OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of the property/casualty members of MAPFRE U.S.A. Group (MAPFRE U.S.A.). Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of MAPFRE Life Insurance Company (MAPFRE Life) (headquartered in Webster, MA). The outlook of these Credit Ratings (rating) is stable.
The aforementioned companies are owned by MAPFRE U.S.A. Corp. (MAPFRE USA Corp), whose ultimate parent is Spain-based MAPFRE S.A. (MAPFRE). The lead company in MAPFRE U.S.A. is The Commerce Insurance Company (Webster, MA) and includes inter-company pooling members, Citation Insurance Company (MA) (Webster, MA), Commerce West Insurance Company (San Ramon, CA), American Commerce Insurance Company (Columbus, OH), MAPFRE Insurance Company of New York (Garden City, NY), MAPFRE Insurance Company of Florida (Miami, FL) and MAPFRE Insurance Company (Florham Park, NJ).
The ratings of the members of MAPFRE U.S.A. reflect the group’s adequate risk-adjusted capitalization, overall favorable operating performance and local market expertise. The group also benefits from the MAPFRE U.S.A./Commerce brand-name recognition in several states, distribution networks and marketing activities throughout the various U.S. subsidiaries.
These positive rating factors are offset partially by MAPFRE U.S.A.’s concentration of business in Massachusetts, underwriting losses on private passenger automobile lines, and susceptibility to frequent weather-related losses. Several reinsurance programs have been established to protect the group and mitigate these weather-related events. The group also is implementing a multidimensional approach to improve profitability, which is being executed across all the four regions (Massachusetts-Northeast, Atlantic, Central and West). In addition, although still supportive of the rating, the levels of risk-adjusted capitalization have declined over the most recent five-year period due to consistently sizeable dividend payments to the intermediate and ultimate parent companies.
A.M. Best believes that upward rating movement at this point is unlikely. Negative rating actions could occur if the group continues to report declining risk-adjusted capitalization levels; there is a continuation of the unfavorable underwriting results that occurred over the previous five-year period, driven by significant catastrophe losses and weather-related losses; any material deviation from the company’s submitted financial projections; the economic conditions in Spain deteriorate; or if MAPFRE U.S.A.’s relationship to its parent changes in a manner that affects the operations of the group.
The ratings of MAPFRE Life reflect the explicit financial support provided by MAPFRE U.S.A. in the form of a full financial guarantee and net worth maintenance agreement. The ratings also reflect the company’s strategic value in offering simplified issue and fully underwritten term life products to its parent company’s property/casualty client base, use of shared services with affiliated companies, and the benefits derived from the use of the MAPFRE brand, which is considered a competitive advantage. Partially offsetting rating factors include the challenges of successfully executing its business plan, minimizing earnings volatility while the company builds scale with its low growth strategy, and exposure to product and geographic concentration risk.
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