MEXICO CITY–(BUSINESS WIRE)–Insurance companies operating in Guatemala have demonstrated the ability
to adjust underwriting strategies amid volatile economic conditions to
maintain profitability, as well as strengthen their capital bases, and
these factors are supporting AM Best’s stable market segment
outlook on the industry.
A new Best’s Market Segment Report, titled, “Market Segment
Outlook: Guatemala,” notes that Guatemala’s insurance market is the
third largest in Central America. However, the market remains top heavy,
as eight of Guatemala’s 28 insurers account for 81% of market premiums.
Additionally, the country’s insurance penetration rate has not changed
significantly since 2013, and currently amounts to 1.2% of the country’s
gross domestic product. This is below the Latin American average
penetration rate of 2.9%. The non-life insurance segment accounts for
79% of total gross written premiums, with the life insurance segment
making up the remainder.
Premium growth contracted by 0.7% in real terms in 2018 despite lower
inflation, owing to a decline in underwriting risk appetites, as well as
economic growth that was less robust than in prior years. In nominal
terms, the market grew 3.5%, below its five-year average of 5.8%. The
slowdown was focused in five specific companies, which accounted for a
2.4% contraction, versus 5.4% growth for the rest of the market.
Profitability improved in 2018, generating a return on equity of 23.8%,
up from 21.9% in 2017. Net income increased 17.8% due to stable
underwriting performance and better financial products; only two
companies had negative bottom-line results.
AM Best expects current market conditions to prevail, so long as
companies do not see the economy improving. AM Best’s preliminary
estimate for economic growth is approximately 3.0% for 2018, just above
the 2.8% recorded in 2017 but low in comparison with that seen just a
few years earlier. If private consumption maintains its rhythm, and if
public expenditures and the external sector are able to regain momentum,
AM Best expects Guatemala’s economy to expand at the same rate in 2019
as in 2018.
Overall, AM Best believes companies are well-positioned to maintain
their product offerings in line with strict underwriting guidelines, and
therefore maintain stable results. Additionally, the improving
regulatory environment is positive, as it provides adequate guidelines
to enhance liquidity and solvency.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=285337.
AM Best will be hosting a networking event with a brief Latin America
market overview to mark the five-year anniversary of its Mexico-based
subsidiary at Habita Hotel in Mexico City, on Thurs., May 9, 2019,
beginning at 6 p.m. (CDT). There is no charge for this event. To attend
or for more information, please visit the event
registration page or email [email protected].
A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Elí Sánchez
Associate Director
52 55 1102
2720, ext. 108
[email protected]
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
[email protected]
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
[email protected]
