Country Profile Spain www.lloyds.com/SpainMI
April 2014 chris.brown@lloyds.com
KEY FACTS FULL NAME / CAPITAL CITY: Kingdom of Spain / Madrid
GDP (PPP):
US$ 1,389bn (Global Rank #15)
LANGUAGE:
POPULATION:
47.3m (Global Rank #29)
IMF CATEGORISATION:
“Developed”
Castilian Spanish (official), Catalan, Galician, Basque
MAIN EXPORT PARTNERS:
France 17%, Germany 11%, Portugal 7% (2012)
MAIN IMPORT PARTNERS:
Germany 12%, France 12%, Italy 7% (2012)
MAIN EXPORTS:
Machinery, motor vehicles, foodstuffs
MAIN IMPORTS:
Machinery and equipment, fuels, chemicals
2012 Rank
2013 Rank
Change in Rank
EASE OF DOING BUSINESS:
44
44
0
COMPETITIVENESS:
36
36
0
FREEDOM FROM CORRUPTION:
32
31
1
DISASTER
YEAR
ECONOMIC COST (US$ x 1000)
Drought
1990
4,500,000
Flood
1983
3,900,000
Drought
1999
3,200,000
Wildfire
2005
2,050,000
Storm
2009
1,900,000
Source: Disaster Statistics based on: Prevention Web (2013); Export Statistics based on CIA World Factbook; Doing Business Indicators based on World Bank & World Economic Forum © Lloyd’s
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KEY STATISTICS SIZE OF ECONOMY
WEALTH PER CAPITA
Purchasing Power Parity (PPP) basis in International $ bn
Purchasing Power Parity (PPP) basis in International $
Portugal
2,500
Government Effectiveness
82
66
81
2,000
Political Stability and Absence of Violence/Terrorism
43
63
70
1,500
Control of Corruption
82
58
78
1,000
Regulatory Quality
78
75
76
500
Rule of Law
83
62
82
0
80
74
30,000 20,000 10,000 0
2006
Voice and Accountability
40,000
30,058
Italy
28,836
Spain
2012
1,586
PT
1,389
IT
1,271
ES
34,811
GOVERNANCE INDICATORS Percentile Rank (1-100) 2012
2013
2018f
2006
2012
PT
ES
IT
2018f
78 ES
IT
PT
TOTAL NON-LIFE DIRECT INSURANCE MARKET*
NON-LIFE DIRECT INSURANCE MARKET
LLOYD’S GROSS SIGNED PREMIUMS
Premiums in US$ m
Premiums in US$ m; by OECD Class
Gross Signed Premiums in US$ m; by country of origin
3,834
600 13,637
Property
30,000 Liability
20,000
9,841
Spain 2012 US$ 40bn
500 400 300
294
592 1,858
PA & Health
292
40,000
Motor
282
42,752
40,003
50,000
700
44,232
60,000
200 MAT
10,000
100 Miscellaneous
0 2011 ES
2012 IT
2013 PT
10,240
0 2011
2012
ES
IT
2013 PT
All data, sources & data limitations are available for download at www.lloyds.com/comparecountries; * 2013 total non-life based on CAGR projection
LLOYD’S TRADING POSITION Spain www.lloyds.com/crystal
Insurance:
Yes
Reinsurance: Yes Coverholders: Yes © Lloyd’s
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BUSINESS ENVIRONMENT Anti-austerity protests will continue in 2014. Strikes and protests have taken place in recent months as Spaniards become increasingly disillusioned with the high level of unemployment, the dire state of the economy, and the continuing austerity regime. A number of nationwide and sectoral protests took place in 2012–13, and this trend is likely to continue in 2014. The frequency of these protests is likely to increase in line with the government's unpopular cost-cutting agenda, although they will remain largely peaceful. Nationalist sentiment in some historically separatist regions is growing, intensified by the austerity regime and pressure on the regions to reduce their deficits. Catalonia's sovereignty bid has intensified after the central government refused to renegotiate its fiscal package and contributions to the central government. Catalonia plans to hold a sovereignty plebiscite in November 2014, which has put the region on a collision course with the central government. The latter opposes any secessionist attempts by Spain's regions and deems such referenda illegal. Serious conflict is unlikely, but a lack of sufficient will to compromise means that institutional conflict will increase risks to some contracts, tenders, and subsidies. Spain exited its technical recession in the third