Insurance companies are undergoing a period of change and consolidation
KEEPING CALM TIMES HAVE BEEN CHANGING FOR THE INSURANCE SECTOR AS MERGERS AND ACQUISITIONS ALTER THE LANDSCAPE. TRANQUILIDADE, HOWEVER, BELIEVES IT CAN RAISE ITS MARKET SHARE BY OTHER MEANS

PETER DE BRITO E CUNHA President of Tranquilidade

ACROSS Europe, the insurance industry has been undergoing a period of fundamental change to meet the challenges of globalization, new technology and the changing needs of customers.
In Portugal, as elsewhere, an increasingly competitive sector has seen mergers, acquisitions and changes in strategy to deal with reduced margins and increased risks and the market for new products. At the same time, there is growing awareness of the opportunities for insurers in the future as state security systems come under pressure from demographic changes.
“We are in a market that has been consolidating quickly,” says Peter de Brito e Cunha, President of Tranquilidade, one of the country’s leading players. “If you look at the big names of Portuguese insurance, they are all disappearing.”
However, Tranquilidade—a significant presence in the sector for more than 130 years—has bucked the trend and put its faith in its well-established reputation.

Part of the Espírito Santo Group for most of its existence, Tranquilidade was nationalized in 1975, but returned to the private sector in 1990, with Espírito Santo as its core shareholder. “We were the first company to be re-privatized,” says Mr. De Brito e Cunha, “and it gave us a lead over the rest of the Portuguese companies.”

Modernization and restructuring followed. In 1993, Tranquilidade turned its life insurance branch into an independent company, Tranquilidade-Vida. Within two years, it became the country’s dominant life insurance player.
The following year, it was decided to spin off the medical services side, leading to the incorporation of the specialized subsidiary, Esumédica.
In 1996 came a pioneering move when Espírito Santo Seguros was created to develop non-life bank assurance exclusively for private individuals who are customers of Banco Espírito Santo and Banco Internacional de Crédito.

HIGH RISE Tranquilidade has increased its market share through a strategy of organic growth and believes it will continue to do so over the next few years

“It was the first big thing that we did and made us look different from the rest of the market today,” says Mr. De Brito e Cunha. “It also gave us an opportunity to grow faster than we would have done otherwise.”
This strategy of organic growth has paid off.
Tranquilidade’s market share has grown from around 9 percent, when Espírito Santo took over, to between 15 and 20 percent.
“We are not against consolidation or acquisitions,” says Mr. De Brito e Cunha. “It makes sense in other markets, but we felt that in Portugal, in terms of the insurance sector and as a regional player with the brand that we had, we were not going to gain that much by taking over other players.”

With its head office in Lisbon and its central services in Porto, Tranquilidade has 60 offices on the Portuguese mainland, Madeira and the Azores. In 1996, it opened a branch in Madrid.
Last year, the company decided to shift towards the sale of risk and pension insurances, which are seen as guaranteeing long term customer loyalty and profitability levels that are higher than those for traditional savings
products.
Mr. De Brito e Cunha believes Tranquilidade can increase its market share further over the next few years. “We are not number one in size, but I think we can call ourselves number one in terms of servicing and in terms of having the confidence of our clients,” he says. “We believe we can develop our position by working our own client base.”