Mexico's economic growth has turned negative due to external and internal short-term disruptions. Political and policy uncertainty continues to delay investments while tight credit conditions are choking private consumption. More monetary easing is expected in coming months, however the trade/investment outlook remains open-ended and is a source of risk aversion. Life and motor premiums have begun to moderate but overall growth remains close to historical rates. A worsening in the combined ratio was offset by stronger investment results in the first half of the year.
The Mexican economy is now contracting due to tight credit conditions as well as political and policy uncertainty.
Inflation pressures have subdued, further monetary easing is expected by the end of the year.
Downside risks prevail and we have lowered our growth projections.
Premium growth would begin to moderate due to the broader economy softness.
A worsening in the combined ratio was offset by a betterment in the investment results.