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When it comes to buying reinsurance, Latin American insurers are known for traveling to Europe and the United States for capacity not available in their homeland.

Even with deregulation of financial markets in Latin America, most local reinsurers tend to be small companies that can't compete with international players. At the same time, many of those local reinsurance companies are being acquired by large international reinsurers.

For the region's insurers, Europe has been a preferred market because of decades-old ties and European patience with Latin American cedents through loss-heavy years.

Latin America's insurers still shop for reinsurance coverage in the United States, and Miami has become a financial services shopping center for Latin American firms. The city hosts branch offices for many reinsurers and an increasing number of intermediaries that crave Latin American business.

Overall, however, many Latin Americans perceive North American reinsurers to have short-term vision, said several sources familiar with Latin American reinsurance purchasing habits. If U.S. reinsurers don't earn a profit immediately, they tend to withdraw their capacity or raise rates, many of those sources said.

"Europeans, they wait two, three, four or five years, and if they lose one year, no problem, they try to recover during the next couple of years," said Augustin O. Quevedo Corona, vp-international reinsurance and underwriting support for Seguros Comercial America S.A. de C.V., Mexico's largest insurer.

In his position, Mr. Quevedo actually oversees fronting arrangements in which U.S. insurers with multinational clients in Mexico reinsure policies written by Seguros Comercial America. In that way, the U.S. insurers provide the actual coverage for their clients, while complying with Mexican law requiring that policies be issued by local companies. The arrangement is a typical one throughout Latin America.

However, Mr. Quevedo also has worked in reinsurance purchasing for Seguros Comercial America and is familiar with the insurer's buying habits. Mexican insurers -- like most Mexican businessmen, who often conduct transactions based on close personal relations -- buy limited amount of reinsurance directly from close contacts within local reinsurance companies.

There is no need to work through intermediaries, and Mexican insurers receive favorable tax treatment for purchasing coverage from domestic reinsurers, Mr. Quevedo said.

Despite those incentives, there are still plenty of reasons why Mexican insurers turn to European or U.S. reinsurers.

Mexico is not a litigious society, so local reinsurers have little experience with specialized liability insurance products, such as those for directors and officers, Mr. Quevedo said. European and U.S. reinsurers have a much better understanding of those risks, he noted.

"Any special risks, like satellites or mining operations, they do not have," Mr. Quevedo said of Mexican reinsurers' experience. They are more familiar with standard coverages, such as those for fire, theft, earthquake, flood and transportation.

Additionally, Mexican reinsurers by law can accumulate only a certain amount of risk for each geographically defined earthquake zone throughout the country. With a huge earthquake, some local reinsurers could face hard times, so it is better for a ceding company to spread its risk, Mr. Quevedo said.

Seguros Commercial purchases about 80% to 95% of its reinsurance from European or U.S. reinsurers, Mr. Quevedo estimates.

A similar situation exists throughout Latin America.

Just a few years ago, there were a few fairly important Latin American reinsurers, said Manuel A. Eskildsen, general manager for Compania Internacional De Seguros S.A., a commercial and personal lines insurer in Panama. But many have been eliminated by international competition, coupled with Latin American currency devaluations and other economic factors.

"Most, if not all, Latin American reinsurers have been disappearing, given the globalization process and the consolidation of reinsurers," Mr. Eskildsen said. "Small Latin American reinsurers are finding it harder and harder to compete in the open arena."

In Panama, nearly all treaty and facultative reinsurance is purchased from European and U.S. reinsurers because of a lack of local capacity, Mr. Eskildsen said. He purchases only about 1% of his reinsurance from a Panamanian company, Reaseguradora del Istmo. "I'm sure that a lot of the other Panamanian insurance companies give them some business, but very limited," he said.

Purchasing reinsurance coverage in the international market also is becoming easier.

"The market is so soft and reinsurance so cheap you don't even have to travel any more to negotiate your treaties," Mr. Eskildsen said. "By fax, you can get a 50% or 60% reduction" in rates, he said.

