The main problem during 2021 for the LATAM region is the uncertainty surrounding economic activity due to the high possibility of a third wave of COVID, as the region’s main countries do not have enough vaccines to execute a quick immunization strategy, according to MAPFRE.

Brazil, with a population of 214m, has the world’s third highest case numbers (15.7m) and the second most deaths (437,000), but it has only administered 58.7m vaccine doses, data from Johns Hopkins coronavirus resource center revealed. In comparison the UK, with 66m people, has 4.5m cases, 128,000 deaths – but has administered 57.4m vaccines.

Oscar García-Serrano, chief financial officer of MAPFRE in Brazil, told Insurance Asset Risk that another challenging event is inflation, due to a recent “rally of commodities” combined with depreciation of the local currencies in the area.

“This effect could bring anti-cyclical actions in monetary and fiscal policies and in some cases increasing the political risks – populism, radicalism or a seeking for disruption in the political ‘status quo’ – and these effects can be already observed in some countries.”

To mitigate some of the effects, the insurer had reduced its exposure to assets with less liquidity and credit risk since the beginning of 2020, he added.

“What differentiates LATAM from other emerging markets is the domestic market that has not yet been fully exploited with high growth potential and regional stability and an absence of conflicts between countries. However, there are some important challenges to attracting more foreign direct investment such as structural reforms and a legal system with clear rules for investors,” García-Serrano concluded.