The negative Rating Outlook for the Brazilian insurance sector mirrors the outlook on
Fitch expects premium growth to remain subdued for the second consecutive year in 2017, despite expectations of economic stabilization and return to growth. This is because GDP growth is likely to be modest (Fitch forecast: 1.2%), and unemployment is likely to remain high. As of
Fitch expects sector profitability to remain solid in 2017, despite a likely decline in interest rates, which would exert downward pressure on investment income, and modest premium growth. Sector return on average assets (ROAA) excluding the health segment, which fell to 1.7% as of
Meanwhile, Fitch expects the upward trend in sector leverage to persist in 2017, as growth of pension products growth should remain solid. Fitch expects all the Brazilian insurers that it rates to meet the increase in minimum required capital in 2017, when insurers have to allocate capital for market risks.
Fitch expects the local reinsurance market's key credit metrics to remain broadly stable and adequate in 2017. As of
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