TBY talks to Diego Sosa, CEO of QBE Seguros Colonial, on expansion plans, aims in Ecuador, and the state of the sector.
THE BUSINESS YEAR What was the purpose of the acquisition of Seguros Colonial in 2010?
DIEGO SOSA The group saw an opportunity to acquire the biggest company in the country, so the main driver behind acquiring Seguros Colonial was to enter the market in a leading position. We are a multi-risk company and operate in all lines of business except life, because we do not have that license yet. We hope to get a license in the next six to eight months. We think we have a good opportunity here, and we hope to receive an adequate return on the investment we made two years ago.
Do you have plans to expand your operations in 2013?
We have a couple of business lines that we want to develop more aggressively in Ecuador. One is in the transport-related business. We want QBE Seguros Colonial to grow at a rate of over 25% in 2013, and we want to develop our SME offerings. Also, we are planning to continue our geographic expansion across the country over 2013. We are expecting to open three additional offices in Machala, Puyo, and maybe Quevedo. The first two are now in the opening process.
What are your aims for the market in Ecuador?
It is not a developed market, and in some cases the market participants did not put the right price on the risks they covered. But it is normal that the market will re-adjust at some point, especially as we now have more multinational companies in the country.
Do you have any connections with other countries in the region?
Yes, as part of QBE Group, we interact with the other QBE companies. We also have quarterly meetings with all our CEOs in Latin America, where we share experiences and products and we have some programs that are looking for more interaction between our teams across the region.
How many employees do you have?
Currently, we have 354 employees; however, over 2013 we expect to increase that number to 400.
What role do you play in supporting the agricultural sector?
QBE Seguros Colonial is the only company that sells policies in this sector. We have 15 years of experience selling our products, but the premiums are still low. In 2012, we recorded about $3.5 million in premiums, and in 2013 we expect to grow to maybe $4 million in premiums, so it is a very small business. We hope the government will offer more support to the agricultural sector in the future because normally this kind of product requires subsidies. If you charge a 6%-7% margin to farmers, they cannot do it because they are very small and Ecuador is a small country. We are going to continue in this market because we have experience and we have the right technical team. It is a policy type that requires unique expertise, which we have.
How does QBE Seguros Colonial differentiate itself from the other main insurance providers?
In 2012, we carried out a survey of our customers and the clients of other companies. One of the attributes our clients found is that we are a company that pays claims, and this is one of the biggest differences that clients perceive. We have the largest coverage in the country, and a good service structure.
What will be the impact of new insurance regulations on your company?
We have a stronger position in terms of technical reserve levels, so we do not see any material impact of the new regulation on us. However, some smaller companies may suffer from the changes. We believe that any regulation that makes companies have adequate reserves is positive. We are a company that has the highest reserves in the country. In the long term, the market will have fewer companies. There are more than 40 companies in Ecuador and many of the smaller companies will not meet the future capital requirements. Some will merge, and some will be sold.
What role does social responsibility play in your company’s activities?
The first thing you have to do is be transparent, and this is the basis to play a role in social responsibility. Also, you have to create a good environment for your workers. If you have happy employees coming to work, you have a good company and it provides better service. QBE Seguros Colonial offers policies for the low-income segment providing coverage to a group that in the past did not have any coverage. We put an adequate price on that type of risk.
What do you foresee in the coming years for the insurance sector?
In the last five years the growth of the Ecuadorean insurance market was in double digits—15%-19%—and we expect that the insurance market will maintain a growth level over that of GDP, so we see good opportunities to continue developing our business.
Is there a place for new investments in this sector?
Yes. For example, we think that in 2013 we will receive an additional capital contribution to the company to finance our business growth, so our shareholders are giving us signals of confidence that they will continue investing in the country. From my point of view, there are not a lot of opportunities for acquisitions in Ecuador. You have to wait to see if the small companies have the adequate level of reserves before you analyze the potential for acquisition.
How do you think the sector will grow?
For example, life insurance is less than 30% of total premiums for the country. If you see other countries in Latin America, the relationship is normally 50-50. There is the potential for growth in the life sector. This is the cycle in all countries. In Ecuador we are starting to see this cycle and we have to take advantage of that, but reforms to the life and pensions sector are required.
Are your clients mostly corporates?
QBE Seguros Colonial has all kinds of clients. We have corporate accounts and individual accounts. We are the leaders in auto insurance, meaning we have a lot of individual policies. In some lines of business, such as cargo, we are the third company, but those are normally corporate clients. We are the biggest company in the country in property, and those are mostly corporate clients as well.
This interview will be published in 'The Business Year: Ecuador 2013'. To subscribe please e-mail us at firstname.lastname@example.org
© The Business Year - March 2013