By Chris Munro

Feb 21 - (The Insurer) - Property pricing was the dominant theme during last week’s Miami-based annual gathering of Latin America’s (re)insurance market, although meeting rooms, cafes, restaurants and bars were also filled with discussions on political and regulatory concerns, MGAs, the role of Lloyd’s in the region and broker competition.

During last year’s Miami Reinsurance Week, much of the discussion was on how the market would react to the losses incurred from Hurricane Otis which had struck Mexico’s west coast the previous October.

The event, which cost the industry around $2 billion to $4.5 billion, as per a Moody’s RMS estimate, focused property reinsurers’ minds on securing the rates they felt were needed, while it also provided a wake-up call to facultative underwriters to keep on top of their aggregates and accumulations after many were hit with far greater losses than they anticipated.

Given the improvements secured during last year’s property renewals, reinsurance broking contacts last week said they had moved toward the January 1, 2025 discussions with optimism that there would be sufficient capacity to complete programs with rates dipping slightly amid a broadly softening market.

What transpired was better than most had expected, with one broking source expressing their surprise at how straightforward the renewal was for most of their clients, as they said there was more than enough capacity meaning programs were completed with time to spare.

Pricing for Latin American cat programs broadly came down, with multiple broking and underwriting sources saying rates were flat to down as much as 15% in a select few cases.

In the Caribbean, capacity was again available, but reinsurers continued to push for rate rises, in part to keep pace with inflationary pressures, but also because some feel the market has some way to go before it catches up with the broad-based increases that have been secured on cat programs worldwide in recent years.

Looking ahead to the April 1 and midyear Latin America and Caribbean property renewals, sources said bar any surprises, there are no reasons emanating from within the region itself that would cause the current market dynamics to change.

However, they acknowledged the big unknown is how reinsurers respond to the Southern California wildfire losses.

While the business is uncorrelated to Latin America and the Caribbean, the concern is that what some have estimated could be a $45 billion industry loss so early in the year has already accounted for around a third or more of reinsurers’ annual cat budgets.

Multiple sources The Insurer spoke to in Miami suggested that cat underwriters have become cautious and wary of what the rest of 2025 may bring. As such, they believe cat rates during the upcoming renewals will be flat, or at best down a couple of points, with the impact of the fires likely pressing pause on any greater decreases.

REGULATORY CONCERNS

Also up for discussion was the uncertainty surrounding new reinsurance rules signed into law in Brazil late last year, and which come into effect at the end of 2025.

The Brazilian Insurance Act has raised eyebrows across the region, in particular certain provisions and their fairness and legitimacy, especially for international companies.

Notably, the new rules mandate that reinsurance contracts covering local risks will be undertaken in accordance with Brazilian law. Those deals will also be subject to Brazilian state courts.

Another key issue for international companies to contend with is reinsurers have a 20-day window in which to confirm whether they will assume a risk from a cedant or not. Should the reinsurer not respond in that timeframe, either by writing or other accepted means, then it is automatically assumed they have taken on the risk.

Market contacts said the changes have caused considerable concern among global reinsurers operating in Brazil, a country that relies on international players to support the two major domestic companies operating in the space IRB Re and Austral.

The change in government in the U.S. was another talking point, with President Trump’s trade wars and tariffs just some of the topics discussed at length.

When it comes to trying to predict what President Trump will do next, the general consensus was that the only certainty is uncertainty.

MGAS IN FOCUS

Another key talking point during the week was the continued rise of MGAs operating in the Latin American region.

As sister title Program Manager noted last year, the MGA model has found favour in the region, with a plethora of startups having been launched in recent years, many of which are seen to be flourishing.

Adaptiv, Agnew International, Brickell Underwriting Agency, CargoCorp, Dock Re, Redline Underwriting, Solis Re and Specialty Lines Underwriters are just some of the MGAs operating in the Latin America and Caribbean regions, while larger global players like Dual, Rokstone and XS Global, which is headquartered in Miami, all have operations in those markets too.

The MGA is model is viewed as attractive to international (re)insurers looking to write business in Latin America and the Caribbean.

Establishing a boots-on-the-ground presence in Latin American and Caribbean countries, or in the regional hub of Miami, can be costly due to the expense of hiring staff and securing office space, especially in the business district of Brickell.

Making the numbers work in what is a competitive environment can prove challenging, as evidenced by the large number of Lloyd’s syndicates that have opened in Miami over the past decade or so, only to shut up shop a few years later.

There are exceptions, including both Allied World and Chaucer which have made a success of their Miami-based operations that target Latin American and Caribbean business.

Lloyd’s Meet the Market event was packed with coverholders that write business in the region on behalf of syndicates.

The expectation is the MGA model will continue to play an important role in Latin America and the Caribbean, although as several contacts noted, there could soon come a saturation point, at which point it will be a case of only the strongest surviving.

THE ROLE OF LLOYD'S

Lloyd’s again hosted its annual Meet the Market event during Reinsurance Week, with what is understood to have been a record number of attendees.

As previously reported, during the event, the corporation’s newly appointed Americas president Marc Lipman said Latin America “is an important and growing market for Lloyd’s”.

“Miami as the hub for underwriting and negotiating that business has become instrumental,” Lipman declared.

Lipman said that in 2023, Lloyd’s generated more than $3 billion of premium volume from Latin America and the Caribbean.

“We're incredibly grateful for that, and we're incredibly optimistic that will only continue to grow,” he declared.

His comments came after Lloyd’s announced last year that it would open a new office in Miami on September 1, 2024.

That new office, Lloyd’s said at the time, would “strengthen its Latin America and Caribbean business and continue to support the market’s sustainable and profitable growth in the Americas”.

There are questions over what role that office will actually play. The past decade or so has seen a host of Lloyd’s appointments in Latin America and the Caribbean, and market contacts said they were unsure of the precise roles these individuals have.

Among the suggestions were that opening an underwriting operation – similar to that of Lloyd’s Singapore, for example – may prove more of a draw than a representative office.

BROKER COMPETITION

There has been some major investment in recent years by reinsurance brokers to tap into the Latin American and Caribbean markets.

Aon and Guy Carpenter continue to dominate the treaty market in the region with the two accounting for the majority of business, sources said. However, some of the challengers are making in-roads, contacts noted.

Where the market is far more fragmented is in the fac segment, with a host of brokers having firmly established footholds in the region.

With Gallagher Re, Lockton, McGill and Partners, BMS Re, ATL Re, UIB and others all looking to strengthen further, sources suggested clients in the region have arguably never had a better choice of representation than now.

MARKET PAYS RESPECTS TO ANDY DOWNEY

Aside from the (re)insurance-focused discussions, there was also a moment of reflection as the market paused to remember Andy Downey, who passed away last year.

Downey, who during his career served as a senior executive at TransRe and helmed Validus Re’s Latin America and Caribbean business, most recently led Miami-based MGA Solis Re as president and CEO.

At a cocktail party hosted at the Doral Trump National on Thursday evening, Juan Carlos Roa, who worked alongside Downey at Solis Re and TransRe, gave a moving memorial to his former colleague.

A highly popular individual within the Latin American market, Downey was frequently found at industry events in Miami.