CARACUS (Bloomberg) — Venezuela's President Hugo Chavez will create the country's first state-owned insurance and re- insurance company.

The Finance Ministry will be in charge of forming Bolivariana de Seguros y Reaseguros SA, which will focus on insuring trade transactions and investments, according to a decree published in the government's official gazette yesterday.

Chavez has increased the government's role in the economy since winning re-election in December. He's nationalized much of the telecommunications and energy industries already, and last week proposed a rewrite of the constitution that would give the state control over natural gas and coal reserves.

"The purpose is to compete with private companies," said Cesar Aristimuno, director of the Caracas-based research company Aristimuno, Herrera & Asociados. "This is the economic model of the country."