Market Overview

A.M. BestTV: Political Changes in Mexico Could Create Opportunities for Insurers, Say A.M. Best Analysts


In this A.M.BestTV episode, Alfonso Novelo, director of
analytics, and Eli Sanchez, senior financial analyst, both of A.M.
, say the change in administration in Mexico could affect the
environment for health and agricultural insurance coverages, among other
areas. Click on
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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