In June 2026, DHL Supply Chain has launched its DHL Fulfillment Network in Colombia and is introducing a logistics platform designed to support the growing volume of e-commerce transactions in the country and across international markets.

The system is intended to handle operations that start at roughly 1,500 orders per month and scale beyond 6,000 monthly orders, positioning itself primarily as a logistics backbone for small and mid-sized e-commerce businesses.

The launch includes initial fulfillment centers in Bogotá and Medellín, two of Colombia’s main logistics and consumption hubs, where DHL will operate multi-client facilities that are designed to adjust capacity based on demand.

The company said the network integrates warehousing, inventory management, order picking and packing, distribution, and reverse logistics under a standardized operational model connected to a global network of more than 80 fulfillment centers.

“Colombia already moved past the stage of basic e-commerce adoption. The current challenge is execution and having the right logistics technology. The increase in order volumes is putting pressure on operations, where accuracy, visibility and responsiveness define the customer experience,” – Robinson Vásquez, general manager of DHL Supply Chain.

The launch comes as Colombia’s e-commerce sector continues to expand. According to the Colombian Chamber of Electronic Commerce (CCCE), online sales grew 11.1% in 2025 compared with the previous year and reached $145.4 billion COP and more than 684 million transactions. Payments CMI projects annual sector growth of approximately 16% through 2027.

Industry research from the NubeCommerce Colombia 2025–2026 report also points to a maturing market, where consumers are becoming more selective and companies are increasingly focused on operational efficiency and technology adoption.

E-Commerce Growth Intensifies Demand for Faster Fulfillment

As online shopping continues to grow in Colombia, retailers are facing greater pressure to deliver orders quickly and reliably. Meeting customer expectations has become increasingly important as consumers demand faster shipping and more visibility into the status of their purchases.

DHL’s fulfillment service is designed to handle warehousing, inventory management, packing, shipping and returns on behalf of businesses. Companies can track orders and inventory through the company’s MySupplyChain platform.

The system can also connect with online stores, marketplaces and business management software, allowing retailers to manage orders across multiple sales channels.

Operating from fulfillment centers in Bogotá and Medellín, DHL said the network can reach more than 1,000 destinations across Colombia as well as international markets. Deliveries to major cities can be completed within 24 to 48 hours, depending on the service selected.

The company said the two facilities were strategically located to serve regions with the highest concentration of online shoppers and help shorten delivery times.

Vásquez said logistics capabilities are becoming increasingly important for small and medium-sized businesses competing in e-commerce.

“Small and mid-sized companies competing in e-commerce need more than capacity. They need consistency and operational confidence,” he said. “Scaling omnichannel fulfillment without losing control of inventory, integrating multiple sales channels efficiently, and managing returns effectively are now critical to sustained growth.”

Robinson Vásquez, general manager of DHL Supply Chain Colombia

The Technology and Sustainability Components

DHL said the Colombian rollout includes a warehouse management system (WMS) that uses artificial intelligence to support inventory control and improve picking and dispatch accuracy.

The system is designed to integrate with digital sales channels and enterprise systems. This allows for real-time visibility across operations.

The company also highlights sustainability-related features in its fulfillment operations, which include LED lighting systems with automated sensors and waste segregation and recycling processes. These measures are part of DHL Group’s broader goal of reaching net-zero emissions by 2050.

How Does the Launch Fit Into Colombia’s E-Commerce Growth?

Colombia’s e-commerce sector has expanded rapidly in recent years, which is supported by rising digital adoption and improved payment infrastructure.

According to Payments CMI, Colombia’s e-commerce sector is expected to continue growing through 2027, which will be supported by increasing digital adoption and improvements in logistics infrastructure.

Above photo: A DHL warehouse. (Photo: DHL)

Tecnoglass, Inc. (NYSE: TGLS) reported first-quarter 2026 revenue of $249.0 million USD, a 12.0% year-over-year increase and a first-quarter record for the Barranquilla, Colombia-based window and architectural glass manufacturer. Despite the top-line growth, net income fell to $31.9 million USD, or $0.71 per diluted share, from $42.2 million USD, or $0.90 per diluted share, in the same period of 2025, as elevated US aluminum costs linked to import tariffs, mandatory minimum wage increases in Colombia, and a strengthening Colombian peso combined to compress gross margins by 540 basis points to 38.5%.

