manuel-escobedo_patria-re
Patria Re CEO Manuel Escobedo
10 September 2018News

‘Fierce’ competition in LatAm

Economic recovery in Latin America is slowly improving the growth outlook for reinsurers in the region, but strong competition is expected to exert pressure on rates and earnings, Patria Re CEO Manuel Escobedo, told Monte Carlo Today.

“The reinsurance sector in LatAm will remain subdued during 2018/2019 given the slow projected recovery of regional economic growth,” Escobedo said.

“Fierce competition could translate into earnings deterioration in the next years,” he warned.

Global reinsurers are seeking to grow their exposure to Latin America, exerting pressure on rates and a price floor has yet to be reached, Escobedo suggested. Global players are competing with regional and local companies who are keen to grow their talent and capabilities, he noted.

At the same time, the region offers growth potential by developing capabilities to reduce the protection gap while avoiding margin deterioration, Escobedo said.

The 2016 and 2017 catastrophes and tight government fiscal budgets should motivate stakeholders to reduce the protection gap, Escobedo suggested. Many countries in emerging markets have difficulties shouldering the cost of rebuilding after a natural catastrophe.

“This could represent an opportunity for reinsurers,” he said. Another opportunity may be cyber risk which is still widely an untapped market in the region, he added.

Noting that Patria Re had managed to achieve double-digit growth in the last three years, Escobedo said “Patria Re is very well positioned in the region.” The reinsurer is expanding globally through its Lloyd’s syndicate and has also opened a new office in Miami to grow further.

“We expect to grow at a high pace in local and regional markets,” Escobedo said.

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