YOU would think Santander must be mad for selling part of its life insurance business in Latin America. True, the industry hasn’t been growing at its scorching pre-crisis rate, but the potential still eclipses most other markets.
In 2010, Santander grew its Latin American insurance premiums by almost a third to $1.9bn, and there is considerable scope for further gains. In earthquake-prone Chile, the region’s most mature market, gross written premiums are equivalent to just 3.9 per cent of GDP, followed by Brazil (3.1 per cent), Argentina (2.6 per cent), Mexico (2 per cent), and Uruguay (1.6 per cent). In the UK and Switzerland, the figure is nearer 13 and 10 per cent respectively.
Santander’s rationale for selling up is two-fold. First it thinks, rightly, that an insurance specialist will grow the pie more quickly (even if the Spanish slice is now half the size). And a $1.2bn capital gain will help it fatten up to digest recent acquisitions and meet stricter capital requirements.