Just how attractive are the MINT countries to insurers?
In my previous blog, I noted the finding that emerging markets outside of BRIC (Brazil, Russia, India and China) were an investment focus for 63 percent of insurers.
Of course, the $64,000-dollar question is, Which specific markets should insurers be looking at?
One way of answering the question is to identify the highest growth markets, and then examine them for their attractiveness to insurers. I’d like to conclude this blog series by following this approach.
Some experts have identified the MINT group of countries—Mexico, Indonesia, Nigeria and Turkey—as having a high potential for becoming, along with the BRIC countries, the world’s key economies. (Jim O’Neill, the economist who coined the term MINT, was also responsible for BRIC. Read a recent interview with him in the New Statesman.) My colleagues at Accenture Research then looked at each of these to establish how attractive they are to insurers. The indicators they used are presented in the table below, and here, for what they are worth, are my thoughts on each country.
Mexico: It’s nice and close to the established markets of the United States and the expanding markets in Latin America, and it’s growing well at 3.6 percent, without the drag of high population growth. Urbanization is expected to increase—a key indicator for insurance—while per-capita income is also expected to rise. Premiums are projected to grow by 13 percent thanks to economic performance. However, there are new capital requirements and tax law reform that could prompt industry consolidation.
Indonesia: With GDP rising at 5.9 percent and low population growth of 1.4 percent, Indonesia has to be an attractive target for insurers. It’s already the world’s fourth most populous country, so low growth rates are good. Fairly low urbanization rates (53.7 percent projected for 2015) will increase to 72.1 percent in 2050, with a fast-growing middle class. Insurance penetration is low, which should mean a huge opportunity for those companies ready to undertake education. Read more about Indonesia as a potential market.
Nigeria: One of Africa’s star growth economies and the continent’s most populous country, Nigeria is urbanizing—and growing more wealthy—fast. It has a substantial middle class and plenty of oil. Swiss Re projects hefty annual growth rates in non-life (9.5 percent) and life (13.5 percent) in a fragmented market. Some big insurers are already purchasing existing Nigerian insurers as a way into this exciting market.
Turkey: At 3.2 percent, Turkey’s growth is the lowest of the four, but its economic expansion continues apace driven by exports to the Middle East and a boost in investment spending. It’s already fairly well urbanized at 75.1 percent, a figure that is expected to rise to 87.3 percent in 2050. Another important indicator for insurance companies is the growth in wealth per capita from $7,274 in 2000 to $17,103 in 2013 (135.1 percent). One indicator of its attractiveness to insurers is the sale of Yapi Kredi Sigorta, the insurance branch of the Yapi Kredi bank, to Allianz in March for TRY 1.6 billion (approximately $743 million).
For another perspective on emerging markets, why not read our recent piece, Big opportunities in small-ticket insurance.
|Total premium volume (US$ millions)||23,982||15,509||1,828||10,882|
|Percentage of total world premium||0.52%||0.34%||0.04%||0.24%|
|Insurance density (premiums in US$ per capita)||206.2||65.3||10.9||145.9|
|Insurance penetration (premiums as a % of GDP in 2012)||2.04||1.77||0.68||1.37|
|Growth in GDP (2014 to 2019)||3.6%||5.9%||6.9%||3.2%|
|Growth in population (2013 to 2019)||1.0%||1.4%||2.8%||1.0%|
|Global ranking by life insurance premium volume||28th||27th||59th||43rd|
|Global ranking by non-life insurance premium volume||20th||41st||55th||29th|
Source: Accenture research