quarter of 2013. Spain's technical recession – defined as two successive quarters of quarter-on-quarter (q/q) decline – ended in the third quarter of 2013 when real GDP grew by 0.1% q/q after falling for nine successive quarters. However, IHS continues to argue that the Spanish economic recovery faces some major obstacles, namely still falling employment, sluggish real income developments, a deepening credit crunch, and the ongoing housing-market slump. Spain is unlikely to approach the European Stability Mechanism (ESM) for a precautionary credit line. We had assumed that Spain would approach the ESM for a precautionary credit line during 2013 to trigger the European Central Bank (ECB) bond-buying scheme, but this is now unlikely as the country is notably enjoying cheaper sovereign financing conditions. Spain has also made significant early inroads into its 2014 sovereign financing requirement, with several debt auctions breaching the upper target range. We had assumed that Spain would consider an approach to the ESM in 2014, with the prospect of an activated ECB bond-buying scheme providing some protection to a country still facing many facets of its multi-dimensional crisis.
GROSS DOMESTIC PRODUCT (GDP)
TOP-10 SECTORS (BY VALUE ADDED)
BUSINESS ENVIRONMENT INFORMATION
(nominal GDP levels in billion US$; Real GDP change)
(value added in billion US$ & 2014 Change in real %)
(provided by IHS Global Insight, April 2014)
2%
1,750 1.7% 1,500
TOP SECTORS
1.7% 2%
1.4% 1.2%
1%
1,250 0.6%
1%
1,000 0.1% 750
0%
-0.2% -1%
500
-1% -1.2%
250
-2%
-1.6%
-2%
0 2010
2011
2012
2013
2014
2015
2016
2017
2018
2013 Value Added
1. Hotels & restaurants 2. Real estate 3. Construction 4. Business services 5. Public Admin. & Defense 6. Health and social services 7. Retail trade - total 8. Banking & related financial 9. Education 10. Wholesale trade
108.1
Top-10 Total
848.2
2014 Percentage Change 2.1
107.3
0.8
97.8
-8.1
92.2
1.2
92.0
0.6
84.7
1.8
76.1
0.1
69.1
2.6
68.7
2.3
52.2
1.3
For daily updates visit: > www.ihsglobalinsight.com © Lloyd’s
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INSURANCE ENVIRONMENT 2012 MAJOR DIRECT INSURERS
2012 DIRECT GROSS PREMIUMS
(Gross Written Premiums in million US$)
(Gross Written Premiums)
Mapfre
11,093
Motor
Grupo Mutua Madrileña
5,082
Santander Seguros
4,872
Allianz
Generali BBVA Seguros
Insurance Market Profiles > www.iii.org/international/profiles
3,834
7,200
Grupo Caixa
Grupo Axa
QUICK LINKS / USEFUL SOURCES
4,247
1,858
PA & Health
13,637
Property Liability
9,841
Spain 2012 US$ 40bn
3,740 3,507 2,940
Grupo Caser
2,785
Grupo Catalana Occidente
2,748
General Directorate of Insurance > www.dgsfp.meh.es Lloyd’s Agency Network > www.lloyds.com/agency
MAT Miscellaneous
The Insurance Company Association > www.unespa.es
10,240
Lloyd’s Claims Team > www.lloyds.com/claims BUSINESS CULTURE GUIDE > http://www.kwintessential.co.uk (View Resources > Culture Guide)
Source: Association: > www.icea.es
Source: Association: > www.icea.es
The size of the insurance market in 2012 was US$ 40.0bn: Spain’s insurance sector is currently experiencing the effects and aftershocks of the financial crisis which have affected the insurance market in terms of reduced levels of client purchasing power. This has lead to intensified competition due to increased sensitivity amongst buyers to any rate change. It has also affected exposure, either through ownership or investment portfolio to Spain’s banking crisis. Additionally, the economy is struggling to grow and the Spanish unemployment rates rose to record levels in 2010. International foreign insurers: Most of the major foreign insurers are present in the Spanish market. Broker Market: Over the past 25 years brokers have increased their market share at the expense of agents. At the moment Spain has over a hundred brokers operating in the country, including major multinational ones. Local reinsurers: The domestic reinsurers in Spain are Nacional de Reaseguros and MAPFRE RE. Several European and other foreign reinsurers have offices in Spain but the majority of business is being placed abroad with their head offices. Outlook: Spain is one of the countries which has suffered the most from the recent economic crisis. An improvement in the insurance market is only likely to happen when the economy recovers in the medium term. © Lloyd’s
