Liberty Mutual Insurance has entered Mexico's $600 million surety market with the acquisition of Primero Fianzas from a private investor group. Liberty Mutual states the company, which is headquartered in Mexico City, ranks first in the country's credit surety segment.
"Primero [Fianzas] has strong market presence and a record of profitable growth," says Chris Peirce, President of Liberty Mutual Global Specialty. "Its excellent agent and customer relationships complement Liberty Mutual Surety's significant underwriting capacity and global expertise, and further solidify our leading North American surety presence."
Primero Fianzas wrote over $33 million in gross written premiums in 2012, primarily in the administrative and credit bond segments. It is the fourth-largest surety writer in Mexico based on 2012 market share, and writes business in all Mexican states.
Neither Liberty Mutual nor investor Grupo Valores Operativos Monterrey have disclosed the financial terms of their agreement.
Liberty Mutual Insurance currently operates in 28 countries across Latin America, Europe, and Asia. It is the largest P&C insurer in Venezuela, the second-largest in Colombia, and is one of the top 10 insurers in Brazil and Chile.
According to Latin business news source BNAmericas, Mexico's insurance sector is the second-largest in the region—falling just behind Brazil's—but accounts for only 1.9 percent of the country's GDP. However, Moody's has shown that return on capital in the surety segment has risen from below 10 percent in 2011 to nearly 25 percent by the end of last year.
Insurance appetite may grow in the near future under Mexico's National Infrastructure Plan, which projects $400 billion on government spending on more than 1,000 energy, tourism, transport, water and urban development projects from 2013 to 2018.
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