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Fairfax Establishes Brazilian Insurer


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Here are some more details on their new venture.




Brazil's insurance market is changing as the country's rapidly growing economy garners respect; the rising power conquered its recession by the second quarter of this year and added more than a million jobs in 2009.


Its population of roughly 185 million, the fifth largest in the world, has helped make it the largest insurance market in Latin America, more than twice the size of Mexico's, according to Moody's.


Yet insurers' sales as a measure of gross domestic product is a measly 3 per cent in Brazil, compared with 9 per cent in the United States, leaving plenty of room for growth.


Throw into the mix the investment that is expected to occur as Brazil prepares to host the World Cup of Soccer in 2014 and the Olympics in 2016, and its relatively low exposure to natural disasters such as hurricanes and earthquakes, and executives at Fairfax are left wondering why it seems to be the only property and casualty insurer seeking a licence since the government shook up the market last year.


Jacques Bergman, who was recruited by Fairfax from one of Brazil's largest commercial insurers to head up its new venture, thinks the industry is on the cusp of a major change.


"Four of the big five insurers were Brazilian and they held up to 45 per cent of the commercial insurance market," he said. "We expect that, in less than two years, their share will go down from 45 per cent to something like 15 per cent. ... So that gives us a very good opening."  .....




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