Best’s News & Research Service - January 15, 2024 12:46 PM (EST)
Best’s Market Segment Report: AM Best Maintains Stable Outlook on Guatemala’s Insurance Industry
- January 15, 2024 12:46 PM (EST)
Mexico City //BestWire// - AM Best is maintaining its stable outlook on Guatemala’s insurance industry, citing the country’s stable economy, which is supporting industry growth, and favorable technical results.
Guatemala’s economy in 2023 is expected to grow less than it did in the previous year amid a post-COVID bounce, but it will still be the third-fastest growing economy in Central America. The country’s insurance market remains the third largest in the region, after Panama and Costa Rica. In its Best’s Market Segment Report, “Market Segment Outlook: Guatemala Insurance,” AM Best states that insurers have maintained strong solvency and overall good technical results, as they have adjusted products in a competitive market that struggles to balance pricing pressures with commercial success. The market’s combined ratio of 87.8 year over year through November 2023 marks the best technical performance of the last five years, demonstrating the effectiveness of better pricing dynamics in the market. Year-over-year results as of November 2023 amounted to USD 146.3 million in net income for a 22.6% return on equity.
“Most of Guatemala’s major insurance segments continue to grow, outside of surety, but the market is battling adjustments in insured amounts and premiums, particularly for large risks,” said Eli Sánchez, director, AM Best. “Net growth is expected in 2024, deriving mainly from property/casualty business. Life and health lines are growing as well, but given their relatively low share, they are defining strategy, particularly for well-developed players targeting new markets, as opposed to driving growth.”
The report notes that regulation has played a key role in the development of Guatemala’s insurance market, in contrast to most other Latin American countries. With this development, insurers have enhanced corporate governance and balance sheet strength, mainly through a solvency framework in line with global trends in more developed markets, and as a result, have managed their capital more efficiently.
AM Best expects Guatemala’s insurance market to remain competitive as the economy continues to grow. Cuts to interest rates and a lack of political consensus infrastructure development could weaken results for insurance companies; however, the impacts should be limited given the country’s stability.
To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=339567 .
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.