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Trade Credit Insurance in Brazil

  • March 2014
  • -
  • Finaccord
  • -
  • 27 pages

Trade Credit Insurance in Brazil is a report about the market for trade credit cover in Brazil. In addition to documenting the development of the market value from 2009 to 2013, the report also divides it for the most recent year between four key segments: between small companies with an annual turnover of less than USD 5 million and larger companies with a turnover above this threshold; between single-risk and annual policies; between export and domestic trade credit insurance; and between protection acquired for political risks and cover bought for business risks.

These unique market splits are based in part on a survey of leading brokers of trade credit insurance in Brazil. This same survey also identifies the underwriters of this type of cover used by brokers on a regular basis, gives an input into Finaccord's estimates for the market shares of underwriters of trade credit insurance in Brazil, provides a basis for commentary surrounding distribution channels used for this type of policy, and informs Finaccord's forecasts for the market value through to 2017.

Key features of this report include:

- quantification of the market size for trade credit insurance in Brazil: how much is the market worth, how has it developed since 2009 and how does it break down into key segments?

- presentation of the actual or estimated market shares of underwriters of trade credit insurance in 2013 based on both the broker survey and other available data sources, plus identification of leading brokers of this type of cover;

- audit of the frequency of usage of underwriters by major brokers of trade credit insurance in Brazil: to what extent are competitors effectively challenging the main incumbent underwriters?

- availability of an accompanying PartnerBASE™ dataset that logs partnerships for trade credit insurance identified by Finaccord across a combined total of over 40 leading banks and major trade associations;

- forecasts for the market for trade credit insurance in Brazil and how it will split between domestic and export trade credit cover: what is this sector likely to look like in 2017?

Table Of Contents

Trade Credit Insurance in Brazil
0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
Rationale 3
Several factors underpin the rationale for the production of this study 3
There are several distribution channel options in addition to brokers 3
Globally, trade credit insurers cover over USD 2 trillion of commercial credit exposures 3
The report provides a standardised analysis of important metrics for trade credit insurance 4
Methodology 4
Research program 4
Market data analysis 5
Definitions 5
Trade credit insurance 5
Single-risk and annual policies 5
Export and domestic policies 6
Political and business risks 6
Premiums 6
Abbreviations 6
PartnerBASE 7
Finaccord 7
2.0 BRAZIL 9
Introduction 9
Market size, growth and segmentation 10
The market for trade credit insurance grew at a compound annual rate of 11.5% between 2009 and 2013... 10
... and while the industry-wide claims ratio nearly doubled in 2012, it remains comparatively low 10
About one half of all business-to-business transactions in Brazil are made on deferred payment terms 10
Small companies account for a relatively low proportion of total trade credit insurance premiums paid... 12
... and single-risk policies are not common 13
Trade credit insurance for domestic risks makes up the vast majority of the market 14
... albeit SBCE has been active in export trade credit insurance since 1997 14
Compared to other major global markets, the value of exports as a percentage of GDP is fairly low 15
Cover for political risks accounts for a very substantial proportion of the total market value... 16
... as a result of the presence of Argentina and China among Brazil's largest trading partners 16
Factoring as a complementary / substitute product 17
The value of Brazil's factoring market more than doubled between 2008 and 2010 before then falling back 17
Underwriter market shares 18
Coface is the largest underwriter in a market in which there are seven significant competitors 18
AIG and Zurich are both understood to have experienced rapid growth in recent years 18
On average, brokers work regularly with close to four of these seven insurance providers 20
At least two significant new competitors are preparing to enter the Brazilian market 20
Distribution channels 21
Brokers are the dominant distribution channel for trade credit insurance in Brazil 21
Leading brokers of trade credit cover include CredRisk Seguros and IRC Brasil... 21
... although many others are already active or are planning to increase their involvement 21
Future outlook 22
The trade credit insurance market has quite significant potential to grow further up to 2017 22
3.0 APPENDIX 24


List of Graphics / Tables


0.0 EXECUTIVE SUMMARY 1
Key market data for trade credit insurance in Brazil 2
1.0 INTRODUCTION 3
2.0 BRAZIL 9
Gross written premiums for trade credit insurance in Brazil, 2009 to 2013 11
Premium income paid by small companies with an annual turnover of less than USD 5 million as a
proportion of the total market for trade credit insurance in Brazil, 2013 12
Premium income paid for single-risk policies as a proportion of the total market for trade credit insurance
in Brazil, 2013 13
Premium income paid for export trade credit insurance as a proportion of the total market for trade credit
insurance in Brazil, 2013 14
Values of exports and imports and split of GDP by sector in Brazil, 2009 to 2013 15
Premium income paid for political risk cover as a proportion of the total market for export trade credit
insurance in Brazil, 2013 16
Total factoring market value in Brazil, 2008 to 2012 17
Estimated market shares of gross written premiums of trade credit insurance underwriters in Brazil, 2013
19
Frequency of usage of specific trade credit insurance underwriters by brokers in Brazil, 2013 20
Forecast gross written premiums for trade credit insurance in Brazil and the proportion due to export trade
credit insurance, 2017 22
Forecast segmentation of gross written premiums in Brazil between domestic and export trade credit
insurance, 2017 (table) 23
3.0 APPENDIX 24

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