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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 25, 2023 08:01 AM (EDT)
Given the strong recovery in Mexico’s insurance industry amid expected GDP growth in 2023, AM Best has revised its outlook on the country’s insurance segment to stable from negative.
The Best’s Market Segment Report, “Market Segment Outlook: Mexico Insurance,” states that premiums in the first half of 2023 grew by 8.5% following three years of near-stagnant growth. At the same time, Mexico’s economy continues to recover, with projected GDP growth of 2.6%, and insurers have been able to raise prices amid global inflationary burdens. Carriers also have transferred a portion of the increase in reinsurance costs on to consumers given hard reinsurance market conditions. AM Best projects premium growth of 6% at year-end for Mexico’s insurance industry.
“Improvement in property/casualty lines has driven the premium growth, with a sharp increase in auto insurance demand,” said Alfonso Novelo, senior director, analytics, AM Best. “This is tied mostly to a jump in new car sales during the pandemic recovery, as well as upward adjustments in the average price of car insurance in light of material auto parts inflation, and rising costs owing to the normalization to claims frequency to pre-pandemic levels.”
A rise in technical results owing to an increase in investment income in first-half 2023 also is a factor in the outlook revision, as it has led to an overall improvement in bottom-line results. AM Best views the segment as being well-capitalized; however, it expects that Mexico’s insurance market will remain under pressure owing to slow economic recovery. The outlook could be revised to negative if macroeconomic conditions deviate considerably from expectations and adversely affect the industry’s operating performance.
To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=335958 .
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.