Explained by the behavior of the Costa Rican market, in 2017 Central American insurers received $5.02 billion in premiums, 7% more than in 2016.
According to a report drawn up by Revista Desempeño Asegurador, in 2017 "... insurance sales in the region expressed an absolute increase of US $334.7 million, an amount that represented a rise of 7.1% compared to sales in 2016."
Projections are that this year growth of the Central American insurance sector will be driven by activities in the markets of Costa Rica and Guatemala.
From the report "Prospects 2018: Insurance Sector in Central America" by Fitch Ratings:
Stable Rating Perspective:The rating outlook for the Central Americaninsurancesectoris stable for 2018, given that most of the rated companies maintain a stable outlook on an individual basis.Fitch Ratings believes that the sector shows stable fundamentals, as a result of good profitability levels and high liquidity and capitalization indicators in all countries, which it expects to continue to be reflected in solid balance sheets in companies.
In Honduras, contracts are being sought for one year insurance policies to cover the vehicle fleets of the Ministry of Finance and the National Autonomous University.
The National Vocational Training Institute in Honduras is putting out to tender collective insurance of medical and living expenses for its personnel, and insurance for buildings, equipment and the vehicle fleet.
The Honduran National Port Company (Empresa Portuaria Nacional de Honduras) is putting out to tender protection insurance for its personnel and the assets belonging to the institution.
Three companies accounted for 62% of total premium production and about 50% of the system's assets.
From a report by Fitch Ratings Central America:
Industry Concentrated by Market Players: The Honduran insurance sector is made up of 12 competitors. In 2016, the three main companies accounted for 62% of total premium production and about 50% of the system's assets.Two of these belong to financial groups and benefit from the related banking channel and businesses referred by them to achieve greater penetration within the market.The entry of two new competitors, subsidiaries of regional groups, could favor the creation of a new market and the development of more products.Fitch Ratings does not expect changes in the concentration of the main players in the market.
Ficohsa Group has announced the acquisition of 100% of the capital of the company Seguros Alianza, which will be operated through the subsidiary Ficohsa Seguros.
The formalization of the transaction was recently approved by the Superintendency of Banks of Guatemala and the Superintendency of Panama.
According to Fitch Ratings growth in the insurance sector in Central America in 2017 will be driven by the markets of Costa Rica and Nicaragua.
From the report "Outlook 2017: Insurance in Central America" by Fitch Ratings:
Rating Outlook Stable:Fitch Ratings´outlook for insurance ratings in Central America is stable. The agency believes that there is a limited probability of rating adjustments in the next 12 to 18 months, which could lead to significant changes in the risk profile or the weighted support in some cases.
Panama stands out as the country with the highest penetration rate in the region, and at the other end is Honduras, with the lowest rate, and below the average in Latin America.
From a report by MAPFRE: "Trends of growth in insurance markets in Latin America":
Fitch forecasts growth of 3.5% in the region in 2016, due to increased competition and currency devaluations in some markets.
From a statement issued by Fitch Ratings:
Fitch Ratings - San Salvador - (January 21, 2016): The Outlook for the Insurance Sector in Central America and the Dominican Republic is stable, according to a report by Fitch Ratings. This is based on good growth rates of insurance markets in the region, in alignment with growth projections for the economies of these countries . The outlook also considers the strengths that these markets continue to show in terms of capitalization and liquidity. However, a higher frequency of catastrophic natural events, along with inflation and higher currency devaluation in some countries, still pose challenges for the region.
ASSA Compañía Tenedora, S.A. and ASSA Compañía de Seguros (ASSA) and American International Group, Inc. (NYSE:AIG) today announced that they have entered into a share purchase agreement under which, ASSA will acquire 100 percent of AIG’s operations in Central America located in El Salvador, Guatemala, Honduras and Panama.
The transaction is subject to regulatory approvals in each country.
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