Latin American Insurer Ratings to Withstand Trade War Impact Despite Economic Growth Concerns

Latin American insurer ratings are likely to remain stable, despite concerns over the potential impact of slower economic growth resulting from the ongoing trade war, according to Fitch Ratings. While Mexico will be the most affected region, other countries in Latin America may also experience lower economic growth and weaker business and consumer confidence due to tariff hikes. The rating agency expects positive but slower year-over-year (yoy) premium growth for Latin American insurers in 2025, driven by price and underwriting stabilization.

Key Takeaways:

• Fitch Ratings expects Latin American insurer ratings to withstand the potential secondary effects of slower economic growth from the ongoing trade war and resulting tariffs.
• Mexico will be the most affected region due to U.S. policy changes, but other countries in Latin America may also experience lower economic growth and weaker business and consumer confidence.
• Positive but slower yoy premium growth is expected for LatAm insurers in 2025 due to price and underwriting stabilization.
• Rate increases may still be expected for certain lines of business, including health insurance, with catastrophic claims or where claims inflation exceeds general inflation.
• Muted regional GDP growth is expected in 2025, with lower relative growth in Mexico and Brazil, but higher growth in Argentina.
• Life insurance would be somewhat less affected, supported by stability from fixed-income investments, but would still feel the effects of lower growth levels and underwriting challenges.
• Chile's life insurance remains stable despite potential market volatility, while non-life insurance could be affected by exchange rates and supply chain issues.
• Colombia and Mexico would likely experience similar trends, with non-life sectors more exposed to inflation and economic pressures.
• Peru, Panama, and Uruguay are expected to experience comparable effects.
• LatAm life and non-life insurers have neutral outlooks.
• Ratings assigned to LatAm insurers are strongly influenced by the industry profile and operating environment of the countries in which they operate.

Statistics:

• Forecasted yoy premium growth for LatAm insurers in 2025: Positive but slower
• Projected regional GDP growth in 2025: Muted, with lower relative growth in Mexico and Brazil
• Life insurance expected to be somewhat less affected by economic growth concerns: Supported by stability from fixed-income investments
• Non-life insurance sector in Brazil expected to face medium impacts from repair cost increases: Auto insurance
• Chile's life insurance rating expected to remain stable: Despite potential market volatility
• Colombia and Mexico expected to experience similar trends: Non-life sectors more exposed to inflation and economic pressures

Sources:

• Fitch Ratings, commentary on Latin American insurer ratings (no date or publication date provided)
• Fitch Ratings, Latin America Insurance Monitor (no date or publication date provided)