Insurance companies target world markets

Insurance companies target world markets

Barely more than a decade ago, the international division of Des Moines-based Principal Financial Group was losing money.The company was trying to sell life insurance overseas, running smack into the harsh reality that a life insurance business built from scratch in Argentina or Spain was unlikely to turn a profit for at least a decade.Principal International was then, as Principal CEO Larry Zimpleman charitably described it, an "aspirational" business. In 1998 it lost $45 million.

The division made $137 million in 2010, more than Principal's 131-year-old domestic life insurance business made the same year and nearly double its profit five years earlier. The company has jettisoned international life insurance and instead is selling retirement products in the world's fastest-growing economies — China, India, Brazil, Mexico and Indonesia.Pets Still Homeless After Joplin Tornado.

Principal is one of a growing number of financial services companies turning its attention to emerging and growth markets, according to a 2010 survey based on 1,200 interviews with chief executives in 69 countries, conducted by PricewaterhouseCoopers. China tops the list of attractive markets, followed closely by Brazil and India.Firms that sell retirement products are the most bullish of all, as they bank on demographic shifts that will require the rapidly growing middle classes in emerging economies to find ways to save on their own.

"Those people aspire, basically, to the same things we've taken for granted for years," said Norman Sorensen, who stepped down as president of Principal International after 12 years running the division. "They will borrow; they will buy; they will leverage themselves; they will save. They will need their retirement security."By 2030, the International Monetary Fund predicts India, Brazil and Indonesia will be the third-, fourth- and fifth-largest economies in the world. The U.S. is projected to be second, with a gross domestic product of $38.2 trillion. China will be by far the largest, with a projected GDP of $73.5 trillion.