Multi-family and commercial revenues rose 20.4% year-over-year, driven by continued activity across key markets including geographies beyond Florida, which has historically dominated the company’s US revenue mix. Single-family residential revenues were relatively flat on a year-over-year basis, with management attributing the result to the timing of order conversion into revenue rather than underlying demand, noting that order growth in the segment remained positive into April 2026. On a geographic basis, the US accounted for $237.1 million USD, or approximately 95% of total revenues, up 11.6%. Colombia generated $7.5 million USD, up 17.2%, and other international markets contributed $4.4 million USD, up 27.3%.

Gross profit declined to $95.8 million USD from $97.5 million USD in Q1 2025 despite the higher revenue base. The company cited an unfavorable revenue mix driven by a greater proportion of installation-related revenue, higher raw material costs — with US aluminum tariffs representing an incremental headwind of approximately $6.4 million USD in the quarter — higher salary expenses resulting from annual minimum wage adjustments in Colombia, and the effect of a stronger Colombian peso on costs incurred locally. Pricing actions and operating leverage on higher volume partly offset these pressures.

“We see a clear path to fully offsetting the impact of tariffs in 2027, when full-year pricing across both businesses and incremental automation savings are expected to be realized.” — Santiago Giraldo, Chief Financial Officer, Tecnoglass

Selling, general, and administrative expenses rose to $50.9 million USD, or 20.4% of revenues, from $42.5 million USD, or 19.1%, in Q1 2025. The increase reflected higher personnel costs from annual salary adjustments, peso appreciation, and higher transportation and commission costs tied to revenue growth. The period also included a one-time charge of $2.9 million USD related to Colombia’s *impuesto al patrimonio*, a government-imposed wealth tax levied on large corporations to fund measures addressing recent climate-related events in the country.

Adjusted EBITDA — which excludes non-cash foreign exchange gains and losses, the bad-debt provision, non-recurring charges, and equity-method adjustments related to the company’s joint venture in Vidrio Andino with Saint-Gobain (EPA: SGO) — came in at $61.5 million USD, or 24.7% of total revenues, compared to $70.2 million USD, or 31.6%, in Q1 2025. Adjusted net income was $34.6 million USD, or $0.78 per diluted share, versus $43.1 million USD, or $0.92, in the prior-year quarter.

Cash provided by operating activities was $6.7 million USD, a significant decline from $46.9 million USD in Q1 2025, driven in part by a deliberate build-up of US-sourced aluminum inventories — up $34.3 million USD in the quarter — as part of the company’s tariff mitigation strategy. Capital expenditures of $17.3 million USD reflected scheduled payments tied to previously announced capacity and automation projects. During the quarter, Tecnoglass returned $16.5 million USD to shareholders through share repurchases and paid $6.7 million USD in cash dividends. As of May 7, 2026, approximately $92.5 million USD remained available under the current share repurchase program. The company ended the quarter with total liquidity of approximately $425.0 million USD, comprising $91.1 million USD in cash and cash equivalents and more than $330.0 million USD in revolving credit facility availability, against total debt of $200.3 million USD.

The company’s order backlog reached a record $1.36 billion USD at quarter-end, up 19.1% year-over-year, extending multi-family and commercial pipeline visibility into 2027. Tecnoglass cited continued expansion of its dealer network and showroom footprint as supporting geographic diversification and market share gains, with vinyl product lines identified as an incremental growth driver broadening the company’s addressable market.

José Manuel Daes, chief executive officer, commented on the results: “First quarter results were in line with our expectations, with resilient performance across our key metrics reflecting the continued strength of our vertically integrated business model despite a dynamic cost environment. Demand for our product offerings remains strong, as demonstrated by another quarter of record backlog and healthy order activity, with momentum continuing into the second quarter. Our previously announced pricing actions are now in place, and the broad-based nature of industry cost pressures supports our confidence in executing these increases while preserving our competitive positioning.”

