AM Best is maintaining its stable market segment outlook on Guatemala s insurance industry, mainly due to the government’s stimulus package in response to the COVID-19 pandemic that limited the economic downturn on insurance companies’ premium generation.
The new Best’s Market Segment Report, titled, “Market Segment Outlook: Guatemala Insurance,” also cites carriers’ limited exposure to foreign exchange and capital markets in insurers’ investment portfolios, which mitigates the impact of market shocks. The stable outlook reflects the expectation that economic growth will foster conditions for business generation to face the gradual normalization of claims frequency to pre-pandemic levels. Insurers in the country showed they could manage the challenges brought by the pandemic, including timely receivables collections and lower investment yields, as well as absorb catastrophe-related losses. Recovery in 2021 will hinge on the success of vaccination efforts, along with companies’ technical capabilities to adequately price risks.
Guatemala remains a positive example among Latin American insurance markets, despite facing the impact of multiple hurricanes and the pandemic. Timely implemented mobility restrictions, along with the development of an economic stimulus package and a countercyclical monetary policy, helped to maintain steady conditions for insurance activity. In 2020, Guatemala’s economy contracted less than expected, as well as less than that of other Central American countries, while its insurance market remains the third-largest in Central America. At year-end 2020, the insurance market stood at USD 1 billion, having expanded by 4.5% (1% in real terms) year over year. The industry’s combined ratio stood at 85.8, reflecting the lower claims frequency brought by the restrictions on mobility, while its operating expense ratio remained stable.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=307925.
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