Analysis of Insurance Prospects in Central America at Second Kuartal of 2011
The slow economic recovery in most of Central America after the crisis of 2009 and 2010 continue to affect the insurance industry. With a combined annual economic growth of only 5% (in dollars), six Central American countries (El Salvador, Costa Rica, Guatemala, Honduras, Nicaragua and Panama) have not succeeded balancing their economic growth.
Quoted from www.latindailyfinancialnews.com Fitch believes, however, that growth will remain moderate in 2011, with hopes of economic recovery than expected for most state agencies, although less pronounced in El Salvador. Fitch will monitor the impact of economic developments in the financial profile of an insurance company rated in the region to take action it deems appropriate.
In late September 2010, El Salvador, Costa Rica and Nicaragua showed decreased performance due to decreased operational efficiency, while maintaining the relative stability of the level of claims, while other countries saw improvements in the last index, including Guatemala, which, however, still has the highest level about 100%, as in Nicaragua. Interest income continues to be an important factor contributing to the insurance industry in the region, especially in Costa Rica and Honduras, in the first case, the registration of a broad investor base, while in Honduras, which is associated with the investment portfolio is relatively high. Meanwhile, the situation remains calm is similar to previous years, such as Guatemala and Nicaragua with a larger displacement than a passive way to rank measures, taking into account the average capitalization lower than your current company. Adequate liquidity position in all countries, although more stringent in the Guatemala and Nicaragua.
In addition, Fitch welcomes the trend in the countries of the region to modernize the legal framework of insurance sector, as happened in Costa Rica and Guatemala, while in Panama the main changes to the law of the last insurance. Fitch expects to continue to see a gradual strengthening in the financial profile of insurance companies in the region and greater standardization of the conditions of competition as a result of the adequacy of the regulatory framework for financial practices and operating standards that can promote the entry of new competitors and contribute to the reduction of risk concentrations. As the September 10, 2010, industry concentration remains high, the five largest companies in each state control over an average of 65% of premiums collected, while the stock of foreign capital in the region remains asymmetrical. El Salvador is the largest market share of foreign investment (78% of premiums collected), and Guatemala, Costa Rica and Nicaragua, the lowest, despite the recent acquisitions have resulted in a significant increase in Panama's strategic partnership between Mapfre Spain and Grupo ASSA in Panama.
The insurance industry in Panama continues to shine with the highest penetration in the GDP (3.4%), followed by Costa Rica (2.3%), both associated with higher purchasing power of the population, with higher levels of GDP per capita, however, Guatemala is a country showing the lowest penetration (1.2%), while the penetration in other countries varies between the limits, but generally below the average for Latin America as a region.
Fitch estimates that as far as marketing channels of exploitation of the insurance industry to become less traditional in terms of innovative insurance products, and expand the choice of cost and convenience, and encourage the expansion and penetration of security in the region. In addition, sustained economic growth and increasing banking penetration is a necessary condition for the expansion of the insurance industry.
Quoted from www.latindailyfinancialnews.com Fitch believes, however, that growth will remain moderate in 2011, with hopes of economic recovery than expected for most state agencies, although less pronounced in El Salvador. Fitch will monitor the impact of economic developments in the financial profile of an insurance company rated in the region to take action it deems appropriate.
In late September 2010, El Salvador, Costa Rica and Nicaragua showed decreased performance due to decreased operational efficiency, while maintaining the relative stability of the level of claims, while other countries saw improvements in the last index, including Guatemala, which, however, still has the highest level about 100%, as in Nicaragua. Interest income continues to be an important factor contributing to the insurance industry in the region, especially in Costa Rica and Honduras, in the first case, the registration of a broad investor base, while in Honduras, which is associated with the investment portfolio is relatively high. Meanwhile, the situation remains calm is similar to previous years, such as Guatemala and Nicaragua with a larger displacement than a passive way to rank measures, taking into account the average capitalization lower than your current company. Adequate liquidity position in all countries, although more stringent in the Guatemala and Nicaragua.
In addition, Fitch welcomes the trend in the countries of the region to modernize the legal framework of insurance sector, as happened in Costa Rica and Guatemala, while in Panama the main changes to the law of the last insurance. Fitch expects to continue to see a gradual strengthening in the financial profile of insurance companies in the region and greater standardization of the conditions of competition as a result of the adequacy of the regulatory framework for financial practices and operating standards that can promote the entry of new competitors and contribute to the reduction of risk concentrations. As the September 10, 2010, industry concentration remains high, the five largest companies in each state control over an average of 65% of premiums collected, while the stock of foreign capital in the region remains asymmetrical. El Salvador is the largest market share of foreign investment (78% of premiums collected), and Guatemala, Costa Rica and Nicaragua, the lowest, despite the recent acquisitions have resulted in a significant increase in Panama's strategic partnership between Mapfre Spain and Grupo ASSA in Panama.
The insurance industry in Panama continues to shine with the highest penetration in the GDP (3.4%), followed by Costa Rica (2.3%), both associated with higher purchasing power of the population, with higher levels of GDP per capita, however, Guatemala is a country showing the lowest penetration (1.2%), while the penetration in other countries varies between the limits, but generally below the average for Latin America as a region.
Fitch estimates that as far as marketing channels of exploitation of the insurance industry to become less traditional in terms of innovative insurance products, and expand the choice of cost and convenience, and encourage the expansion and penetration of security in the region. In addition, sustained economic growth and increasing banking penetration is a necessary condition for the expansion of the insurance industry.
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