Argentina: consolidation, promise and uncertainty

Almost all of the Latin American insurance markets underwent notable regulatory and market change in 2008. But, according to Machua Millett, an attorney at Boston based law firm, Edwards Angell Palmer & Dodge LLP, Argentina stands out as particularly significant given the size of the market and its importance in the region as well as the fundamental nature of the developments seen there in the past year. Here, Mr. Millett comments on the implications for the market of the nationalisation of the Argentine US$30.0bn private pension fund system by the government in 2008

Machua Millet, Attorney, Insurance and Reinsurance Department, Edwards Angell Palmer & Dodge LLP

By most measures, Argentina is considered Latin America’s fourth largest insurance market. The market has continued on a path of steady growth and consolidation in 2007 and 2008. The total number of insurers operating in the jurisdiction declined to 184 in 2007, from 189 the previous year and 266 in 1998. Meanwhile, average insurance market growth has topped 12.8% over the last four years and insurance penetration remains relatively low. That being said, however, Argentina’s high sovereign risk and the government’s recent nationalization of the nation’s private pension funds has caused many, including Moody’s, to express concern about the coming year for the Argentinean economy generally and the insurance market specifically.