Best’s Special Report: Recovery Continues in Argentina Markets, but Challenges Persist

OLDWICK, N.J.--()--While the threat of inflation remains in Argentina, its economy has made significant progress in recovering from financial woes, which is evident by its recent re-entry into debt markets and the sale of an historic 100-year bond in 2017, according to a new A.M. Best special report.

The Best’s Special Report, “Argentina Market Review,” states that Argentina’s economic progress still faces headwinds in the form of county risk. A.M. Best defines country risk as country-specific factors that could adversely affect an insurer’s operating environment, and it is evaluated and factored into all A.M. Best Credit Ratings. Countries with the least amount of risk are assigned CRT-1 (Country Risk Tier 1) while countries that pose the greatest challenge to insurers’ financial stability, strength and performance are rated CRT-5 (Country Risk Tier 5). Argentina, Latin America’s third largest insurance market behind Mexico and Brazil, remains in the CRT-5 category despite some recent market improvements.

The liquidity of investments among Argentina’s insurers has improved over the past five years, with total invested assets increasing to USD 17.4 billion from USD 15.6 billion during that time, at an average rate of 2.2% a year, while total liabilities increased by an average annual rate of 1.4%.The portion of liquid assets over the total invested assets increased to 96.8% from 89.8%, recording a five-year average of 93.3%.

In addition, insurance premiums have increased, totaling 2.6% of the country’s gross domestic product in 2016, up from 2.1% in 2011. The largest market sector in Argentina is automobile, which generated 44.2% of the total gross premium written in the non-life market in 2016. The automobile and workers’ compensation sectors together have consistently accounted for more than 75% of the non-life market over the past five years. However, underwriting losses continue to pose a challenge as the loss ratio for Argentina’s non-life market increased to 77.3% from 64.8% over the past five years. The combined ratio for the non-life sector deteriorated to 113.6% from 105.8% during that same timeframe.

To access the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=272384.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Yong Lee, +1 908 439 2200, ext. 5493
Manager, GAAP and Latin America Data
— Corporate Data Management
yong.lee@ambest.com
or
Meg Mulry, +1 908 439 2200, ext. 5446
Associate Director — Economic Research
and Analytics
meg.mulry@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Yong Lee, +1 908 439 2200, ext. 5493
Manager, GAAP and Latin America Data
— Corporate Data Management
yong.lee@ambest.com
or
Meg Mulry, +1 908 439 2200, ext. 5446
Associate Director — Economic Research
and Analytics
meg.mulry@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com