Christian Daes, chief operating officer, addressed the tariff response and the company’s assessment of a potential US manufacturing presence. “Our pricing initiatives and cost mitigation efforts are well underway, including logistics improvements, further automation across our operations, and ongoing supply chain optimization,” he said. “We are also advancing our assessment of a proposed US manufacturing initiative, with a well-located site identified and significant state and local incentives secured that strengthen the project’s potential economics if we decide to move forward based on market demand.”

Santiago Giraldo, chief financial officer, reaffirmed full-year 2026 guidance and outlined the company’s tariff offset timeline. “Based on our strong execution to start the year, we are reiterating our full year revenue outlook in the range of $1.06 billion to $1.13 billion USD and Adjusted EBITDA outlook in the range of $225 million to $245 million USD,” Giraldo said. “This reflects the impact of the recently implemented 10% tariff on finished aluminum window imports as previously disclosed, which is expected to be partly offset in 2026 through pricing actions effective on orders from early May forward, with additional efficiency initiatives from logistics optimization and automation underway and expected to begin contributing benefits by year end. We see a clear path to fully offsetting the impact of tariffs in 2027, when full-year pricing across both businesses and incremental automation savings are expected to be realized.”

On the corporate structure front, Tecnoglass’ board of directors has approved a plan to redomicile the company from the Cayman Islands to the United States, subject to shareholder approval. If approved, the redomiciliation is expected to be completed during Q2 2026. The company stated that the move is intended to simplify its organizational and regulatory structure, improve the tax efficiency of dividend distributions, and expand its potential investor base to include funds and accounts limited to US-domiciled securities. Tecnoglass will retain its Miami, Florida headquarters following the change.

Separately, the company is conducting a feasibility study for a potential new US manufacturing facility. A site meeting project specifications has been identified and substantial state and local tax credits have been secured. The proposed facility is described as highly automated and intended to support future growth while also improving lead times, reducing transportation costs for certain markets, enhancing supply chain efficiency, and enabling the company to compete for Buy America-eligible projects and rapid-turnaround contracts. Tecnoglass expects to complete the purchase of land for the potential facility during Q2 2026, at an estimated cost of $20 million to $25 million USD to be financed through available credit facilities. The company noted that the land purchase does not constitute a commitment to proceed with construction, which would occur in phases contingent on demand, market conditions, and return profiles. The company’s 5.8-million-square-foot vertically integrated manufacturing complex in Barranquilla, Colombia, would continue to serve as its primary production base.

Above photo: Tecnoglass facilities in Barranquilla

The manufacturing sector was among the quarter’s strongest contributors, posting year-over-year growth of 2.9% and adding 0.3 percentage points to the annual variation in GDP. The sector’s performance placed it among the primary drivers of national economic output for the period.

Within manufacturing, two subsectors recorded particularly pronounced gains. Motor vehicle production expanded 27.8% year-over-year, while metallurgy grew 6.6%. Both categories function as inputs to broader industrial supply chains, and their recovery carries implications for upstream and downstream productive linkages, including employment in skilled manufacturing roles.

“What is notable about the first-quarter results is not solely the magnitude of the growth, but its composition. The performance of sectors such as motor vehicles, metallurgy, and machinery is particularly significant because it demonstrates a recovery of industrial capacities with greater effects on productive linkages, skilled employment, and economic sophistication.” — Diana Marcela Morales Rojas, Minister of Commerce, Industry, and Tourism of Colombia

Separate monthly data from statistical agency DANE’s índice de producción industrial (IPI) showed that real industrial output grew 3.9% in March 2026 compared to March 2025. The expansion was distributed across multiple subsectors, including motor vehicles, metallurgy, machinery and equipment, chemicals, pharmaceuticals, rubber, plastics, and non-metallic minerals, indicating that the manufacturing recovery was not concentrated in a single production category.

Wholesale and retail trade expanded 6.0% in the first quarter, reflecting increased domestic market activity and business commerce. The trade sector’s performance complemented the manufacturing gains and contributed to the overall breadth of the quarter’s expansion.

Not all sectors contributed positively. Construction contracted 5.4% compared to the first quarter of 2025, the weakest result among major economic categories for the period. Public administration, defense, social security, education, and health services grew 5.7%, and reporting by Colombian media citing DANE data indicated that public spending accounted for approximately 46% of total first-quarter growth — a concentration that introduces a structural caveat to the headline figure, as private-sector momentum remains uneven across the economy.

