AM Best published its September 2026 Latin America market segment report on 7 September, describing a market still firmly favourable to cedants, with facultative pricing reductions of 5 to 20 percent in some areas, regional growth revised down to 2.2 percent, and less than 24 percent of almost USD 21 billion in economic losses insured. Within that supply-driven picture the agency identifies rising life and health reinsurance demand, driven by demographic change and migration, while Aon puts dedicated reinsurance capital at a record USD 800 billion and S&P Global Ratings warns that 2027 pressure will fall on terms and conditions, including attachment points, as much as on rate.
AM Best published its September 2026 Latin America market segment report today, and the sentence that matters most to a specialist writer of personal lines treaty business in this region is not the one about property capacity. It is the observation that life and health reinsurance demand is increasing, driven by demographic change, migration and evolving protection requirements. That is a demand statement in a report otherwise dominated by supply, and it deserves to be read carefully rather than gratefully.
What the segment report says
AM Best describes a Latin American reinsurance market that has stayed resilient despite weaker economic growth, significant catastrophe exposure and a prolonged soft cycle that has now run since the second half of 2024 and extended through the June and July 2026 renewals. Conditions remain favourable to cedants: capacity is ample, terms are flexible, and facultative business is highly competitive, with pricing reductions of between 5 and 20 percent reported in some areas. The economic backdrop is less generous. The agency cites the Economic Commission for Latin America and the Caribbean’s revised forecast of 2.2 percent regional growth in 2026, down from 2.3 percent, with growth expected to slow in 24 of the region’s 33 countries. The protection gap remains the structural fact of the region: less than 24 percent of almost USD 21 billion in economic losses were insured, and insurance penetration remains below 5 percent of GDP. AM Best also flags the onset of what it calls a Super El Nino phenomenon showing signs of rapid intensification, with prolonged drought, torrential rainfall and extreme heat among the possible consequences for second-half catastrophe experience. Against that backdrop the agency records growing interest in proportional reinsurance, casualty and specialty appetite building in the more developed markets of Chile, Mexico and Brazil, and rising life and health reinsurance demand.
Brazil as the structural signal
Brazil supplies the most instructive numbers in the report. Domestic Brazilian reinsurers remained profitable in 2025, with net premiums up 5.6 percent and industry surplus up 13 percent in local currency, and they recorded a positive underwriting result for the first time since 2019. Investment income supported that outcome, with the policy rate at 15 percent at year-end 2025, although investment income itself fell 12.7 percent. The more consequential figure is a share rather than a result. Local reinsurers took approximately 70 percent of premium ceded by domestic insurers between 2015 and 2018, but only 53 percent at the end of 2025. Seventeen points of a maturing market have moved offshore, and AM Best attributes the shift to diversification need and market maturation rather than to any failure of the local sector. Recent foreign exchange measures and the CBS and IBS taxes introduced in April 2026 raise the operating cost of offshore participation, and the pilot implementation is expected to surface operational issues during the year. Health, property, motor, marine and financial risks led premium growth in 2025, and agricultural reinsurance grew 6.3 percent despite weather concerns. The report also identifies managing general agents and alternative risk transfer arrangements as a material source of the capacity that has prolonged the soft cycle, and notes that lower global interest rates would make the region more attractive still to delegated underwriting authority enterprises.
The global backdrop the region will import
None of this is happening in isolation. Aon put dedicated reinsurance capital at a record USD 800 billion heading into the January renewal, framing the abundance as a growth opportunity for insurers. S&P Global Ratings, publishing its sector view on the eve of the Monte Carlo Rendez-Vous, maintained a stable outlook on the global sector while stating plainly that pricing pressure will persist through 2027, that rate reductions could match those of 2026 even if large losses reach annual budget levels, and that ample reinsurance and retrocession capacity is likely to exert additional pressure on terms and conditions, including coverage provisions and attachment points. Fitch has maintained a deteriorating outlook on the global reinsurance sector for 2027. Hannover Re, speaking in Monte Carlo, said it still expects risk-adequate prices at 1 January in what it described as an increasingly challenging environment. Read together these are not contradictory positions. They describe a sector that is exceptionally well capitalised, still earning above its cost of capital, and beginning to lose ground on structure rather than on rate. The region will import that dynamic through the same channels it always has: broker competition, MGA capacity and the migration of displaced appetite into whichever class has the lowest technical entry barrier.
What this means for Power Re
Power Re underwrites Group Life and Personal Accident across Latin America, and a rating agency reporting rising demand in precisely our classes is not a reason for comfort. Demand that grows during a soft cycle arrives on the cedant’s terms, and four disciplines follow from that. First, growing demand is an invitation to underwrite, not an instruction to accept. Every additional submission we see this year should raise our decline rate, not lower it, because a wider funnel with an unchanged acceptance standard is the only form of growth that survives the cycle turning. Second, the pressure S&P identifies is on structure, and structure is where our classes are quietly given away: event definitions, hours clauses, occupational and travel extensions, reinstatement terms, and the ceding commission itself. A wording concession costs nothing on the day it is granted and everything on the day it is tested, and it appears in no published index. Our discipline is a wording and commission register in which every deviation from our filed technical terms is priced, referred, documented and matched against what was received in exchange. Third, the Super El Nino warning is a Personal Accident and catastrophe accumulation question, not only a property one. Extreme heat, flooding and displacement produce mortality and morbidity, and our aggregation control must be able to answer, before the event, how much Group Life and Personal Accident exposure sits inside a single geography, a single cedant scheme and a single event definition. Fourth, Brazil’s move from 70 to 53 percent is a reminder that access is contestable in both directions. Share migrates towards the carrier that is technically more useful, not merely cheaper, and the defence of a franchise is the quality of the analysis a cedant cannot obtain elsewhere. The protection gap that AM Best measures is real and it is our long-term market. It will be closed by reinsurers that priced the cycle correctly and were still solvent, credible and rated when the demand finally arrived.
Power Re perspective
This commentary reflects Power Re’s reading of public market reporting. It is general information, not underwriting, investment or legal advice.
