News Column

Fitch: Stable Outlook for Central America and Dominican Republic Insurance

January 22, 2014

SAN SALVADOR, El Salvador --(BUSINESS WIRE)-- The rating outlook for Central America and Dominican Republic insurance companies is stable for 2014, which is highly likely to affirm the ratings. Fitch also maintains the region's insurance industries with a stable outlook, supported basically by the good economic prospective and regarding an economic and financial growth in most of the countries. However, industry in the region will face pressure from various challenges during 2014 including fierce price competition, high exposure to natural disasters, volatile inflation and currency devaluation environment in some countries. According to Fitch projections, consolidated premium production for the Central America and Dominican Republic region will reach a year to year nominal growth of 7.5% in 2013 and 9% in 2014. This projection is based on expectations of double-digit growth for Costa Rica , Guatemala , and El Salvador , countries whose total premium represent approximately half of the region's total production. Fitch also forecasts a better performance for the region's insurance industry with operating profits and a combined ratio likely reaching below 100%. This will be contingent on how much improvement is seen in Costa Rica (the second largest insurance market in the region) and also in El Salvador and Guatemala , markets that have been experiencing an outstanding operating performance. The agency believes that an improvement in operating performance would be critical to reduce dependence on investment income and increase net profits, especially in some countries in the region. On the other hand, Fitch estimates that the insurance industry in the region will continue to reflect adequate capitalization levels, considering the prudent prevailing reinvestment policies of most of the largest insurers and the local regulatory frameworks that tend to strengthen solvency margins. Therefore, Fitch estimates that the region will continue to register a low operating leverage ratio during 2014, approximately 1.1 times. Fitch's full report, '2014 Outlook: Central America and Dominican Republic Insurance Sector' is available at www.fitchratings.com . Additional information is available at www.fitchratings.com . Applicable Criteria and Related Research : 2014 Outlook: Central America and the Dominican Republic Insurance http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730995 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS . IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.FITCHRATINGS.COM . PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Ratings Eduardo Recinos , +503 2516 6606 Senior Director eduardo.recinos@fitchratings.com Fitch, Centroamerica 79 Av. Sur, Col. Escalon San Salvador, El Salvador or Jazmin Roque , +503 2516 6607 Associate Director jazmin.roque@fitchratings.com or Maria Jose Arango , +503 2516 6620 Associate Director maria.arango@fitchratings.com or Miguel Martinez , +503 2516 6628 Analyst miguel.martinez@fitchratings.com or Johann Goebel , +571-326-9999 Associate Director johann.goebel@fitchratings.com or Milena Carrizosa Lora , +571 326-9999 Director milena.carrizosa@fitchratings.com or Media Relations: Elizabeth Fogerty , +1 212-908 0526 elizabeth.fogerty@fitchratings.com Source: Fitch Ratings


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Business Wire


Story Tools