08/23/2024 | Press release | Distributed by Public on 08/23/2024 07:36
AUGUST 23, 2024 09:34 AM (EDT)
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FOR IMMEDIATE RELEASE
MEXICO CITY - AUGUST 23, 2024 09:34 AM (EDT)
Reinsurance companies operating in Latin America continue to benefit from the region's GDP growth, although the impact of 2023's Hurricane Otis highlights the need for additional capacity, according to a new AM Best report.
The Best's Market Segment Report, "Latin American Reinsurers Benefitting from GDP Growth," is part of AM Best's look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo. Other reports, including AM Best's ranking of top global reinsurance groups and in-depth looks at the insurance-linked securities, Lloyd's, life/annuity, health and regional reinsurance markets, will be available during August and September.
This report states that reinsurers in the first half of 2024 have continued to support primary insurers. Some global participants operating in Latin America have shifted their risk appetites, due to global mandates or general risk aversion. Most shortfalls in placing contracts have been covered by other large international players or regional reinsurers. In a few instances, programs were not placed at 100%.
"Reinsurance renewal experience across Latin America has varied but has mostly favored primary insurers with more comprehensive enterprise risk management capabilities, which have better claim experience and are then able to negotiate reinsurance contracts more effectively," said Eli Sanchez, director, analytics, AM Best. "Renewals are being affected by significant events in the region, including flooding in Brazil and the aftermath of Hurricane Otis in Mexico."
The report notes that the use of managing general agents, either to provide capacity to the Latin American market or to take risks by regional reinsurers from abroad, has gained popularity. As global interest rates continue to fall, the region's attractiveness may generate more demand for delegated underwriting authority enterprises (DUAEs).
In Brazil, domestic reinsurers with international catastrophe exposure are trimming their property catastrophe exposures in line with global trends. However, their actions have yet to translate into meaningful underwriting profits or capacity growth. Domestic reinsurers have been focusing on specialty lines such as surety, auto, transports and agricultural, as they represent opportunities to grow.
"The increasing volume of ceded premiums - 8.9% growth in 2023 - to local reinsurers reflects the maturation of the insurance market," said Ricardo Rodriguez Perez, financial analyst, AM Best. "Pricing remains favorable, with the help of the hard global reinsurance market."
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=345889.
A video discussion of this report also is available at http://www.ambest.com/v.asp?v=ambgrlatam824 (Spanish: http://www.ambest.com/v.asp?v=ambgrlatamspanish824&AltSrc=182).
For future global reinsurance reports ahead of Rendez-Vous de Septembre, please visit Best's Research.
Lastly, AM Best will host its annual reinsurance market briefing at Rendez-Vous de Septembre on Sept. 8, 2024, at 10:15 a.m. (CEST) in Monte Carlo. For more information, please visit http://www3.ambest.com/rd/rd.aspx?rd=RVDS2024.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.