Press Release - MAY 08, 2019
Best’s Market Segment Report: Guatemala Insurance Industry Outlook Stable as Companies Navigate Slower Economic Growth
FOR IMMEDIATE RELEASE
MEXICO CITY - MAY 08, 2019
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@example.com.
A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry.