Winds of unrest in Spain 'unlikely to buffet LatAm insurers'

Spain may be gripped by a political crisis but the Latin American subsidiaries of large Spanish insurance players Mapfre, Atradius and Cesce will unlikely be buffeted in the short term, BNamericas was told.

Catalonia, home of myriad financial services companies, wants independence and held a referendum which those seeking to split with Spain say it won. But the national government is against the region's exit and a question mark hangs over what happens next.

The arrest of two Catalan leaders sparked massive protests this week.

AM Best, which rates Mapfre, Atradius and Cesce, among others, does not forecast any immediate significant implications for the Latin American subsidiaries of these three players.

"We don't expect any major impact in the short term," Alfonso Novelo, head of analytics at AM Best's Mexico City office, told BNamericas. "I think that it won't translate into a higher dividend payment or anything of the sort. For these subsidiaries it should be business as usual."

Novelo said that, if there is any impact, it would likely be felt first by the parent companies.

In a report on the crisis, AM Best said the "investor community remains cautious and political risks are elevated.

"The political uncertainty created by events following Catalonia's independence referendum has created volatility in Spanish insurers' investment portfolios and raised concerns about future access to business."

The investment portfolios of many players have a high concentration in Spanish sovereign fixed-income securities and life insurers are likely to be the most adversely impacted by unsettled bond markets, the rating agency added.

Some firms, among them Seguros Catalana Occidente, have already announced plans to move their legal entities to other parts of Spain.

Mapfre, which in Latin America has operations in markets such as Brazil, Argentina, Mexico and Chile, was the biggest non-life insurer in Latin America last year with a 7.6% market share, according to data from reinsurer Swiss Re.

Cesce and Atradius are both credit insurers. The former has business units in several Latin American countries and the latter has units in Brazil and Mexico.

Pictured: People attend a demonstration in Barcelona following the arrest of two Catalan separatist leaders.