Mexican Agro Insurance Market Lloyds, March 2012 Structure of the Insurance System Farmers Small Farmers* Protection in case of a Insurance Insurance natural catastrophe. Insurance Insurance Premiums Paid Insurance Fondo Private Insurance Co. by Federal & State Govnm Reinsurance AGROASEMEX & Reinsurance Insurance INSURANCE CO. Reinsurance Reinsurance for the CAT Coverages and retrocession for the Insurance Fondos Reinsurance International Reinsurance Co. Dsitribution of Premium Subsidies *Protected by a public fund. The state is the one that benefits in case of a natural catastrophe. 2011 & 10 Crop Insurance Figures Insured Area Sum insured Premiums (Thousands of hectares) (USD Mio.) (USD Mio.) Increase Increase Increase 2010 2011 2010 2011 2010 2011 % % % Agricultural 2,439.2 2,671.9 9.5 2,177.0 2,492.0 14.5 134.0 174.0 29.8 FONDOS 1,430.5 1,664.5 16.4 1,234.0 1,413.0 16.4 82.0 109.0 32.9 Privates 1,008.7 1,007.4 -1.1 943.0 1,079.0 12.0 52.0 65.0 26.9 2011 Crop Area/Risk Distribution Regional concentration of the Insuerd Area at the end of 2011 in % Region 4 39.7% Region 3 30.4% Region 2 Region 1 16.0% 13.9% 2011 Insured Crop Types Crop Area Insured at the end of 2011 (thousands of hectares) 3,000.0 2,671.9 2,500.0 2,000.0 1,500.0 857.3 1,000.0 649.4 472.9 362.0 500.0 330.3 0.0 Total Maíz Sorgo Trigo Caña Otros 2011 & 10 Livestock Insurance Figures Year-end 2010 and 2011 Livestock Insurace Figures Unit / risk Sum insured Pre miums (Thousands of Animal Units / Risks) (USD Mio. (USD Mio.) Increase Increase Increase 2010 2011 2010 2011 2010 2011 % % % Livestock 137,302.9 142,722.9 3.9 13,354.0 11,846.0 -11.3 39.7 37.8 -4.8 Founds 127,466.5 134,765.8 5.7 12,054.0 10,770.0 -10.7 30.6 30.5 -0.4 Privates 9,836.4 7,957.1 -19.1 1,300.0 1,076.0 -16.8 9.1 7.3 -19.9 2011 Livestock/Risk Distribution North Region 66.3% Region 4 6.1% Northest Region 19.3% Region 2 Region 1 8.1% 8.6% 2011 Insured Livestock Types Agro Reinsurance Market in Mexico • Crops: - USD 60 M Proportional (mainly from Private) - USD 25 M Non-Proportional (Fondos & AA) - USD 90 M Proportional (Group Risk Plans “CAT”) Total = 175 M • Livestock: - USD 10 M Proportional & Non-Proportional (Private & Fondos or retro from Agroasemex) Main Reinsurance Players in Mexico • Hannover Re (retro Agroasemex & General Seg) • Munich Re (Pro Agro and General de Seguros) • Swiss Re (Mapfre) • Scor, Novae, Odyssey, others (Lloyds ?) • Thank you very much! • Agro Re, Consulting Services, S.C. • Atlacomulco, Estado de México. MÉXICO • www.agrore.com.mx Tel: 01 712 122 2053 Executive Summary The Project An Investors group of growers belonging to Fondo de Aseguramiento Agropecuario Fortschritt & Union de Credito de Agricultores de Chihuahua (UCACSA), seek to obtain from Ministry of Treasure in Mexico (SHCP), authorization to constitute an authorized Insurance Institution to exclusively take part in the Reinsurance side of the business (the Reinsurer - DNHR) mainly focused on the Agriculture Line of Business (Crop & Livesttock) and in less proportion/extention on the following Farm Owners Lines: • Property (Grain storage facilities, Rural Houses & Builds, Cotton Gins and Bails) • Allied Lines (Crop Machinery & Food Procesor Equipment) • Motor (Pick Up’s & Trucks) • Marine (Cargo in Transit) • Earthquake, Huricane and other CAT coverages for Property. • Casualty (on food products) Target Market The Reinsurer-DNHR will be focused on providing and channalize best security proportional and non-proportional reinsurance capacity to the market niche that represents over 340 Insurance Fondos in Mexico (Fondos). In 2011 this market niche insured 1.665 Mio. Hectares in all the country (about 4.1 Mio. Acres) with a Total Sum Insured of USD 1,436 Mio. generating USD 109 Mio. of Direct Premiums. Also in 2011, Fondos insured over 100 Mio. Animal Units with a TSI of USD 10,770 Mio. generating USD 30.5 Mio. Premiums. Feasability of the project 80% of Fondos are currently reinsured by Agroasemex on a non- proportional basis which likewise, retroceeds in a non-proportional basis to International Reinsurers. 15% of Fondos are currently reinsured by General de Seguros on a non-proportional basis which likewise, retroceeds in a proportional basis to International Reinsurers. 5% of Fondos are currently reinsured directly by Swiss Re on a non- proportional basis so, DNHR is looking to become a strategical partner for International Reinsurers to reinsure Fondos in a Proportional basis. Office location and Marketing DNHR head quarters will be located in Cuauhtemoc City, Chihuahua State where Fondo Fortschritt and UCACSA offices are located as well. These two entities, represent about 15% of Fondos Market Niche in the whole country (please take note that for example, France territory fits 4 times in the Chihuahua State territory) Marketing of DNHR will be selective and on a direct basis. It will be performed by an specialized team of experienced Agro UW. Capital A USD 2.5 Mio. investment in the first year will be leading the starting capital of DNHR up to reach USD 5 Mio. in a five years period where it is forsee by actuarial studies, that the operation will accomplish a balance in the second year of operation Thank You! .