OLDWICK, N.J.--(BUSINESS WIRE)--AM Best is maintaining its negative market segment outlook on the Brazilian reinsurance industry due to persistent economic uncertainty that has been exacerbated by the COVID-19 pandemic.
The Best’s Market Segment Report, “Market Segment Outlook: Brazil Reinsurance,” states that resurging macroeconomic and political uncertainties, along with a record-low interest rate environment, worsening foreign exchange volatility and a reinsurance market that looks inward to the domestic market, are additional factors supporting the negative outlook.
Owing to the pandemic, Brazil has become more vulnerable to the global economy. Given the corporate nature of the reinsurance segment and its correlation to the domestic economy, losses have grown, with companies feeling the effect of the COVID-19 crisis. Record-low interest rates offer little help to grow capacity through retained earnings, for reinsurers to increase their underwriting activity.
Brazil remains a developing economy with a developing (re)insurance regulatory framework that has played a large role in the market and that will continue to evolve and influence the segment’s prospects. AM Best believes that a couple of factors could stabilize the reinsurance market; in particular, the continuation of meaningful economic reforms, which could facilitate long-term growth and boost confidence domestically and abroad. Another important factor is reinsurers’ ability to generate strong overall earnings, mainly through underwriting, to achieve a sustainable and prosperous reinsurance segment in Brazil.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=305228.
To view current Best’s Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp.
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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