Fitch: LatAm insurers expected to withstand economic challenges from trade war and tariffs

By Mia MacGregor

June 30 - (The Insurer) - Latin American insurer ratings are poised to withstand potential secondary effects from slower economic growth due to the ongoing trade war and tariffs, according to Fitch Ratings.

While Mexico will be most affected by U.S. policy changes, Fitch noted that other regional insurers face risks from lower economic growth and weakened business and consumer confidence.

Fitch said that it anticipates positive yet slower year-on-year premium growth for Latin American insurers in 2025, attributed to price and underwriting stabilization.

Certain lines of business, such as credit insurance or credit life, may benefit from lower inflation and moderate economic growth, potentially reducing loss costs. However, Fitch warned that rate increases might be necessary for lines with catastrophic claims or claims inflation surpassing general inflation.

Fitch forecast muted regional GDP growth in 2025, with Mexico and Brazil experiencing lower relative growth, partially offset by higher growth in Argentina.

In severe economic slowdowns or heightened inflationary pressures, non-life insurance could encounter rising costs from higher interest rates and foreign currency risk. Supply chain disruptions may also impact motorcycle and property insurance lines.

While life insurance may be less affected due to the stability from fixed-income investments, it would still face challenges from lower growth and underwriting difficulties.

Fitch stated that it maintains neutral outlooks for both life and non-life insurers in the region, noting that ratings are heavily influenced by the industry profile and operating environment of each country.