Market leaders differentiate through long-term behavior: MS Re’s head of LatAm

Latin America’s reinsurance market is finding a new balance between pricing and capacity, even as risk complexity rises. What will differentiate market leaders from the rest, says Lucas Castagnino of MS Reinsurance, is long-term behaviour rather than tactics.

Key points:
Regulation reshaping LatAm risk profiles
Political shifts will shape 2026 outcomes
Capacity not scarce, discipline still needed

Latin America’s reinsurance market is being priced off recent loss experience, while the risk mix itself is changing underneath – through regulation, secondary perils and political shifts – creating a growing gap between technical comfort and risk reality.

Put simply, the market feels comfortable because losses have been manageable, not because risks have become simpler or more predictable. That is how Lucas Castagnino, head of Latin America and the Caribbean at MS Reinsurance, reads the state of the market as it moves further into 2026.

“During 2025 there was a prevailing belief that reinsurance rates were technically adequate,” Castagnino said. “The absence of major catastrophe losses gave the market comfort, and that comfort translated into increased appetite across the insurance offering.”

That appetite has had a direct impact on market dynamics. “It has translated into more options for the buyer,” he said. “And that means that the break-even point in the market is shifting.”

However, this sense of comfort did not come from a quiet year. While aggregate losses remained contained, 2025 delivered a series of developments that materially altered the risk environment.

“This happened in a year where we did have a major hurricane in the region – the largest ever for Jamaica,” he said, referring to Hurricane Melissa, “and where we’ve seen other concerning events.”

“The market is shifting and the bargaining power is more balanced; longer-term players will reap the benefits.”

Regulatory change has been among the most significant. “We’ve seen changes in the insurance law in Brazil and the elimination of certain tax deductions for insurance companies in Mexico,” Castagnino said. “That has implications for the profitability of the business there, especially motor and medical lines.”

Political and macroeconomic shifts have added further complexity. “We’ve seen deceleration of inflation in Argentina, changes in ruling parties in Chile and Bolivia and massive changes in Venezuela,” he said. “All these changes will definitely have an impact for 2026, even though most happened in 2025.”

Despite those developments, Castagnino said: “We still believe rates are at an adequate level,” including through the 1/1 renewals.

However, adequacy does not mean uniform profitability. “The repayment of the cost of capital for certain lines and certain territories could be a little bit more challenging,” he said, particularly when regulatory change and secondary, non-modelled perils are taken into account.

“Discipline and competition are, at the end of the day, a factor of opportunity, appetite and need,” he added. “That’s why, regardless of technical considerations, you will still see movements in the marketplace.”

Planning ahead of the cycle

Against that backdrop, MS Re’s focus has been on positioning rather than reaction. “Our approach to this phase of the cycle has been to plan ahead,” Castagnino said. “During the harder part of the cycle, we massively strengthened our position in the region.”

“We don’t believe there will be any shortage of capacity,” he added. “We are making sure we can keep expanding our presence and offering at sustainable prices, and with a wider variety of products.” That thinking has translated into concrete action, including the recent launch of a parametric agriculture product designed to complement MS Re’s traditional agricultural offering.

For Castagnino, the defining challenge for reinsurers in Latin America is not volatility in isolation, but how different risks interact. “Economic, political and natural shocks can affect both sides of the balance sheet,” he said, “and on top of that, they can disrupt operations.”

MS Re’s response has been to focus on correlation. “We constantly analyse how our portfolio is correlated to these risks, both by line of business and by territory,” he said. “As we identify risks, we try to mitigate them, hedge them or add complementing products to reduce correlation and volatility that our portfolio is exposed to.”

That lens also shapes his view of market gaps. “The industry is still falling short of delivering its promise for certain underserved segments in local economies,” Castagnino said, pointing to flood, earthquake and political risk. Cyber risk also remains underappreciated. “There is still not full awareness of the threat cyber poses to business continuity.”

Looking ahead to the rest of the year, including the important July renewals, Castagnino believes opportunity exists but only for reinsurers that take a long-term view.

“We believe that as the market is shifting and the bargaining power is more balanced, longer-term players will reap the benefits even at a turning point in the market, if they proceeded in a fair way during the harder phases of the cycle,” he said. 

“In reinsurance, boring is good. Clients remember who stood by them – and they will honour that.”

Lucas Castagnino is head of Latin America and Caribbean at MS Reinsurance. 

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