MEASURED APPROACH
TBY talks to Juan Pablo Lozano, President of Afiancol, on the evolution of the company, developing market trends, and opportunities for greater economic equality.
BIOGRAPHY
Juan Pablo Lozano has been in the insurance industry since 1996 when he joined the insurance company Confianza S.A., where he held the post of messenger for three years. In 1999 he was appointed president of an NGO until 2008, when he was appointed executive vice president of the Inter Afiancol bonding company. He served in this role for two years until 2010 when he was appointed president by the board, a position he has executed successfully, leading the company to develop and grow into becoming the most important bonding firm in the country.How has the company evolved over the last decade?
Initially, we engaged with performance bonds associated with public works, but after the law was reformed we started to work with the contracting of outsourcing contracts. In 2009, we took our business in a new direction, with cooperative funds, which is also known as economic solidarity. We initially launched a product that was extremely well received, called Aficativa. Ever since that strategic move, we have grown at average annual rates between 40% and 60%.
What are the main features of Afiactivia?
It offers guarantees to the employee fund in relation to the debtor balance. In other words, when an embargo of a debtor takes place, we give an immediate response, paying the credit fees, and we manage the collection of the money from the debtor. One of the competitive advantages that we offer over insurance companies is that we considerably reduce bureaucratic barriers in order to pay. Overall, payment guarantee is our main strategy and mission. For example, when people ask for credit to purchase a vehicle and they do not have a good credit record, we offer payment guarantees. If the person does not pay, we assume responsibility and also embargo the vehicle. We have also become a stronger player thanks to partnerships such as the one we signed with PMI, an insurance company, related to people affected by El Niño. It offers us comprehensive support, which provides us with a reinsurance capability that no other company has in Colombia
How do you see the company evolving in the near future?
I see us increasingly targeting employee funds and cooperatives. When it comes to employee funds, we have been increasingly engaging with large companies and public institutions and we see this as the path to take. We would like to have a stronger presence in the construction sector as well. This industry will be the main economic engine of the national economy in 2016. I expect to consolidate our activity in the cooperative segment over the next year and close the year with a moderate growth rate. We see potential to grow with our renting bond Afiarriendos. I also foresee a crisis in the insurance market within five years due to increasingly low interest rates. There are also far too many players and, in fact, we have seen several companies joining efforts through merges and acquisitions. I think we have managed to find our niche market and we have become a strong player there with a competitive product. We will, however, open offices in other neighboring countries as we see more opportunities and facilities there.
How would you assess developments in the reinsurance sector?
There is a lack of appropriate regulatory framework and we have raised this topic to the national authorities. In this context, we are few steps behind compared to other Latin American countries and we should consider our current situation and how convenient it is. There is concern among insurance companies that they could end up losing business and they are not very keen on such a regulatory framework for reinsurance.
What opportunities does economic solidarity offer?
There are plenty of opportunities and the fact that many banks have decided to enter the business means a great deal. It has a high social component that at the end of the day is an essential ingredient in this recipe. Colombia stands at the forefront of economic solidarity in the region. In my opinion perhaps only Guatemala is ahead of us. In Guatemala, the largest bank is the Employees Bank and this was born from a cooperative. Unfortunately, the gap between rich and poor people is growing. There is still a cultural element of informality and other historical factors holding back Colombia from economic equality. Nevertheless, the concept of economic solidarity can really help to narrow economic gaps in our society.
MEASURED APPROACH
TABLE OF CONTENTS
Interview
Bruce Mac Master, President, National Business Association of Colombia (ANDI)
TBY talks to Bruce Mac Master, President of the National Business Association of Colombia (ANDI), on tackling obstacles to competitiveness in the economy, participating in the global value chain, and the impact of the currency devaluation.
read articleFocus: Bank Expansion Abroad
Fortune Favors the Brave
Colombian banks have greatly expanded their operations in Central America in the last decade. The dramatic growth of the middle class and the internationalization of the Colombian economy has propelled growth. The market has shaken the shackles of the large players who used to dominate the market, with smaller institutions expanding and widening their coverage across the region.
read articleInterview
Mauricio De La Mora Rodríguez, Former President, National Hydrocarbons Agency (ANH)
TBY talks to Mauricio De La Mora Rodríguez, Former President of National Hydrocarbons Agency (ANH), on promoting investment, gaining knowledge of offshore activities, and the short-term outlook.
read articleInterview
Eduardo Jaramillo Cuervo, President & CEO, General Electric (GE)
TBY talks to Eduardo Jaramillo Cuervo, President & CEO of General Electric (GE), on the role GE intends to play in developing Colombia's energy value chain and creating a diversified matrix to support the country's energy needs for years to come.
read articleInterview
Adriana Lucia Falla, General Manager, SoftManagement S.A
TBY talks to Adriana Lucia Falla, General Manager of SoftManagement S.A., on the important elements of the company's business, its key strengths compared to its competitors, and the significance of the IT sector in Colombia.
read articleInterview
Juan Martin Caicedo Ferrer, Executive President , Colombian Chamber of Infrastructure (CCI)
TBY talks to Juan Martin Caicedo Ferrer, Executive President of the Colombian Chamber of Infrastructure (CCI), on the future of infrastructure in the country, challenges, and the role of SMEs.
read articleFocus: 4G Generation
Motoring Toward Development
Colombia is looking toward the future and improving its transportation network by renewing road infrastructure, putting an end to the nation's underdevelopment in roads and highways. The government estimates that in the next four years the 4G program will dramatically enhance the Colombian economy, shortening traveling time between cities and, consequently, reducing transportation costs.
read articleFocus: Coffee
Morning Joe
Colombian coffee has an incredible reputation for its aroma, taste, and purity, which is why it is considered one of the best quality coffees in the world. This belief has not changed despite the entrance of huge producing countries such as Ethiopia, Brazil, and Vietnam into the market.
read articleReview: Education
Gold Star For You
In recent decades, Colombia made changes to nearly every level and aspect of its education system and has been exceeding the expected results, putting the country on the right track to achieve the president's goal of becoming the best educated country in the region.
read articleReview: Tourism
It's Not Magic
A reputation for violence had for many years stunted the growth of Colombia's tourism sector. But now that the country has enormously improved its image abroad, there is little to prevent it from becoming one of the most ideal destinations in Latin America.
read article
