CReCER’09Latin America and the Caribbean

Averting Contagion:A Look at the Insurance Sector

Osvaldo do NascimentoSeptember, 24th, 2009

BrazilArea (km2): 8,511,965

GDP 2008: US$ 1,2 trillion

Population 2007: 191.8 million

2

About Brazil...

InflationIPCA accumulated in 12 months

3Source: Brazilian Central Bank and IBGE

4,36% Aug 2009last 12 months

% p.y.

Nominal and Real SELIC Rate(in 12 months, % p.y.)

Interest Rate

4Source: Brazilian Central Bank

SELIC (Nominal Rate)Real Interest Rate

8,75%

4,25%

% p.y.

Net Debt

Source: Brazilian Central Bank5

Net debt of public sector (% GDP)

Net debt/GDP

Dollar denominated Debt/GDP

44,06%

-9,24%0,00

%

International Reserves

Source: Brazilian Central Bank

US$ 221,3 Billion

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• Public sector is net foreign creditor since 2006• Brazil is investment grade since 2008

Sep, 10th,2009

BRAZILIAN’S INSURANCE MARKET

Insurance Market Revenue(Premiums – % Over GDP – 2008)

Source: CNSeg/SUSEP

(Distribution by Insurance Category – 2008)

Source: CNSeg/SUSEP

(*) Considers the VGBL revenue(**) Total revenue 2008 in BR$ converted in US$ on dec/08 (***) Do not consider closed pension funds revenue

Total Premium Revenue 2008:US$ 41,2 billion (**)

Insurance Market Revenue

(***)

Pension FundsTotal Asset Under Management 2008:

US$ 252,6 billion (**)

Closed Pension Funds

Opened Pension Funds

Insurance and Pension Government Key Players

Ministry of Health

CONSUConselho de Saúde SuplementarPrivate Health Insurance Council

ANSAgência Nacional de Saúde Suplementar

Private Health Insurance Agency

Health Insurance Companiesand

Health Private Plans Operators

Private Health Insurance Advisory Board

Ministry of Finance

CNSPConselho Nacional de Seguros Privados

National Private Insurance Council

SUSEPSuperintendência de Seguros Privados

Private Insurance Superintendence

Insurance and Reinsurance CompaniesPrivate Pension OperatorsCapitalization Companies

CMNConselho Monetário Nacional

National Monetary Council(Investment Prudential Rules)

Ministry of SocialSecurity

CGPCConselho de Gestão da Previdência Complementar

Complementary Pension Management Council

SPCSecretaria de Previdência Complementar

Secretary of Private Pension Funds

Pension Funds

CNSEG

Confederação Nacional das Empresas de Seguros Gerais,Previdência Privada e Vida, Saúde Suplementar e Capitalização

National Confederation of General Insurance Companies, PrivatePensions and Life, Private Health Insurance and Capitalization

FENAPREVIFederação Nacional de

Previdência Complementare Vida

Life InsurancePrivate Pension Plans

No Life Insurance Health InsurancePrivate Health Plans

Capitalization

FENASAÚDEFederação Nacional de

Saúde Suplementar

FENACAPFederação Nacional de

Capitalização

FENSEGFederação Nacional de

Seguros Gerais

Insurance Institutional and Representative ModelWorking since 2007

Legal Prudential Requirements

Many technical provision must be created All financial and actuarial data are sent to SUSEP monthly Independent actuarial and financial audit (annually) Strong rules about asset allocation to invest those assets that

guarantees de technical provisions and de “free assets” Slide 14

To invest in assets that the insurance company or its controller or subsidiary is forbidden

Total transparency about the clearing process. SUSEP has access to the insurance companies every day

Rules to regulate the “No operational Liability” Free rollover right to all pension participant Strong internal control and compliance rules, included KYC Reinsurance operations Solvency rules (base capital, additional capital based on risks,

adjusted net assts etc…)

Know Your Client Rules

Circular SUSEP 380/2008 requires strong procedures to create and maintain an anti-laundering and counter-terrorism financing structure

The Internal Control team has to follow all financial transactions and to notice the governmental agent (COAF) the suspected operations

The Politically Exposed Person have to be identified The personal data information of all customers have to be keep under

control

CReCER’09Latin America and the Caribbean

Averting Contagion:A Look at the Insurance Sector

Osvaldo do NascimentoSeptember, 24th, 2009