Mexico’s Cartel Violence Could Hit Economy and Insurance Segment: AM Best

Ongoing violence from criminal groups in Mexico, which disrupted travel and attacked businesses in Puerto Vallarta during the weekend, could create headwinds for a country where tourism represents approximately 10% of the economy, AM Best said in a commentary.

Violence began on Sunday, Feb. 22 in reliation for the killing of cartel leader Nemesio Oseguera Cervantes.

“Although flights are expected to resume at Guadalajara and Puerto Vallarta’s airports…, it may take more time for cruise ships to resume visits, and the event in the longer term may dissuade tourists from visiting oceanside resort areas on Mexico’s west coast,” according to Carlos De la Torre, managing director of operations of AM Best’s Mexico-based subsidiary.

Read more: Mexico Visitors Shaken as Cartel Death Fuels Travel Chaos

While the impact of the violence remains to be seen, continuing unrest could exacerbate the negative forces affecting Mexico’s insurance segment, he said, noting that the country carries moderate levels of economic and financial system risk with a high level of political risk.

He warned that spreading or ongoing unrest could present a challenge to Mexican President Claudia Sheinbaum.

Negative Outlook

AM Best has a negative outlook on Mexico’s insurance segment, which relies on reinsurance as a form of risk management and capital planning. De la Torre noted that global reinsurers have shown renewed interest in the region as market pricing has been trending downward.

“Although the insurance market is expected to grow, the rate of growth likely will slow as compared with the previous two years, hampered in part by a slowing economy,” he said.

“Additionally, the elimination of ‘fiscal credit,’ resulting from value added tax (VAT) paid by insurers to third parties when paying claims to policyholders, may potentially erase 40% of expected net profits for 2025,” De la Torre said.

He explained that insurers are revisiting their strategies to mitigate the impact of this change, which is likely to lead to a continuation of the decline in financial products seen in 2025.

The anticipated low-interest-rate environment will more volatility to insurers’ 2026 results, he added.

Mexico remains at a level 2 travel advisory from the U.S. State Department, which advises travelers to “exercise increased caution,” De la Torre continued.

While the U.S. and Canadian governments have issued shelter-in-place orders for citizens in Jalisco and Nayarit, AM Best said, it has not observed any disruptions in Mexico City.

Photograph: Pedestrians walk past a charred vehicle after it was set on fire, on a road in Cointzio, Michoacán state, Mexico, on Sunday, Feb. 22, 2026, after the death of the leader of the Jalisco New Generation Cartel, Nemesio Rubén Oseguera Cervantes, known as “El Mencho.” (AP Photo/Armando Solis)

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