Diana Marcela Morales Rojas, minister of the Ministerio de Comercio, Industria y Turismo, addressed the composition of the results in a statement issued alongside the data release. “What is notable about the first-quarter results is not solely the magnitude of the growth, but its composition,” she said. “The recovery of manufacturing, metallurgical, and industrial production activities demonstrates a greater role for sectors associated with transformation, productive capacity, and value-added generation within the national economic dynamic. The performance of sectors such as motor vehicles, metallurgy, and machinery is particularly significant because it demonstrates a recovery of industrial capacities with greater effects on productive linkages, skilled employment, and economic sophistication. These are meaningful indicators of strengthening of the manufacturing structure and national production.”

The first-quarter data were released as Colombia continues to manage elevated monetary policy rates and fiscal pressures that have weighed on investment activity in recent quarters. The Ministerio de Comercio, Industria y Turismo indicated that the quarter’s results reflect progress on an agenda oriented toward strengthening industry, domestic production, and commercial activity, though the degree to which private-sector industrial recovery can sustain these gains independently of public spending remains a key variable for subsequent quarters.

Headline photo credit: Tecnoglass

TORONTO — Jaguar Uranium Corp. (NYSE American: JAGU) has commenced an initial rare earth element assessment program at its flagship Berlin Project in Caldas, Colombia. The site is a polymetallic sedimentary deposit containing uranium mineralization alongside associated rare earth elements (REE) and battery-related commodities such as vanadium, phosphate, nickel, molybdenum, rhenium, and yttrium.

The company plans to utilize approximately 20,000 meters of preserved historic drill core for selective re-sampling and assaying. This approach is intended to advance early-stage REE characterization without the immediate requirement for new drilling. The program represents the first dedicated effort by the company to evaluate the rare earth potential of the 9,053-hectare concession area.

“The results could be a step-change in how this project is understood and technically evaluated.” — Steven Gold, Chief Executive Officer, Jaguar Uranium Corp.

“We are now attempting to advance the recognition that Berlin could represent a relevant non-China based critical mineral deposits in the western hemisphere and specifically in Latin America,” stated Steven Gold, Chief Executive Officer of Jaguar Uranium Corp. “We believe the results could be a step-change in how this project is understood and technically evaluated.”

The strategic shift toward REE evaluation follows a period of increased global policy attention regarding critical mineral supply chains. Materials required for defense systems, electric vehicles, and clean energy infrastructure have become a priority for Western governments seeking to diversify away from Chinese-dominated markets. Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS), has indicated that the US and the European Union are working to foster independent markets for these materials.

The Berlin Project deposit is situated within a layered sedimentary sequence of phosphate-bearing limestone. The company is employing a three-phase approach for its assessment: core logging and systematic re-sampling, multi-element geological modeling, and an evaluation of by-product economics. This modeling will integrate REE assay data with existing datasets for uranium, vanadium, and phosphate to establish a technical foundation for future resource estimates.

Infrastructure at the site includes proximity to a hydroelectric power source 12 kilometers away and access to a river port approximately 65 kilometers from the project, providing a logistical route to the Caribbean coast. The company, which completed a $25 million USD initial public offering on the NYSE American (NYSE American: JAGU) in February 2026, is also managing the Laguna Salada Project in the Argentine province of Chubut and the Huemul mine in Mendoza.

Technical information regarding the program was approved by Owen D. W. Miller, a qualified person as defined by NI 43-101. The company noted that the Berlin Project remains in the exploration stage and does not currently host mineral resources or reserves as defined under SEC Regulation S-K 1300.

Above photo: Col. John P. Kunstbeck scans uranium ore for alpha and beta radiation signatures outside of a uranium mill. (Photo Credit: U.S. Army photo by Maj. Mark S. Quint)

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“This alliance reflects our shared commitment to promote economic and social development through technology,” said Perilla, accompanied by Ruta-N’s executive director Carolina Londoño.

