The Latin American reinsurance market remains shaped by foreigner reinsurers, while the bulk of Latin entities that have begun an incipient development mainly focus in captive niche segments, according to a new Fitch Ratings report.
Gross written premiums(GWP) and the reinsurance business in Latin America have attractive growth projections, aligned with the strong growth rates during the previous years. Most Latin American countries have shown an economic profile enhancement and a solid development of its financial industry, which benefit the insurance penetration and underwriting sophistication. GWP breakdown continue to show an ample dispersion by country, and it's concentrated in retention lines as auto insurance, health and traditional life.
In the special report published this week, Fitch says the Latin American reinsurance market is in a soft cycle considering that in the last couple of years the number of natural disaster has decreased from its peak in 2010 and 2011. As a result, there is an international surplus of reinsurance capacity, weaker reinsurance premiums rates and lower funding cost.
The number of Latin reinsurers remains limited(fewer than 15), as a consequence of the ample capital requirements for reinsurance business, geographical ability to disperse the risk, and higher sovereign risk of most of the host countries. However, in recent years there has been further development of Latin reinsurers, mainly in Brazil, Colombia and Panama, focusing on captive reinsurance programs and niche approach through strong relationship with related insurance entities.
The report 'Diversity and Growth Opportunities in an Improved Regulatory Environment' is available at www.fitchratings.com.
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