AM Best expects insured losses from a recent earthquake in Peru to be limited. The rating agency cites low insurance penetration near the epicenter and geographic concentration of premiums in Lima.

Seismic Event Details

A 7.2-magnitude earthquake struck the southwest portion of Peru on Aug. 20, 2026, near Coracora in the Parinacochas province. Preliminary reports indicate damage to 83 homes, approximately 20 schools, as well as health centers, public facilities, and transport routes. The full scope of insured losses remains subject to ongoing assessments.

Market Penetration Context

Insurance penetration in Peru stands at approximately 2% of GDP in 2025. Insurance activity is geographically concentrated, with Lima accounting for over 80% of total insurance premiums as of June 2026. The epicenter was located far from this primary market hub.

What the Numbers Show

The divergence between national insurance penetration (2% of GDP) and regional premium concentration (over 80% in Lima) suggests that catastrophic events outside the capital face minimal direct exposure to the formal insurance sector. This structural gap limits immediate financial impact on insurers despite physical damage to infrastructure and housing in the affected region.

Outlook

Inger Rodriguez, senior financial analyst at AM Best, noted that increased insurance penetration and reinsurance availability remain paramount for Peru given its exposure to natural catastrophes. AM Best maintains a stable outlook on Peru’s insurance segment.

AM Best has assigned a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of "a" (Excellent) to MACM Risk Retention Group, Inc. The outlook is stable.

The agency concurrently affirmed the same ratings and stable outlook for Medical Assurance Company of Mississippi. Both entities comprise the MACM Group.

Rating Drivers

AM Best cites the group’s balance sheet strength as strongest, supported by risk-adjusted capitalization at the strongest level under Best’s Capital Adequacy Ratio (BCAR). Surplus levels remained stable despite sizable unrealized losses at year-end 2022. The group maintains a conservative investment portfolio.

Operating performance remains strong, driven by solid net investment income that offsets volatility in underwriting results. This dynamic delivered strong pre-tax and net earnings in each of the past five years.

Business Profile

AM Best assesses the business profile as limited due to the group’s mono-line, single-state focus on physicians. MACM RRG was created in 2026 to facilitate measured regional expansion. It will be heavily quota shared with its affiliated entity, MACM.

Enterprise risk management is assessed as appropriate for the organization’s size and scope.

Outlook

The stable outlook reflects expectations that the group will maintain its strongest balance sheet assessment. Operating performance is expected to remain strong over the intermediate term, bolstered by solid investment returns.