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Investing.com -- AM Best, a global credit rating agency, has maintained a stable outlook for Panama’s insurance industry. The agency’s outlook is based on the industry’s growth and consistently profitable underwriting results, which are expected to continue despite challenges presented by the implementation of International Financial Reporting Standard (IFRS) 17.
The report, titled "Market Segment Outlook: Panama Insurance," reveals that Panama’s insurance industry grew by nearly 10% in 2024, following an 11% growth in 2023. The growth figures are based on gross premiums written (GPW). The industry in Panama remains concentrated, with five companies holding more than 75% of the market share.
The underwriting results in the industry remain healthy, with a combined ratio below 100. This is in line with the segment’s historically sound performance. However, the report noted potential headwinds in acquisition costs due to hardening of the reinsurance market.
Salvador Smith, an associate director at AM Best, stated that strict controls on operating expenses and claims continue to support the industry’s underwriting performance. He added that the industry’s overall profitability is still backed by historically conservative investment strategies of insurers. Smith also noted that sound capital positions will help the industry withstand current economic pressures.
The report also touched on Panama’s economic slowdown in recent years, which has been supported by ongoing challenges in its fiscal regime, pressured public finances due to the government’s significant dependence on Panama Canal revenue, and material pension system imbalances due to depleting reserves. Disruptions in global commercial trade, climate change shocks impacting the Panama Canal, ongoing turmoil in the mining industry, and other potential external shocks pose challenges for the region’s shipping and logistics hub.
Despite the persistent challenges the industry faces, AM Best will continue to monitor carriers’ performance in the region.
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