LIDE Argentina

Guillermo Pastore: “We Are Evaluating Acquisition Opportunities Not Only Locally, but Also Across the Region”

Todo Riesgo TV Interviewed Guillermo Pastore, Chairman of Division International Group, About the Current and Future Outlook of the Insurance and Reinsurance Industry

The executive also discussed the operations of Special Division Reinsurance Brokers.

CHANGES

“The insurance and reinsurance market has always followed the dynamics of the global economy and the domestic economy. Speaking of the global economy, which influences reinsurance and insurance worldwide, regionally and locally, we know there have been very significant changes since Donald Trump took office. The tariff war generated major changes throughout the capital structure of insurance and reinsurance entities, which in turn led them to reassess how they conduct their business,” said Pastore.

The executive went on to state that “as a result of all this, the international insurance market also underwent significant changes. Consequently, both the region and Argentina have been affected. With a different economic environment since December 2023, under a new administration and with a fiscal anchor that brought inflation down from more than 25% to below 2%, Argentina has also experienced very important changes in consumption, savings, investment, credit and, naturally, insurance, which is directly impacted by all these factors.”

IMPACT

“From an insurance perspective, financial income once represented an important component of overall results. Today, however, its performance is very different from what it was in previous periods. Other aspects have changed as well, such as automobile insurance and the ability to obtain spare parts at a given price. Within the Argentine insurance market, I believe conditions will gradually improve as the economy continues to advance,” Pastore stated.

According to the Chairman of Division International Group, “the National Insurance Superintendency (SSN) has also introduced certain measures aimed at strengthening the solvency of the insurance market through capital requirements and solvency ratio analysis, which is absolutely positive. Personally, I would like the process to move a little faster, but we are certainly heading in the right direction.”

“As a result of all this, I also believe that we are moving toward market consolidation, where larger and stronger companies with greater net worth and stronger solvency positions will, in one way or another, acquire portfolios from smaller insurers. Naturally, this will also have implications for reinsurance, particularly beginning on July 1st, when Argentina’s most important contract renewal season takes place.”

ARGENTINA

When asked how the international reinsurance market views Argentina’s evolution and the local insurance sector, Pastore replied:

“They do not see us as tall, blonde, and blue-eyed, but they certainly see us more favorably than they did a year and a half ago. We must remember that for a significant period Argentina was unable to meet its obligations and was not paying reinsurance premiums.”

“With the arrival of the new administration and the meetings held between government officials and market participants, a commitment to payment was established, along with a clear distinction between the stock, meaning what was owed from the past, and the flow, meaning what would be owed from a certain date forward. The idea was to resolve the stock through different series of Bopreal bonds while keeping current obligations paid. After more than a year and a half, I would say that both the stock and, certainly, the flow have been virtually normalized. As a result, reinsurers now view Argentina as an attractive market in which to provide capacity.”

RENEWALS

However, he clarified that the process has been highly segmented.

“It is not the same for a company that has honored its commitments for thirty years and maintained a strong claims and payment record as it is for a company that has not. I foresee the July 1 renewal season offering substantial capacity, potentially even a slight surplus of supply. This could result in some softening of reinsurance programs, particularly among those that have demonstrated good performance.”

Expanding on this issue, Pastore noted that:

“In facultative reinsurance we have already seen some price reductions and certain terms becoming more flexible. Therefore, Argentina is likely to benefit from a very reasonable renewal season. Obviously, not all companies will experience the same treatment, with a distinction once again being made between those that have performed well and those that have not.”

“Looking to the future, if we assume there may be greater market consolidation, reinsurers are also analyzing which companies are likely to remain viable and which may not. In the case of companies perceived as facing difficulties, reinsurers will be less inclined to provide coverage because future premium collection could become problematic and claims recovery would be even more difficult in the event of liquidation.”

OUTLOOK

Pastore described himself as highly optimistic about the direction Argentina is taking.

“The economy is improving significantly and growth is becoming evident, although not across all sectors. This type of economy will create winners and losers. Business leaders will need to review costs, adjust margins, innovate, invest in technology, and create differentiated solutions that add value for consumers. Insurance and reinsurance are no exception.”

“Those companies that innovate and are capable of delivering what policyholders expect from a solvent insurer will enjoy substantial growth. This growth will not be limited to traditional business lines but will extend into areas that inflation previously prevented from developing. I see significant opportunities in health coverage, unemployment products, life insurance, and personal lines. Cyber insurance, of course, also requires much greater development because losses clearly exist, even if they are not always widely discussed. Companies must commit to these opportunities, and many are already doing so.”

“The issue of artificial intelligence is something that nobody can ignore. Today, my second-best friend is ChatGPT. I wake up in the morning, talk to it, ask it about products, and analyze them. The use of these tools will improve productivity across every sector, and insurance and reinsurance will certainly not be exceptions.”