There is a growing opportunity for further use of catastrophe bonds and insurance-linked securities (ILS) in Latin America, with Brazil’s first ILS deal recently setting a positive example, Fitch Ratings has explained.
Commenting on reinsurance market opportunities in Latin America, Fitch said, “Fitch Ratings estimates the Latin American reinsurance market from USD18 billion to USD22 billion, with key risks that include currency volatility, inflation, political instability, and frequent catastrophic claims. The average retention rate is about 80%, with higher retained premiums in more developed countries and in more stable insurance business lines.
“Ceded premiums are expected to continue growing over the next 12–18 months, driven by organic market expansion, increased risk exposure, insurers’ volatility management strategies, and increasing losses from natural catastrophes.
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