Fully covered: eager to latch on to Latin American growth, insurers jump in with both feet. (Insurance).

Hungry global financial companies are gobbling up Latin American insurance assets like never before. Facing topped-out insurance markets at home, they look to gain the upper hand as regional governments race to reform pension, social security, workers' compensation and health care systems. Foreign insurers have dumped more than US$2.5 billion into the region so far, and there's room to grow, executives say.

Mexico, Brazil, Argentina, Chile and Colombia make up 93% of Latin America's more than $36 billion in premiums. Not surprisingly, the biggest deals so far have happened in those countries. Yet those premiums account for less than 3% of Latin America's gross domestic product, compared to 8% to 13% in North American and European economies, according to Standard & Poors.

The Latin American insurance market grows 2 to 2.5 times faster than the region's GDP, says Jim McCarty, president of U.S. insurer Liberty Mutual's international operations. "If you assume 10-year GDP growth in most Latin countries of 4% to 5%, then insurance markets will grow 12% to 15%," he says. McCarty's company has bought insurers in Venezuela, Colombia and Argentina.

Mexico is the plum. Citigroup in early 2002 paid $1.2 billion to Dutch insurer Aegon for Seguros Banamex Aegon and pension fund management company More Banamex Aegon. The deal gives Citigroup 1,500 offices that sell 15,000 to 20,000 insurance policies per week, says Fernando Quiros, deputy president of strategic planning for Seguros Banamex.

Mexico's integration with the United States and its drive to more closely reflect U.S. financial practices have helped. The Mexican middle class accounts for the bulk of customers, Quiros says. "Mexico adds more than 800,000 employees every year, and average per capita income is growing," Quiros says.

Dutch financial conglomerate ING Group in October paid $791 million for Seguros Commercial America, Mexico's largest overall insurer. The deal included a network of 8,000 agents.

Free trade is more than car exports; it's car insurance, too. GMAC Insurance Holdings, a unit of General Motors Acceptance Corp., made Mexico its first entry point into the Latin American auto insurance market. Earlier this year, GMAC acquired ABA Seguros, one of Mexico's largest auto insurers, for $100 million.

It scooped up $200 million in annual premiums and more than 700 employees in 35 offices throughout Mexico.

Fueled by increasing car-loan financing in Mexico, ABA Seguros has grown 20% to 25% annually over the last few years, says David Wells, regional manager of Latin American operations in Monterrey. Liability coverage is now mandatory in Mexico City. Car sales, too, are setting records as interest rates remain low in Mexico.

Vroom, vroom. GMAC is also exploring the possibility of adding other insurance products. "ABA has a small but growing property and casualty business, and we want a greater understanding of that area and its growth opportunities. The question is whether we can build a brand outside of auto insurance," Wells says.

The deals keep on coming. At press time, New York's MetLife was one of four companies bidding to purchase state-owned Aseguradora Hidalgo (Ahisa), Mexico's top life insurer. The prize: Ahisa insures more than half of Mexico's public employees.

MetLife in November bought two life insurance and financial services subsidiaries of Santander Central Hispano for $250 million. It has also started a private pension company in Argentina, acquired a Brazilian insurance company and bought a Mexican annuity business. Prudential, meanwhile, has invested to add a sales network in more than 30 Mexican states after buying 50% of Mexican retirement fund administrator More XXI for $127 million.

Despite the avalanche of deals, McCarty at Liberty Mutual sees plenty of room for more--if foreign insurers have the cash to ante up. "So far, the Latin American insurance market is not dominated by multinational competitors," he says. But if global growth rebounds, as U.S. economists now predict, foreigners might be stronger still-and looking to grow.