June 19 (Bloomberg) -- Grupo de Inversiones Suramericana SA, the parent company of Colombia’s largest bank, expects 2010 profit to increase more than this year’s forecast of up to 10 percent growth, Chief Executive Officer David Bojanini said.

The company’s decision last month to combine its car and health insurance services under the “sura” brand will help it lure in more customers and cut costs, Bojanini said. He said sales growth will also quicken as the economy starts to rebound from a slump that sparked the first contraction since 1999 in the fourth quarter.

“This isn’t just a change in brand,” Bojanini said in an interview yesterday at Grupo Suramericana’s Medellin headquarters. “It creates important synergies in costs that translate into greater efficiency and higher profits over time. It’s powerful, it gives us a competitive advantage in the market.”

Colombia’s economy will grow 0.5 percent this year and 2.5 percent in 2010, Finance Minister Oscar Ivan Zuluaga said this week, after shrinking 0.7 percent in the fourth quarter as the global financial crisis stifled exports and consumer demand.

Grupo Suramericana’s 2008 earnings rose 9.4 percent to 273 billion pesos ($130.6 million). The company changed its name from Suramericana de Inversiones SA while its insurance holding is now called Suramericana SA instead of Inversura SA. They are both part of Colombia’s biggest industrial group known as Grupo Antioqueno, which also includes Bancolombia SA, the nation’s biggest lender. Grupo Suramericana owns 81.1 percent of Suramericana and 29.4 percent of Bancolombia.

2010 Recovery

“The past year has been relatively bad for insurance companies as reinsurers raised premiums because of the global crisis,” said Johanna Castro, an analyst with Bogota-based brokerage Corredores Asociados. “After a not so spectacular year everyone now is focusing on the 2010 economic recovery and what this will mean in terms of increased demand.”

Colombia posted average annual economic growth of 5.5 percent over the past six years after President Alvaro Uribe boosted consumer confidence by cutting the murder rate 40 percent and kidnappings 63 percent following his August 2002 inauguration. Better security helped drive the economy in 2007 to 7.5 percent growth, its fastest expansion in three decades.

Castro predicts Grupo Suramericana’s shares will “stabilize around current levels” after jumping 30 percent in the past three months. Grupo Suramericana rose 0.3 percent to 20,100 pesos at 10:05 a.m. New York time in Bogota trading.

“The company’s shares really aren’t overpriced,” Bojanini said. “They’ve regained part of their value very quickly, but their price today isn’t speculative. They represent well the value of the companies” in Grupo Suramericana’s portfolio.

Stock Market

Colombia’s IGBC stock index has risen 28 percent this year, the second-worst performance among Latin America’s six major exchanges. The MSCI Latin America index has gained 44 percent in 2009. Foreign demand for Colombian stocks is increasing, helping the market to return to “normal prices,” as the U.S. economy recovers, Bojanini said.

“People were afraid to invest,” Bojanini said. “Now there’s optimism in Colombia. Investors from outside have started buying much more here.”

Bojanini said Grupo Suramericana’s operations in Venezuela have been hurt by the limited access to dollars in the neighboring country. The company has a 36.4 percent stake in Grupo Nacional de Chocolates SA, Colombia’s biggest food producer, and owns 34.3 percent of Cementos Argos SA, Colombia’s largest cement maker, both of which do business in Venezuela.

“In some cases we’ve had to make do with the parallel market,” Bojanini said. “Prices have had to jump very high, and demand for many goods has fallen because of that. Our margins are acceptable though perhaps not as good as in other times.”

Venezuela’s bolivar traded at 6.77 per dollar in the unregulated market yesterday. The government pegs the currency at an official exchange rate of 2.15 per dollar under restrictions it imposed in 2003. The Foreign Exchange Administration Commission, known as Cadivi, controls access to dollars at the official rate.

To contact the reporters on this story: Alexander Cuadros in Bogota at acuadros@bloomberg.net; Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

Last Updated: June 19, 2009 10:18 EDT