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FM Global benefits from booming growth in Brazil

FM Global benefits from booming growth in Brazil

SÃO PAULO—Few countries would seem to provide a more conducive environment for the unique operating model of Factory Mutual Insurance Co. than Brazil.

The Johnston, R.I.-based mutual insurer, which does business as FM Global, utilizes extensive on-site engineering reviews in its underwriting process to help its customers mitigate risk.

The South American nation's expanding economy is spurred by growth in heavy industries such as paper, steel, and aircraft and auto manufacturing.

“Over the past few years, we've seen a growth in our business of over 15% annually,” said Marc Ragazzi, FM Global vp and Latin America operations manager.

Mr. Ragazzi said in addition to helping foreign companies establish operations in Brazil, the company has focused in recent years on helping large Brazilian companies that are becoming regional and global players establish factories in Brazil and other countries.

“As these companies go global they want to excel in all areas of operations, especially risk management,” he said. “That's where our operating model of building a good, quality operation that is sustainable and has constant earnings without losses resonates with them. We want to capitalize on that opportunity.”

Mr. Ragazzi notes the insurer has operated in Brazil for 29 years and long has relied on partnerships with Brazil-based insurers. FM Global's expertise in engineering and risk management complements the deep market knowledge of its Brazil-based partners, he said.

“As a property insurer that covers large industrial risks, one of our differentiators has been to provide large amounts of capacity,” Mr. Ragazzi said. “Within the regulations of insurance and reinsurance in Brazil, one of the most efficient ways to provide that is through working alongside local insurers and reinsurers.”


Brazil opened its reinsurance market to foreign reinsurers for the first time in 2008, and FM Global received approval from Brazilian insurance regulator Superintendencia de Seguros Privados to operate as an admitted reinsurer in 2009. “Our strategy, when the market started to open in 2008, was to maintain those partnerships and operating model and build on it,” Mr. Ragazzi added.

Another strategic imperative for FM Global is imparting its longstanding expertise in loss mitigation to clients in Brazil. In the U.S., FM Global worked to develop standards with National Fire Protection Assn. and runs the 1,600-acre FM Global Research Campus in West Glocester, R.I., which uses advanced equipment for scientific research and product fire testing.

“We're spending a lot of time and effort in Brazil in leveraging our technology when it comes to evaluating risk. We have a codes and standards department that is working with fire departments, standards organizations and universities in Brazil to support the development of building codes and standards,” Mr. Ragazzi said.

In addition to fire risk, the company expends a good deal of effort helping companies with site selection for new facilities to help mitigate flood risk.

“From a natural catastrophe point of view, one of the things that Brazil benefits from is that there isn't much (risk) of earthquake or hurricane,” he said. “However, you do have a lot of flood exposure, so we do a lot work looking at properties.”


Yet here Brazil's rapid growth is a hindrance, as FM Global finds itself competing with other firms for a finite number of suitably trained engineers.

“There are some challenges that are coming with the success of the country,” Mr. Ragazzi said. “One is that when our multinational clients come to Brazil to build or buy a facility here, we have to support that through building highly protected plants. To do that, you need a lot of engineering talent.”

To surmount this difficulty, the company is focusing on recruitment and the development of existing employees to round out client service teams, he said.

Another challenge for FM Global is finding the right people in the right places. While the country's industrial heartland is situated in the central and southern states surrounding the company's Brazilian headquarters in São Paulo, the insurer is seeing increasing demand for its services as large industrial projects commence in the northern and western parts of Brazil.

“The whole country is booming,” Mr. Ragazzi said.

While growing in order to accommodate this rising demand, the company is careful to maintain a consistent approach in all manner of operations from risk assessment to claims.

“Our strategy is to build on our existing book of business.” Mr. Ragazzi said. “There are some growing pains in this market but it's an exciting place to be.”