A.M. Best Affirms Ratings of MAPFRE USA Group and Its Members

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of MAPFRE USA Group (MAPFRE USA), its lead company, The Commerce Insurance Company (Commerce Insurance) and four of MAPFRE USA’s inter-company pool members.

“Risk Management and the Rating Process for Insurance Companies”

Concurrently, A.M. Best has affirmed the ICR of “a-” and debt rating of “a-” for the $300 million 5.95% senior unsecured notes due 2013 the parent holding company, MAPFRE U.S.A. Corp. (formerly known as The Commerce Group, Inc.). The outlook for the above ratings is negative. All companies are domiciled in Webster, MA, unless otherwise specified.

The ratings reflect MAPFRE USA’s solid risk-adjusted capitalization, strong operating performance and local market expertise. In addition, the other MAPFRE USA members, Citation Insurance Company, Commerce West Insurance Company (Pleasanton, CA), American Commerce Insurance Company (Columbus, OH) and State-Wide Insurance Company (Garden City, NY) provide geographic diversification and rate flexibility to the group. The outlook reflects the potential weakening in the consolidated risk-adjusted capitalization of MAPFRE USA’s ultimate parent organization, MAPFRE S.A. (Spain).

The positive rating factors are partially offset by the group’s concentration of business in Massachusetts and its limited product scope, which is focused on private passenger automobile insurance.

MAPFRE USA’s operating performance is strong; however, it remains influenced by the Massachusetts personal automobile market and is susceptible to weather-related losses. As the state’s leading writer of personal lines business, the group benefits from its brand name recognition, adherence to strict underwriting fundamentals and in-depth understanding of the personal lines marketplace.

In addition, A.M. Best has upgraded the ICR to “a+” from “a” and affirmed the FSR of A (Excellent) of MAPFRE Insurance Company of Florida (Miami, FL). This rating action reflects the explicit support provided by the company’s participation in MAPFRE USA’s inter-company pooling agreement. A.M. Best also has affirmed the FSR of A- (Excellent) and ICR of “a-” of MAPFRE Insurance Company (Florham Park, NJ). The outlook for these ratings is stable. Both companies are wholly owned subsidiaries of Commerce Insurance.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; “Natural Catastrophe Stress Test Methodology”; “Catastrophe Analysis in A.M. Best Ratings”; “Risk Management and the Rating Process for Insurance Companies”; and “A.M. Best’s Ratings & the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.