Best’s Market Segment Report: AM Best Revises Outlook on Peru Insurance Market to Negative

AM Best has revised its market segment outlook on Peru’s insurance industry to negative from stable, citing the negative impact of COVID-19 on revenues, along with a significant amount of early withdrawals from the country’s Private Pension Fund system and its negative effect on premiums.

The new Best’s Market Segment Report, titled, “Market Segment Outlook: Peru Insurance,” also notes the difficult underwriting conditions going into 2021, with a gradual pickup in claims frequency coupled with lower revenue from premiums related to the Private Pension Fund system. As of February 2021, approximately PEN 32.8 billion had been withdrawn from the pension fund, with an additional PEN 37.9 billion in surrenders still expected due to extension of the early surrender program for qualified pensioners. The potential disruption in financial markets from this program could affect the valuations of investments used to back up reserves, consuming available capital to cover the potential mismatch and raising capital requirements. In addition, the withdrawals likely will not will migrate back to the insurance system as many of the eligible beneficiaries are facing economic distress instead of planning for retirement.

As of December 2020, Peru’s insurance market was the seventh-largest in Latin America. The insurance market contracted 0.7% in 2020 (-2.4% in real terms), as the toll of the pandemic on the economies of Latin America has worsened living conditions in the region, and has particularly affected small to medium-size enterprises (SME), job creation and public finances.

Higher benefits paid from the life insurance segment greatly influenced the overall underwriting performance. Declines in technical results and financial income led to a contraction of 28.8% in net income and a return on assets of 1.9%, the lowest in five years. Given the importance of life products, operating performance will continue to rely on investment income to generate positive results.

Government measures have set the path for a prompt economic recovery, but pandemic-related issues still could prove challenging to the Peru’s insurers despite the industry’s solid capital position. A successful vaccination program also could partially mitigate the negative market forces through an increase in enrollment stemming from employment creation.

To access the full copy of this report, please visit

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. For more information, visit

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


Eli Sanchez
Associate Director
+52 55 1102 2720 ext. 122

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