...Capitalization and leverage are key rating drivers in the assessment of insurers' financial strength and are highly influential. Fitch Ratings' recent update to its global insurance criteria quantifies this by assigning a 35% weight to capitalization and leverage in the final rating, the highest among all rating factors. Sufficient capital headroom strengthens insurers' capacity to absorb extraordinary volatility in variables such as claims experience, inflation, exchange rates, and investment results, particularly in periods of economic stress. In Latin America, however, direct comparison of capitalization and leverage metrics is constrained by the heterogeneity of solvency regulatory frameworks across the region. Unlike EMEA, APAC, or North America, where more standardized regimes such as Solvency II or risk-based capital (RBC) prevail, the Latin America insurance sector encompasses a mix of more advanced RBC frameworks, traditional prudential regimes, and intermediate or transitional...
