CORRECTING and REPLACING Best’s Briefing: Mexico Election Results Hold Uncertain Implications for Insurance Sector

CORRECTION...by A.M. Best

MEXICO CITY--()--In the first paragraph of release dated July 16, 2018, the second half of the sentence should read: …which could cause an increase in the loss ratio of the country’s insurance sector, according to a new A.M. Best briefing (instead of … which could cause asset-liability mismatches in the country’s insurance sector, according to a new A.M. Best briefing).

The corrected release reads:

BEST’S BRIEFING: MEXICO ELECTION RESULTS HOLD UNCERTAIN IMPLICATIONS FOR INSURANCE SECTOR

While the peso has gained some ground after Mexico’s recent presidential election, failure or unfavorable conditions in the renewal of the North American Free Trade Agreement (NAFTA) could burden Mexico’s currency, which could cause an increase in the loss ratio of the country’s insurance sector, according to a new A.M. Best briefing.

The Best’s Briefing, titled, “Mexico’s Election Results: Short-Term Stability, Long-Term Headwinds,” states that an ambiguous economic landscape will challenge President-elect Andrés Manuel López Obrador. Additionally, the NAFTA renewal, monetary policy, inflation and the strength/weakness of the peso will be key concerns. The non-renewal of NAFTA could impact insurance companies’ claims as a result of an increase in the cost of commodities, automobile parts and medical supplies that are priced in U.S. dollars. The insurance sector in Mexico generally tries to avoid currency mismatches between assets and liabilities. Nevertheless, some participants hold long positions in U.S. dollars with excess capital, which could translate into currency gains.

Contracts awarded by López Obrador’s predecessor, especially those related to infrastructure and tax incentives, may be re-examined, which could affect a growing surety insurance sector. Furthermore, changes in attitudes toward trade, business and labor could influence taxes, wages and inflation, which in turn would alter risk/reward profiles of various asset classes and influence investment portfolios.

A.M. Best will continue to monitor key developments in the economic, political, and regulatory landscape of Mexico for any impact on credit risk and ratings.

For the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=275852.

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
Alfonso Novelo, +52 55 1102 2720, ext. 107
Senior Director, Analytics
alfonso.novelo@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
Alfonso Novelo, +52 55 1102 2720, ext. 107
Senior Director, Analytics
alfonso.novelo@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