A.M. BestTV: Political Changes in Mexico Could Create Opportunities for Insurers

Thursday, August 2, 2018

Press Release by A.M.Best

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OLDWICK, N.J., August 2, 2018-In this A.M.BestTV episode, Alfonso Novelo, director of analytics, and Eli Sanchez, senior financial analyst, both of A.M. Best, say the change in administration in Mexico could affect the environment for health and agricultural insurance coverages, among other areas. Click here to view the entire program.

The analysts said that the recent election in Mexico could redefine the role of the government, as well as have a big impact on Mexico insurers and the multinational companies that operate there. One pressing issue in Mexico's market is the renegotiation of NAFTA.

"At this time, the market is optimistic, since the peso has gained some ground against the U.S. dollar," said Novelo. "I believe that the renegotiation of the NAFTA agreement will have some impact on the movement of the Mexican peso in the coming months. However, as of now, the insurance industry is well-prepared to face these challenges that could arise, basically because most of the insurance companies try to avoid mismatches in terms of currency for their assets and liabilities."

Sanchez focused on the ever-present catastrophe risk in Mexico, especially in light of the earthquakes in 2017.

"At the time of the earthquakes, there was a catastrophe risk culture among insurers, which enabled them to be very well-protected by their insurance programs," said Sanchez. "Presently, those programs are well-capitalized and have regulator support. Additionally, in those areas where insurers do not participate, the government has put in place catastrophic bonds."

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