Net profits of insurers rose 42% in a year according to Fitch

The rating agency Fitch Ratings released its report on the outlook for the Colombian insurance industry with a cut in the first half of the year.

In this case, the sector, in its consolidated results, including life and non-life insurance, registered an increase in net income to June 2019 of 42% compared to the previous year.

The growth was driven “by an outstanding 31% increase in the financial income of the investment portfolios, by a situation of the markets,” according to the New York rating agency.

The firm also reviewed a greater dynamism in the business, since the growth of the sector at June 2019 was 8.3%, a figure higher than 5.1% in June 2018.

According to Fitch, debtor, fire and earthquake life products benefited greatly from the good performance of consumer credit, which by June 2019 had improved 11%, and the mortgage, which saw a 10% gain in the same period.

The expert in banking and insurance, Wilson Triana, commented that this is especially true in these segments since “these are tied to the loans of the banks”, since many of the products offered by financial entities include insurance in their portfolio.

Regarding occupational risks, the increase in the minimum wage of 6% in the year favored a greater number of affiliations, which continued to boost the sector.

According to the report made by local analysts, Milena Carrizosa and Fernando Cárdenas, this not only favored the regulated rates of this branch, but also impacted the compulsory insurance against traffic accidents (Soat).

In car insurance and Soat also counts the increase in sales of new cars that for June saw an increase of 4.7%.

"Fitch expects the sector to have a better dynamism compared to 2018 with growth close to between 8% and 10%, depending on the economic growth of the country," the study concluded.

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