Profitability of Pension Insurance in El Salvador

According to Fitch Ratings, pension insurance has become a problem in terms of technical profitability for the companies that sell them.

Monday, May 2, 2016

From a statement issued by Fitch Ratings:

Fitch Ratings - San Salvador - (April 28, 2016):

Pension insurance has become a challenge in terms of technical profitability for sellers, says Fitch Ratings. One of the benefits of the current pension system is protection against disability and pension insurance, contracted by the Pension Fund Administrators (AFP) for its members. This coverage is provided by insurers and covers the insured against accidents or diseases that would make it impossible for them to work. In addition it also covers beneficiaries when the insured person dies, providing the required additional capital to finance pensions.

In one of the two policies, premiums are recorded twice in the market and, in these cases, one company writes the business and cedes it to local reinsurance. However, this year it is expected that the effect of this distortion will be eliminated as only one insurance policy will be involved for each of the two AFP.

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El Salvador: Profitability of pension funds drops to 3%

January 2009

The profitability of the Pensions Savings System (SAP) dropped from 6.33% to 3.14%. reports: "There is no need to use a magnifying glass to look for the reasons. They are very clear, according to the superintendent of pensions, Victor Ramirez, and the director investments at the Crecer Pension Fund Administrator (AFP), Carlo Escalante.

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