“Our priority has always been to proactively and efficiently protect our clients’ legal interests and their funds”

At the Global Meeting of MAPFRE’s Legal Affairs Area, we spoke with Agustina Monti, manager of Legal Services at MAPFRE Argentina, who provides a detailed overview of the challenges and opportunities facing the reinsurance sector in that country. She referenced crucial issues such as the impact of high inflation, the viability of the blue chip swap and the complexities involved in managing captive clients in a challenging regulatory environment.

 

Agustina, the situation in Argentina over the last two years has had a major impact on the Global Risks Unit and has generated a lot of uncertainty for everyone, especially you. Based on your knowledge of the market and experience over these years, how do you think the situation will be resolved in the future? Is there more certainty now about how things stand?

The situation in Argentina has certainly been very challenging for the reinsurance sector in the last two years. High inflation has eroded the value of premiums and technical reserves, hindering long-term financial planning. Exchange rate volatility has generated mismatches in the valuation of assets and liabilities, especially in contracts denominated in foreign currencies, which increases operational and financial risk.

In addition, exchange restrictions have limited the capacity of insurers and reinsurers to transfer funds abroad, affecting the payment of international reinsurance premiums and claims management. This context has forced companies to adapt their risk coverage strategies and to seek innovative solutions to maintain solvency and competitiveness in an increasingly complex market.

The combination of these factors has generated an environment of high uncertainty that requires proactive and flexible management to mitigate negative impacts and take advantage of emerging opportunities.

“However, in the future, although economic challenges persist, there are signs that give us reason to be optimistic”.

The implementation of economic policies aimed at controlling inflation, stabilizing the exchange rate and promoting clear regulations can all contribute to a more predictable and favorable environment for the sector. I trust that, with a strategic and adaptive approach, we’ll be able to capitalize on opportunities and strengthen our position in the market.

 

Have blue chip swaps facilitated access to currencies and enabled premiums to reach reinsurers in an acceptable manner, or we have interpreted it that way, from a financial point of view? Do you think the same system will remain viable over time or do you foresee changes?

I believe that, in general terms, blue chip swaps won’t undergo substantial changes in the short term under the Milei’s government. The direction of economic policy suggests the continuity of this mechanism as a viable tool for accessing currencies.

Blue chip swaps have been key to facilitating the flow of premiums to reinsurers, enabling the fulfillment of financial commitments in an appropriate and timely manner. This stability in payments is essential to maintain confidence and the financial integrity of reinsurance operations in a complex economic context.

However, it’s really important to keep an eye on possible adjustments arising from changes in government policies or changes in market dynamics. Factors such as the opening of the exchange market, regulatory modifications or new restrictions could impact how blue chip swaps work.

That’s why although the system has proven to be efficient up to now, adopting a flexible and preventive approach to anticipate possible changes and adapt financial strategies accordingly is really important.

We would consider any change in external payment mechanisms as an improvement on the current system.

 

The management of captive clients with risks in Argentina has been particularly complex and efforts have been made to protect their interests and funds in the best way possible. What reading should we take from this whole situation?

The management of captive and risk clients in Argentina has been particularly complex due to the economic and regulatory environment. However, our priority has always been to proactively and efficiently protect our clients’ interests and their funds. This experience has taught us many things, chief among them being that we need to act flexibly, always be looking down the road and work together as a team to stay one step ahead of the ever-changing context.

Being part of a group like MAPFRE, which values strength and transparency, I consider it essential to maintain constant and fluid communication with our clients and with MAPFRE Global Risks. This allows us to rigorously analyze the best alternatives to mitigate risks and optimize results, always aligned with strategic objectives.

In short, this situation reinforces the importance of collaborating, being adaptable and leveraging deep analysis to stay informed as key pillars of dealing with the challenges we face and ensuring the interests of all parties involved are protected.

 

How have you assessed and managed this situation in general from a legal point of view?

From a legal perspective, we’ve managed this situation through close collaboration with the Group’s different teams, maintaining constant and effective communication. This has allowed us to comprehensively evaluate the best legal and financial alternatives open to us, anticipating possible contingencies and mitigating risks in a timely manner.

Our experience confirms the importance of being updated with regard to regulations and regulatory changes, adapting quickly to evolving scenarios and proposing innovative solutions, insofar as the prevailing legal framework allows. This approach has facilitated the correct management of funds and the protection of the interests of all parties involved.

 

What lessons should we learn from all of this in your opinion, or is it just a question of more of the same?

Although in Argentina we’re accustomed to constant and rapid changes, each situation brings with it valuable lessons that enrich our experience and encourage us to continually improve. This context shouldn’t be interpreted as simply more of the same, but rather as an opportunity to strengthen our capacity to analyze, adapt and respond strategically to complex scenarios.

Each new challenge invites us to review and adjust our practices, identify areas for improvement and develop innovative solutions within the current regulatory framework. This means not only reacting to changes, but also anticipating them through constant monitoring of economic, legal and regulatory variables that affect our operations.

This situation also highlights the importance of fostering collaboration between multidisciplinary teams and maintaining fluid communication with the different actors involved.

“Sharing experiences and best practices allows us to address problems from multiple perspectives and find more efficient and sustainable solutions”.

Furthermore, it’s essential to strengthen our risk management and compliance strategies, adapting them to the current context to ensure the protection of the interests of the company and our clients.

 

What is your opinion of this first global meeting of legal directors of the different MAPFRE companies?

This meeting was a significant achievement for the new management, given that a meeting on this scale had never been organized before. The organization was excellent and the positive atmosphere contributed greatly to the success of the event. From a professional perspective, it was an excellent opportunity for legal managers to learn and share experiences and successful strategies, which will undoubtedly boost the efficiency and effectiveness of the legal departments in different regions.

This type of meeting facilitates alignment with global legal policies and procedures, both existing and future, ensuring that all subsidiaries follow common guidelines and standards. Personally, I had the opportunity to meet colleagues from different jurisdictions with whom I’m already collaborating, which will be key to jointly address complex legal problems that affect the company in different countries.

This forum also enabled us to strengthen solid work relationships, which will be highly beneficial. We often believe that certain challenges are exclusive to our country, but sharing experiences shows us that our colleagues are also tackling similar situations, and learning from their approaches is extremely enriching.

One highlight for me was that I had the chance to meet colleagues from corporate and other subsidiaries in person, and was able to spend time with them, exchange ideas, opinions and experiences, get to know them socially and create new friendships, and I’m positive this will contribute to working better together in the future.

Finally, it was a really valuable training and professional development opportunity, in that we had the chance to get up to date with the latest trends and changes in the legal field. I sincerely appreciate this initiative and am so glad I had the chance to be part of it.