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LLOYD’S BUSINESS 2009-2013 LLOYD’S TOTAL PREMIUMS
2013 LLOYD’S HIGH LEVEL CLASSES
Gross Signed Premiums; Direct versus Reinsurance; in million US$
Gross Signed Premiums; high level classes; in million US$
2013 GROSS SIGNED PREMIUMS*
350 300
Total
US$ 294m
Reinsurance Direct
US$ 197m US$ 98m
250
0.0 5.8
Property Treaty
200
165 164
182
193
197
*COUNTRY OF ORIGIN PREMIUMS
100 96
113
100
99
2010 Direct
2011
2012 Reinsurance
Policyholders are based or headquartered in this territory;
Premiums may be written outside this territory;
98
0 2009
66.7
Property (D&F)
65.6
Marine
150
50
UK Motor Overseas Motor
2013 X X
Not necessarily where risks are located May differ to what is reported to local regulator (dependent on local requirements).
58.5
Energy
22.0
Casualty
28.8
Casualty Treaty
2.0
Aviation
28.8
Accident & Health
16.0
0
20
40
80
60
SOURCE: Market Intelligence based on *Gross Signed premiums; Xchanging (2014); unaudited figures based on country of origin and processing by calendar year; see Appendix for details
Mr Juan Arsuaga Type 3 Office
A Type 3 office is defined as a Lloyd's office headed by a Country Manager who in addition to meeting regulatory requirements in that territory also proactively supports the business development objectives of the managing agents in that territory.
Lloyd’s Country Manager
Calle José Ortega y Gasset 7 Edificio Serrano 49 1a Planta 28006 Madrid, Spain
TELEPHONE: EMAIL:
+34 91 426 2312 juan.arsuaga@lloyds.com © Lloyd’s
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LLOYD’S OBJECTIVES
To strengthen Lloyd’s position as a reliable, specialist insurance provider to the local industry and their international business. Place Lloyd’s as the insurance market of reference in the Iberian Peninsula for cedants, brokers and risk managers needing specialised, large capacity solutions should be our focus with emphasis in the Lloyd’s financial strength and solvency as well as underwriting expertise and capacity to support international risks.
LLOYD’S KEY INITIATIVES 2014
Take advantage of Lloyd’s financial rating and international capacity to make Lloyd’s business grow with large multinationals: Maintain a constant contact with MAs to explain the opportunities that the Iberian market offers as well as understand their appetite for business. Support presentations to the main brokers of this business for them to know Lloyd’s appetite. Finally work together with the risk managers and cedants to educate about the Lloyd’s market and show the solutions that Underwriters may offer.
Contribute to the business growth in LATAM (Vision 2025) through the opportunity that the Iberian market offers as a platform to the LATAM market
Promote the use of CHs as a way of reaching medium size companies and highly specialised insurance solutions markets: Work closely with CHs and MAs to detect niches and business opportunities. Promote CHs as the preferred business platform for MAs in the Iberian Peninsula, with the aim of other intermediaries consider CHs as an efficient way of looking solutions for their clients’ needs. Monitor and lobby potential legal changes in 2014, which might put Spanish CHs at the same level than EU coverholders.
