you say are most important in Brazil?
I think what our clients in Brazil value most of all is our ability to work on a face-to-face basis, understand client needs and co-develop solutions.