Uncertain future for local bancassurance model

The Portuguese non-life market, in common with many developed western markets, is suffering the effects of the global financial and credit crisis. Falling investment, a marked reduction in imports and exports, a construction sector in crisis and the disappearance of a manufacturing industry have combined to drive competition to new levels. The predominant financial interests in the Portuguese market are local conglomerates dominated by banks. However, some of these groups are now seeking to divest themselves of their insurance interests, a trend which is expected to increase as a result of the global financial crisis. Indeed, in 2008 the problems of the Banco Portugues de Negocios (BPN), owner of Real Seguros, had a major negative impact on the insurer, and efforts to sell Real Seguros began in September 2008. However, as other insurers are also said to have financial problems, some merger and acquisition activity, which should help to reduce the level of competition and rate cutting in the market, is likely in the immediate future. But for many observers, the strong presence of foreign groups such as Allianz, Ergo and AXA in Portugal attests to the underlying potential in the market

In May 2009 there were 63 companies licensed to operate in the Portuguese insurance market, of which 31 were joint stock companies, 30 were branches, and two were mutuals. Of the joint stock companies, 25 wrote only non-life and six were composites while 24 of the branches wrote only non-life and six were composites.