Growth in Brazil’s reinsurance sector was driven in 2024 by property, special risks, aeronautics, and financial risk lines, but steep declines in agricultural reinsurance – down 47% – and marine business weighed on the market, keeping AM Best’s outlook negative.
In its latest Market Segment Report, AM Best said it is maintaining a negative outlook for the country’s reinsurance industry. The ratings agency cited political uncertainty, upcoming 2026 elections, and tax reform measures that are putting pressure on profitability. Regulatory restrictions on foreign assets have also limited domestic reinsurers’ ability to expand abroad.
The report noted that Brazil’s reinsurance market continues to recover but requires sustained improvement before the outlook could change. AM Best said a shift to stable would depend on reduced volatility in technical and bottom-line results and the achievement of positive technical income under the country’s new tax framework.
Brazil’s economy grew 3.9% in 2024, supported by strong private consumption along with growth in services and agriculture. At the same time, the Brazilian real weakened sharply, reaching 6.18 BRL/USD as of Dec. 30, 2024.
Within the reinsurance segment, agriculture was described as comparable to natural catastrophe exposure, given its sensitivity to climate risks. Ricardo Rodriguez Perez, senior financial analyst at AM Best, said new techniques are being used to monitor such risks, though agricultural reinsurance still declined 47% in 2024.
According to the report, recent tax changes implemented in 2025 increased costs for insurers and reinsurers, particularly through higher taxes on foreign exchange transactions. Offshore reinsurers are now paying more than triple the rates applied in previous years. Industry growth has also slowed, which the report linked to more selective underwriting by local reinsurers and a greater share of premiums ceded to offshore players. At the same time, higher interest rates have improved returns on invested reserves, helping to deliver positive bottom-line results in both 2023 and 2024.
Although investment income has supported earnings, AM Best said the sector continues to face challenges from political uncertainty, regulatory restrictions, and the current tax environment. The outlook will remain negative until more consistent results are achieved in both technical performance and overall profitability.
What do you think – will Brazil’s reinsurance industry achieve the stability needed for AM Best to revise its outlook? Let us know in the comments below.
