MEXICO CITY--(BUSINESS WIRE)--AM Best is maintaining its stable market segment outlook on Peru’s insurance industry, citing the country’s solid macroeconomic factors tied to favorable investment policies, strong life offerings that will continue to drive growth and the market’s ability to strengthen its capital base.
The new Best’s Market Segment Report, titled, “Market Segment Outlook: Peru,” states that Peru’s insurance industry grew premium by 7.6% in 2019, as life insurance offerings continue to provide attractive savings alternatives to traditional investments and pension plans. The non-life segment also continues to expand, particularly major medical, earthquake and automobile. As of December 2019, Peru’s insurance market was USD 4.2 billion, making it the seventh-largest insurance market in Latin America. Although insurance penetration has increased slightly since 2015, it remains below the Latin American average penetration rate of 2.9%.
In 2016, market dynamics in Peru changed after approval of early retirement pension benefits; however, as of 2019, lost premiums have been replenished through a diverse offering of life products. This change continues to influence underwriting performance in 2019, as the acquisition costs associated with life products has led an increase in the industry’s combined ratio. On the other hand, profitability improved in 2019 as investments yields associated with life products have been able to compensate for its technical results while non-life lines have consistently generated positive technical income.
The industry’s risk-adjusted capitalization is robust, based on Best’s Capital Adequacy Ratio (BCAR), in line with a reported regulatory capitalization margin of USD 553.4 million, resulting in a capitalization to required equity ratio of 1.3 times. As of December 2019, all active companies were complying with the regulatory capitalization requirement. Historically, dividends have been substantial, but have not eroded the industry’s balance sheet strength or its solvency, owing to ongoing positive bottom-line results.
To access a copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=294839.
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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