Best’s Market Segment Report: Latin America Reinsurance Segment Still Attractive Despite Soft Market

OLDWICK, N.J.--()--Global reinsurers continue to look to Latin America for diversification, even though the natural catastrophe-prone region has not seen any significant market-hardening events since 2013, according to a new AM Best report. As a result, the reinsurance market in Latin America remains soft.

AM Best believes that the strengthening of the regulatory frameworks in some Latin America countries could lead to market consolidation, and increase overall demand for reinsurance. Lower interest rates and protectionism, however, could limit those prospects, according to the report.

The new Best’s Market Segment Report, “Global Reinsurance: Fighting the Last War,” notes that on a global basis, the days of large catastrophic events triggering widespread market hardening are gone, replaced by pockets of microcycles, based on geography and loss experience.

The Latin America region remains attractive owing to its growth potential and strengthening regulatory frameworks, as well as primary companies’ profitable risk selection.

“However, limited economic prospects, potential protectionism and lower interest rates could limit business opportunities and pricing terms for participants in the region,” said Elí Sánchez, associate director. “Insured losses may have been low in recent years, but market participants will be aware of the region’s susceptibility to earthquakes.”

Historic catastrophe events in Chile, Mexico, and more recently, Peru and Panama, should be considered as reinsurers estimate their underwriting capacity, pricing and risk management initiatives in Latin America. In addition, the region remains susceptible to climate change has been experiencing increasingly volatile weather patterns.

AM Best’s market segment outlook on the global reinsurance sector remains stable, primarily reflecting a more-stabilized, non-life pricing environment, as well as a stable market environment in the global life reinsurance segment.

Other highlights from this year’s annual report on the global reinsurance include:

  • The most notable movement in AM Best’s highly regarded annual ranking of the Top 50 Global Reinsurance Groups was Swiss Re Ltd. moving back into the top spot as the world’s largest reinsurer, as measured by reinsurance gross premium written.
  • The 2017-2018 catastrophe events increased attention on the collateralized reinsurance market, as it absorbed a substantial amount of the related losses. However, it remains the fastest-growing segment of the insurance-linked securities market, with market capitalization of approximately $55 billion out of a roughly $98 billion ILS market.
  • The global reinsurance report also provides in-depth looks at the Lloyd’s market, as well as other geographic regions such as MENA, Sub-Saharan Africa and Asia-Pacific.

To access a copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=289149.

AM Best also will host its annual Reinsurance Market Briefing at the 2019 Rendez-Vous de Septembre (Rendez-Vous) on Sunday, Sept. 8, 2019, at the Hermitage Hotel in Monte Carlo, Monaco. The briefing will start at 10:15 a.m. and end at 11:45 a.m. (CEST). To register, please visit www.ambest.com/events/rmbseptembre2019. AM Best will hold a second Reinsurance Market Briefing in Zurich on Wednesday, Sept. 18, 2019, at the FIFA World Football Museum. More information and registration can be found at www.ambest.com/events/rmbzurich2019.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Elí Sánchez
Associate Director
+52 55 1102 2720, ext. 122
eli.sanchez@ambest.com

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

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Contacts

Elí Sánchez
Associate Director
+52 55 1102 2720, ext. 122
eli.sanchez@ambest.com

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

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com