Best’s Market Segment Report: AM Best Maintains Stable Outlook on Guatemala Insurance Industry

MEXICO CITY--(BUSINESS WIRE)--AM Best is maintaining its stable market segment outlook on Guatemala s insurance industry, citing improvement in Guatemala’s economy and the market’s capacity to further strengthen its capital base, as measured by the industry’s regulatory solvency margin and Best’s Capital Adequacy Ratio (BCAR).

The new Best’s Market Segment Report, titled, “Market Segment Outlook: Guatemala Insurance,” states that in 2019, premium growth in Guatemala expanded by 6.7%, more than a full percentage point above its five-year average of 5.5%. The larger market players, as well as one smaller participant making its way into the market and the insurance arm of the central bank, drove the premium growth. AM Best expects insurance growth to be supported by consumer spending due to healthy remittance flows and low inflation. Additionally, the government plans to invest in infrastructure (i.e., building new homes and highways and updating ports) and improve the tourism sector to help drive future economic growth. Profitability, as measured by return on equity, reached its highest level in five years at 23.9%. Net income increased by 5.7% due to stable underwriting performance and constant financial income.

Guatemala was ranked as the third-largest insurance market in Central America as of year-end 2019. The country’s insurance penetration rate has not changed significantly since 2013 and currently amounts to 1.19% of GDP, below the Latin American average penetration rate of 2.9%.

The industry’s risk-adjusted capitalization is robust, as measured by BCAR, in line with a reported regulatory solvency margin of USD 166.6 million, resulting in a solvency margin to technical equity ratio of 32. Regulatory investment requirements for technical reserves also have further strengthened companies’ balance sheets.

With good prospects for growth in the Guatemala’s economy, AM Best expects the insurance industry to reflect these conditions. Growth in personal lines and property/casualty segments will come hand in hand with an improved dynamism in private consumption and public investment. Companies are well-positioned to maintain stable results supported by strong solvency and an adequate regulatory environment that provides guidelines to safeguard liquidity and solvency.

To access a copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=294573.

AM Best will host a market briefing on the state of Latin America’s insurance industries on Thursday, March 12, 2020, at the JW Marriott Miami Turnberry Resort and Spa in Miami, FL, featuring leading Latin America-based insurance industry executives and AM Best analysts. To register for the event, or for more information, please visit www.ambest.com/events/imblatam2020 (or www.ambest.com/events/Cumbre2020 in Spanish). For a related Best’s Special Report, titled, “Latin America: Economic and Political Risks May Subside in 2020,” please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=293607. A video interview with that report’s author is also available.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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