On July 1, Mr. Eskildsen renewed excess-of-loss coverage for marine, property catastrophe and other lines of coverage. He saw a 35% reduction in rates after a 25% reduction a year earlier.

In addition to their loyalty through the tough years, European reinsurers have long maintained local offices throughout Latin America.

"The Munich Res, the Swiss Res, some of the English firms, some of Lloyd's, some of the French companies, they have been trading reinsurance partners in Latin America since the early postwar years, from the days of steamship travel," said Mark Gregory, senior vp for J&H Marsh & McClennan Global Broking in London.

To be fair, he said, U.S. reinsurers for years also have had offices in Latin America.

"In terms of indigenous reinsurance companies, there really aren't very many," Mr. Gregory said. "Mostly it's foreign companies investing locally."

The situation is similar for intermediaries.

"Local reinsurance brokers only can be local to the extent that they are a correspondent with an international reinsurance operation," said Alex Moczarski K., senior vp in Santiago, Chile, for Claro J&H Marsh & McLennan.

The arrival of worldwide reinsurers has discouraged the growth of local reinsurers, said a spokesman for La Caja Seguros in Buenos Aires, Argentina. La Caja is Argentina's largest insurer. The company writes life and property/casualty business, both personal and commercial lines.

La Caja purchases nearly 93.6% of its reinsurance from European companies, 5% from the United States and 1.4% from Latin American reinsurers.

"In general, U.S. reinsurers are more selective than European reinsurers," the spokesman said. "We feel that this difference may be due to a greater knowledge of the Latin American market by European reinsurers since they have operated longer in these countries."

Although many international reinsurers have long maintained offices throughout the region, Latin American cedents still have preferred to travel and to conduct their business face-to-face -- even when an intermediary is involved -- with the reinsurer's home office.

Until recently, Latin American buyers have been more wary of trading with U.S. reinsurers because of a perception that the U.S. companies lack commitment to long-term continuity.

But the growing presence of reinsurers in Miami targeting the Latin American market is changing that perception, Mr. Gregory said. There is growing confidence in Miami, where reinsurers are staffing new offices with workers who understand Latin American business.

Five years ago there were only a couple of reinsurance representatives there. Now there are about 20, along with a growing number of intermediaries, he said.

"These are guys who know that there is a lot of premium available to them in Latin America, and they know that the Latin Americans are increasingly looking at Miami as a burgeoning marketplace," Mr. Gregory said.

"They do a good job because they have Spanish speakers, and they are hungry because they are new operations and they have a budget to meet."

The Miami market is only in its infancy, but it is expected to grow in importance. Mr. Gregory said estimates show the Miami market is capable of providing about $500 million in capacity per account for the best class of risk.

Miami is easy to reach for Latin Americans, said David Hofmann, assistant director of Latin American operations for Hartford Re in Miami. Instead of traveling to several European countries and throughout the United States, or traveling throughout Latin America to reach a variety of reinsurers, Latin American insurers can meet with several sellers in one city.

"It's like a little supermarket," Mr. Hofmann said of Miami's reinsurance offices. Hartford Re opened a Miami office in January 1998 to show its commitment to Latin America, he said.

"We have been in Latin America for many years, and we expect to be there for many years," Mr. Hofmann said.

Meanwhile, many reinsurers are investing in Latin America by purchasing local companies. For example, Swiss Re recently bought Reaseguros Alianza, one of Mexico's top reinsurers.

Swiss Re already has an office in Mexico City, as well as in Bogota, Colombia; Buenos Aires, Argentina; Caracas, Venezuela; and Sao Paolo, Brazil. But Latin America's insurance market is expected to grow, and purchasing Reasegura Alianza fits Swiss Re's plan to expand in the region, said a Swiss Re spokesman in Zurich.

Brazil's Instituto de Resseguros do Brazil, a state-owned company with a monopoly, is probably Latin America's largest reinsurer, sources said. Observers said they expect it could be privatized in 1999, but whether it intends to maintain its monopoly has yet to be announced.