Best’s Special Report: Recovery Continues in Argentina Markets, but Challenges Persist

Best’s Special Report: Recovery Continues in Argentina Markets, but Challenges Persist


OLDWICK, N.J.–()–While the threat of inflation remains in Argentina, its economy has made
significant progress in recovering from financial woes, which is evident
by its recent re-entry into debt markets and the sale of an historic
100-year bond in 2017, according to a new A.M. Best special
report.

The Best’s Special Report, “Argentina Market Review,” states that
Argentina’s economic progress still faces headwinds in the form of
county risk. A.M. Best defines country risk as country-specific factors
that could adversely affect an insurer’s operating environment, and it
is evaluated and factored into all A.M. Best Credit Ratings. Countries
with the least amount of risk are assigned CRT-1 (Country Risk Tier 1)
while countries that pose the greatest challenge to insurers’ financial
stability, strength and performance are rated CRT-5 (Country Risk Tier
5). Argentina, Latin America’s third largest insurance market behind
Mexico and Brazil, remains in the CRT-5 category despite some recent
market improvements.

The liquidity of investments among Argentina’s insurers has improved
over the past five years, with total invested assets increasing to USD
17.4 billion from USD 15.6 billion during that time, at an average rate
of 2.2% a year, while total liabilities increased by an average annual
rate of 1.4%.The portion of liquid assets over the total invested assets
increased to 96.8% from 89.8%, recording a five-year average of 93.3%.

In addition, insurance premiums have increased, totaling 2.6% of the
country’s gross domestic product in 2016, up from 2.1% in 2011. The
largest market sector in Argentina is automobile, which generated 44.2%
of the total gross premium written in the non-life market in 2016. The
automobile and workers’ compensation sectors together have consistently
accounted for more than 75% of the non-life market over the past five
years. However, underwriting losses continue to pose a challenge as the
loss ratio for Argentina’s non-life market increased to 77.3% from 64.8%
over the past five years. The combined ratio for the non-life sector
deteriorated to 113.6% from 105.8% during that same timeframe.

To access the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=272384.

A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit
www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.



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