Uruguayan insurance industry growth is driven by premium increases in massive lines such as pension, automobile, life and accidents, registering yearly average growth of 17%. In Fitch's opinion, 2017 premium growth will be limited within historical ranges between 10%-20%. Pension premiums will maintain two-digit growth while other insurance lines may present one-digit growth.
Given its geographical location,
As with other industries in the region, net income highly depends on financial income. The investment portfolio is concentrated in Uruguayan government and local financial institution securities, with a return on investment of 4.8% resulting in an operational ratio of 91.0%. Fitch does not foresee significant changes in the short term, consequently combined and operational ratios will be around 105.0% and 90.0% respectively.
The industry's leverage has increased to 5.8x, driven by constant pension business growth, an area historically dominated by BSE, holding concentrating practically 100% of market share. The remaining Uruguayan insurers will continue to present a low average of leverage of 2x, comparatively lower than other industries in the region.
Uruguayan insurance regulation has evolved positively during the last three years. Future regulation development will focus on mortality tables and increasing competition in pension segments, now dominated by BSE. This will enhance competition and increase insurance penetration.
The full report, '2017 Outlook: Uruguayan Insurance Sector - Market Dominated by a
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