By Kieran Lonergan
The Mexican insurance industry's premiums grew 10% in 2013, according to a Fitch Ratings report that cast a mixed sector outlook for the current year.
The figure was boosted by state oil company Pemex's renewal of a multi-year contract in June. Without that contract, premium growth would have been 8%, said Fitch.
The sector's combined ratio for 2013 also improved, falling to 104.5% at end-year from 105.2%, thanks to tighter management of operating costs and stable claims levels.
Operating costs represented 32.2% of retained premiums, while claims amounted to 74.5%, said Fitch.
Reserves rose 12.1%. In contrast, investment income fell 7% in 2013, impacted by persistently low interest rates set to continue this year, said Fitch.
The rating agency predicts a mixed year for the Mexican insurance industry.
Premiums are expected to grow 13% due to an uptick in demand from improved economic conditions and increased bancassurance products, but the industry could also see combined ratios deteriorate due to increased regulatory costs and the possibility of a less benign catastrophic environment, said Fitch.
In 2013, the sector benefited from fewer large-scale catastrophes than normal.
The implementation of solvency II will also have a significant impact on insurer's capital requirements as well as internal processes and platforms, which could lead to consolidation in the sector, said Fitch.
Source BNamericas
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