Moody’s warns Mexico insurers of economic slowdown effects
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Moody's anticipates the premium growth in Mexico to slow down under new pressure from the weakening economy. The rating agency revised Mexico’s 2019 GDP growth forecast to 1.2% from 1.7% on the back of an unpredictable political environment. Moody's also affirmed its ratings on the 13 Mexican insurers that it rates with 12 having a stable outlook and MBIA Mexico maintaining its 'developing' outlook.
The decelerating economy may make competition in the insurance market heavier, prompting insurers to soften underwriting practices to spur growth, with negative implications for their profitability, Moody's said. Other factors include the effect of the negative outlook on Mexico's sovereign rating on the insurers’ asset quality, as they invest around 50% of their assets in sovereign securities, as well as the impact of the government's cancellation of private insurance benefits for federal employees in early 2019.
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