SAP’s President for the Northern Region of Latin America and The Caribbean, Marcela Perilla (Photo: Loren Moss)

“This strategic alliance represents a unique opportunity for the more than 460 companies in Medellín and the digital talent that today makes up our ecosystem, providing them access to world-class resources and knowledge,” said Londoño.

Companies that have participated in Ruta-N’s development and entrepreneurship programs will have the opportunity to receive mentoring in innovation through a program called Startup Innovation Journey, which is designed to support the growth and expansion of startups through access to technology and market opportunities offered by SAP.

SAP is Europe’s largest enterprise software provider and produces enterprise resource planning (ERP) software along with other business software solutions for global companies, including human resources, supply chain, and customer experience solutions.

The 61-year-old, should he gain more than 50% of the vote in either the first or second round of the presidential elections would be Colombia’s first leftist candidate in modern history. In an interview with Colombian network Blu Radio, he promised that the first thing he would do is to declare an emergency and rule by decree, bypassing congress.

Listen here (Spanish) to the actual interview

Taking control of the food supply

Petro says that the move would allow him to take control of the agricultural and food supply chain, something that neighboring Venezuela has done, leading to a humanitarian crisis.

“We must decree the economic emergency that empowers the State to buy crops from peasants, small and medium-sized agricultural food producers, protect food production in Colombia, establish a more medium-term policy of subsidy for agricultural inputs and bring that food, as in the past went to (social subsidy program) Idema, to the popular neighborhoods, where the hunger is,” said Petro.

A similar program operates under leftist dictator Nicolás Maduro in neighboring Venezuela.

A similar program operates under leftist dictator Nicolás Maduro in neighboring Venezuela. The CLAP program (Comité Local de Abastecimiento y Producción), an acronym for “Local Committees for Supply and Production. The United Nations Office of The High Commissioner issued a report saying that the structure and execution of the Venezuelan food program is a fundamental violation of the human rights of Venezuelans (download the report here).

Venezuelans must wait in long lines just to enter largely empty grocery stores, to purchase food beyond the government administered CLAP, which requires a certain level of compliance with local committees staffed by Maduro’s partisans. The lack of food has led to a refugee crisis, with Colombia now housing approximately two million Venezuelans.

While mayor of Bogotá, Petro tried to take government control of the municipal garbage collection network with disastrous results. Piles of trash piled up uncollected in Colombia’s capital of nine million, leading to a sanitary crisis, and Petro’s temporary removal from office by the national government.

Nationalizing new pension contributions

Currently, Colombia requires pension contributions by employees and independent professionals. Colombians may choose from either a state option, or a menu of privately run pension plans, somewhat similar to a 401(k) plan in the US, albeit with fewer choices. Petro campaign advisor Ricardo Bonilla says Petro promises to upend that.

According to Bonilla, people earning between minimum wage and four million Colombian pesos (slightly more than $1,000 USD per month), will no longer have a choice of plans, but must contribute to the government plan. Money already in private plans may stay there, says Bonilla. For those earning more than $4 million pesos, the pension contributions on the first 4 million must go to the government, and only the contribution on the surplus amount may be contributed to alternate plans, making the private option only available to higher income earners.

From SINPRO we see with great concern how in this administration there have been repetitive changes in the EPM structure and appointments that affect the transparency and the rigors that have characterized our company.

In addition to the cases that we have made public, we now warn about the latest moves: the appointment of the new Vice Presidents of Legal Affairs, Jonathan Villada Palacio, and from Human Talent, Juliana Carolina Zapata Molina; the appointment of two advisers for the new manager of Afinia; the settlement of the new IT structure attached to the Vice Presidency of New Businesses, Innovation and Technology; and that of the Identity management, attached to the Vice Presidency of Communications.

SINPRO President Olga Lucia Arango

Historically, we have asked EPM for an administrative structure in accordance with institutional principles and technical rigors, leaving no fissures for politicking, bureaucracy, nepotism, cronyism and corruption. For example, in 2018 after the contingency of the Hidroituango project, we delivered a proposal for contribution to the sustainability of EPM, including the optimization of the structure.

In 2020, during the administration of the first of four EPM managers in 20 months—something never seen in 66 years—we warned about the fairness of appointments to high positions of managers and advisers, who did not correspond to the tradition of a company like EPM. With the new management’s arrival and with the approval of the board of directors, this practice did not change. On the contrary, it has become more evident, without shame.