EVENTS & MARKET INTELLIGENCE 2014 INDUSTRY EVENTS
2014 LLOYD’S EVENTS
MARKET INTELLIGENCE Available Market Intelligence products for this territory include:
AGERS Risk Managers Conference, 21,22,23 May, Madrid
Catalonia World Week, 4Q,. Barcelona
Coverholder Awards, 8 October, Madrid
ENTRE Reinsurance Conference, 1,2 &3 October, Madrid
Lloyd’s Meeting Point , 19-20 February, Madrid
FORINVEST - International Forum about reinsurance and finances, organised by ACS (Association Insurance Intermediaries,13 March 2014. Valencia
Iberia market Presentation & Class Review
Association of Catalonian’s intermediaries Meeting,. 20 March 2014. Tarragona
Association of Castilian’s intermediaries Meeting 6 June, Soria
http://www.lloyds.com/lloyds/offices/europe/spain/events-in-spain
Reinsurance Report – 23 October, London
Country Profile Market Presentation Country Roundup
Class of Business Event, 29 October, Madrid Class Review – Lite (work in progress) www.lloyds.com/SpainMI © Lloyd’s
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APPENDIX MACRO-ECONOMIC & BUSINESS ENVIRONMENT DATA Source: IMF (www.imf.org/external/data.htm), World Bank (http://data.worldbank.org/), IHS Global Insight. Notes: GDP data on size and wealth of the economy is reported in Purchasing Power Parity (PPP) terms; this is the most accurate indicator of the true standard of living in each country and therefore potential demand. To calculate this, GDP is converted from local currency to an international $ currency using PPP exchange rates rather than the market exchange rate. The PPP local currency-to-international $ exchange rates are determined such that a standard basket of goods has the same price in international $ terms in each country. This adjusts for the differing costs of goods across countries, when converted at market exchange rates. INSURANCE MARKET DATA Source: Reported data derived by Lloyd’s Market Intelligence team; original source is regulatory bodies, associations, third party information providers. Notes: Data is reported in US$. For more information, see www.lloyds.com/comparecountries. Exchange Rates Note: Where required, data has been converted to US$ using annual average exchange rates as per www.oanda.com. LLOYD’S PREMIUM DATA Source: Reported data derived by Lloyd’s; original source is Xchanging (data therefore contains only premiums processed by Xchanging). Notes: Data is reported is US$, on a calendar year basis and is signed gross premiums. This differs from the data published in the Lloyd’s Annual Report, which is also on a calendar year basis, but is written gross premiums and sourced directly from Syndicates. Differences are therefore (1) timing inconsistencies between signed and written gross premiums; (2) inconsistent use of exchange rates by Syndicates and Xchanging; & (3) incompleteness of Xchanging data set for certain classes of business (a substantial amount of premium is not processed by Xchanging and missing from the REG 258 data set; this comprises, for example, UK Motor). Exchange Rates Note: Data has been converted to US$ using monthly exchange rates provided by Xchanging. Definitions: Gross Signed Premiums: Original and additional inward premiums, plus any amount in respect of administration fees or policy expenses remitted with a premium but before the deduction of outward reinsurance premiums. Calendar Year: Relates to the calendar year in which the premium, additional or return, is processed by Xchanging. This is irrespective of the actual underwriting year of account, which is determined by the inception date of each risk. Country of Origin: Denotes the domicile of the insured party (i.e. the coverholder or policyholder). This is the country from which demand for the insurance / reinsurance emanates, & is irrespective of the country to which the risk is classified for regulatory reporting purposes. Example: A policy holder in the UK insuring a holiday home in France would be classified as a UK risk by “Country Of Origin”, but “French” for regulatory reporting purposes. Similarly a risk incepting on 1st December 2007 would be classified at 2007 “Underwriting Year of Account” but may not be processed by Xchanging until 2008 and so be allocated to the 2008 “processing year”. ACCESSING THE DATA: to access the raw data in this document, and equivalent data for other countries, see www.lloyds.com/comparecountries.
DISCLAIMER: This document is intended for general information purposes only. Whilst all care has been taken to ensure the accuracy of the information, Lloyd's does not accept any responsibility for any errors or omissions. Lloyd's does not accept any responsibility or liability for any loss to any person acting or refraining from action as a result of, but not limited to, any statement, fact, figure, expression of opinion or belief contained in this document. © Lloyd’s
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