A few months ago, and without questioning their possible academic merits, we warned about the appointments of the General Secretary, María Cristina Toro, and the vice presidents of Finance and Investments, Martha Durán, and Communications, Mabel López, upon the impression that quotas of politicians related to the government of Medellin were being filled.

The next step was the creation of the Administrative Management Department in the General Secretariat, despite the existence of the Administrative Support assigned to Supply Chain and Shared Services.

Mr. Manager and members of the board, you have underestimated these alerts, which we launched on the retirement of about twenty workers of all levels brought through extreme pressure and to which people of retirement age have also been subjected.

Knowing that a big investor is interested in an asset can distort the price.

As more companies and investors pursue opportunities in emerging markets, or even remote locations of mature developed economies, it becomes increasingly important to go beyond the typical audits and financial reviews of financial due diligence, and actually inspect the underlying tangible assets of any acquisition, merger, or financing. In addition to conducting on-location physical due diligence of potential investments or relocation, the service is important for ongoing compliance and verification, says CEO Loren Moss. “More and more, institutional investors are finding opportunities in emerging markets such as Latin America, The Caribbean, Asia, Africa, Eastern Europe. A deal can look good on paper, but an independent party should actually show up and make sure that the asset is what the documentation says it is,” says Moss. “We also see cases where a potential investor wants confidentiality or to avoid publicity. Knowing that a big investor is interested in an asset can distort the price.”

 But when investing in, purchasing or funding any significant asset, be it a business, building, agricultural property, mine, power plant, nonprofit initiative, or any other valuable undertaking, there is no substitute for eyes and ears on the ground to verify what the documents state.

The service is directed towards corporate clients & private equity, but is priced to make sense for high-net-worth individual investors and family offices. Generally an investment bank or corporate law firm would engage with Unido Digital to work in a collaborative fashion with auditors and accountants conducting financial due diligence on a transaction. In addition to transactions, ongoing compliance and verification, such as for supply-chain, labor conditions, or quality are important.

“Let’s suppose you are investing in a shopping center in a distant market. Have you actually verified that the real foot or vehicle traffic is what they claim it is?  Look at the case of Miniscribe. Investors thought they had a warehouse full of hard disks that they were selling to buyers like IBM. But if you went to their warehouses in Malaysia, the packages were literally filled with bricks!” Moss insists that an inspection would have protected investors against the multi million dollar fraud that came to light. “Insurers have underwriters. Real estate investors have property inspectors. Now acquirers and investors have a similar service.”

“Look at Theranos. They defrauded investors out of hundreds of millions of dollars over a magic box that nobody bothered to look inside of,” said Moss. “There were investors who looked closely and decided not to invest. The ones that just relied on paperwork and hype lost out.” According to Moss, if anyone either hired an independent third party to verify the claims or simply insisted on verifying them physically, they wouldn’t fall for similar deceptions. Moss recounted the case of a commodities trader who purchased a ship load of coffee from Africa, after conducting several similar transactions; only in the final instance, he was sold a “bill of goods” and was defrauded when there was no actual ship, and no actual coffee. Physical due diligence is designed to deter this.

Interested investors can learn more here.

Unido Digital shares common ownership with Finance Colombia

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With its Brussels office, which the three-century-old specialty insurance market hopes to have running by mid-2018, Lloyd’s will maintain the ability to underwrite throughout the E.U. even if it proves unable to secure the so-called “passporting rights” to do so from the U.K. capital.

Photo: Lloyd’s of London Chairman John Nelson (left) tells Finance Colombia Executive Editor Loren Moss (right) that, in Colombia, “insurance penetration needs to increase — that’s the opportunity for Lloyd’s.” (Credit: Loren Moss)

While this is the international story of the day, it is far from the only recent expansion by Lloyd’s. Last year, the insurance pioneer that got its start in a London café in 1688 opened its first office in Colombia. By setting up shop in Bogotá, Lloyd’s hopes to capture more business in what it views as one of the most promising markets in Latin America.

Under the leadership of Chairman John Nelson, Lloyd’s has continued to grow in both the region and other areas outside of its traditional areas of strength in the United States and Europe. And he believes the opportunities in Colombia are numerous.

The country still has a low penetration rate, even compared to many of its Latin American peers, and various industries are set to benefit as the country moves into its post-conflict era following a peace accord with the Revolutionary Armed Forces of Colombia (FARC).

By while Nelson led this move into Colombia, he will soon be leaving it in other hands. The other big news for Lloyd’s this year was the announcement is that Nelson’s time as chairman will soon come to an end. In June, Bruce Carnegie-Brown will take over the role.

But Finance Colombia Executive Editor Loren Moss was fortunate to sit down with Nelson last year before he moved on. The two discussed the opportunities present in the Colombian insurance market, the strategic aims of Lloyd’s in the country, and the future of the Bogotá office.

John Nelson, chairman of Lloyd’s of London. (Credit: Lloyd’s of London)

Finance Colombia: What did Lloyd’s of London see to decide that now is the time to warrant opening an office on the ground in Colombia?

John Nelson: Lloyd’s is the only insurance market in the world. We’re not a company — we are a global hub for specialist insurance and reinsurance. All our business is basically commercial, so it’s B-to-B sophisticated risk, catastrophe risk, and so on.

Part of our strategy at Lloyd’s is to reinforce our position as the global hub for specialist insurance and reinsurance, so that means that, traditionally, our strongest position is in the United States. It’s 40% of our market. We are the largest excess and service lines provider in the United States, and we’re double the size of AIG, to give you an example, in the U.S. We’re the second largest reinsurer.

And then we have big business elsewhere: 15% in the U.K., 15% in the E.U., about 12% in Asia, 8% here in Latin America, and the rest in the rest of the world. So Latin America, talking generally, has been sort of challenged over the last 50 years — or 100 years — for different reasons: economically, politically, and in every other way. As economies have improved in Latin America over the last 30 or 40 years — in Brazil, Mexico, Chile, Peru and so on — our penetration in those countries has improved.

Our biggest market, for Lloyd’s, is Mexico, and the second biggest is Brazil. Brazil is probably our biggest infrastructure, and then we have good positions in Chile and Peru. Colombia has been a small market for Lloyd’s. We write about $1.5 billion USD of reinsurance business in Latin America. About a hundred million dollars of that is in Colombia — all written offshore.

But over the last three or four years, we’ve had a hard look at where we feel we could make a real difference, and in fact, if you look at Colombia and look at the Colombian economy, it’s grown well. It’s slowed down a bit now because of the oil price and geopolitical slowdown, but still we think it’s a very good economy.

Remember that it has industrialized and commercialized very well. You’ve got a strong, sustainable democracy and you have a good quality of governance in the country. I think it’s going to be helped by the peace talks with FARC. The Pacific Alliance is important, and the 4G infrastructure project is important. So we take a long-term view, and we think that the economy will grow.

Finance Colombia: Specifically in the Colombian insurance market, what opportunities do you see?

John Nelson: Colombia is heavily underinsured. If you look at insurance penetration in Colombia, it’s around 1.6% in terms of gross written premiums to GDP. The average worldwide is about 6.1%, so Colombia is about a quarter of where it should be. On top of that you’re seeing a greater concentration of risk because of urbanization. You’re seeing in Bogotá, for example, a huge concentration of risk. We did the Lloyd’s City Risk Index report, and you can see the risk that Bogota has become more efficient economically but that this creating greater risk — which is not being insured.

So by bringing in reinsurance to support the domestic insurers, it should allow those domestic insurers to increase insurance penetration, not just in capacity but also breadth of product. Because a lot of product isn’t provided by the domestic insurance, particularly sophisticated B-to-B, cyber, some supply chain risk, and so on is not provided. And that we can do.

“If you look at insurance penetration in Colombia, it’s around 1.6% in terms of gross written premiums to GDP. The average worldwide is about 6.1%, so Colombia is about a quarter of where it should be.” – John Nelson, chairman of Lloyd’s of London

The economic community, the business community, the governmental community, they all think this is important because Colombia and Bogotá are very susceptible to catastrophe risk. The country is also susceptible to man-made risk. So if we look at the key elements affecting Bogotá, as well as earthquake, it’s also things like market crash, pandemic, and cyber-risk.

We think that, over time, insurance penetration needs to increase. That’s the opportunity for Lloyd’s, but we also think it’s good for the Colombian economy and good for the Colombian insurance industry.

Finance Colombia: Certainly. We all know that Colombia sits in the Andes mountains, at least a lot of the country does. But apart from the obvious, such as seismic risk, what are the unique aspects of the Colombian insurance market? What makes Colombia different than, say, even neighbors like Peru or nearby Chile?

John Nelson: What’s different in Chile, for example, is that Chile has good insurance penetration. So when the massive earthquake hit in 2010, that was largely reinsured offshore. So capital was pumped into Chile and the economy recovered very quickly.

If you take New Zealand, after the Christchurch earthquake, we saw the same thing. It was insured offshore. So diversifying risk outside the country is pretty important. If a disaster of that size happened in Colombia today, that would not be the case. The hit would be taken by the government, taxpayers, and the communities to a large extent. It would not be cushioned by capital coming in from outside the country.

And I’ll give you the biggest example: the United States. The country is heavily susceptible around the coasts to natural catastrophes: earthquake in California, winds in Florida, and storms in Texas. But about 60% of the risk is reinsured outside the country.

Finance Colombia: With Colombia, one of the things that I’ve seen recently is the increased interest from institutional investors, and I imagine that the institutional investors coming in — with the more sophisticated mind-set and more sophisticated investment criteria — are going to demand certain levels of insurance written through certain carriers that are rated at certain levels.

John Nelson: Yes, and where they start is in evaluating the quality of corporate governance. One of the elements of that is risk management. On any board of directors I sit on, once a month you’re looking at risk. It may be item number one on the agenda. You’re looking at the top 10 risks and what the company is doing about it — how it is doing in terms of risk mitigation.

“By bringing in reinsurance to support the domestic insurers, it should allow those domestic insurers to increase insurance penetration, not just in capacity but also breadth of product.” – John Nelson, chairman of Lloyd’s of London

I’m sure that in the sophisticated Colombian companies, that is happening. But I suspect there’s further to go because, as I say, if you look at insurance penetration, a lot of the risk is just not covered. Cyber insurance, for example, hardly exists in Colombia.

Lloyd’s of London opened its Bogotá office last summer. (Credit: Jared Wade)

Finance Colombia: How sophisticated are the domesticated insurers? We have some relatively large insurance companies — well, at least one relatively large insurance company.

John Nelson: Sura company.

Finance Colombia: Exactly. But then there are some others that are smaller. When it comes to the reinsurance opportunities in Colombia, do we see that? Other global or at least multinational insurers operating in Colombia? Or is a lot of that the domestic insurance?

John Nelson: Well, the domestic insurance market, as opposed to the reinsurance market, is dominated by domestic insurers. They’re pretty strong. Many of them are good, quality businesses. But they don’t yet provide the scale or the breadth that the economy is now requiring.

In terms of reinsurance, most or the reinsurance capacity comes from the international reinsurers. There’s some domestic reinsurance, but it is mostly provided by the international reinsurers who are here — and hopefully Lloyd’s as well.

Finance Colombia: Great. So what can you tell me about the office that you’ve opened in Bogotá?

John Nelson: It’s very small — very small. In any country where we open offices, it’s always very small. So we’ve probably got three or four people here at the moment, led by Juan Carlos Realphe, a Colombian who’s a very experienced insurance professional. We’re very pleased to have him. He’s been with us for around two years now.

And then the key thing is: how many of our managing agents come to be physically present. At the moment we have two, Brit and Advent, who’ve come to Colombia. I expect that number to grow slowly and gradually. That’s usually what happens.

If you look at our other platforms outside London, Singapore is a good example. That has taken 20 years to grow to where it is today — our biggest hub outside of London. China’s growing more quickly. We now have over half the managing agents on the Chinese platform in Shanghai and Beijing. Dubai has about 10, I think, and in Brazil we have 10, I think.

So here I wouldn’t expect it to be a very large number. But what will happen is that Lloyd’s tends to be a catalyst to increase penetration. More people come in around us: More brokers, more advisors, more insurance companies come in.