LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of MAPFRE RE, Compañía de Reaseguros S.A. (MAPFRE RE) (Spain) and MAPFRE GLOBAL RISKS, Compañía Internacional de Seguros y Reaseguros S.A. (MAPFRE GR) (Spain). The outlook of these Credit Ratings (ratings) remains stable.
The ratings of MAPFRE GR reflect the company’s strategic importance to MAPFRE S.A. (MAPFRE), along with its solid risk-adjusted capitalisation and solid, albeit declining, operating performance. The support from MAPFRE S.A. remains a key factor for the ratings of this subsidiary.
MAPFRE exhibits strong consolidated risk-adjusted capitalisation that has been supported by strong earnings in recent years. The group’s capital and surplus remained at a solid level at year-end 2016, reaching EUR 11.4 billion, sufficient to support the increase in its insurance and investment risks.
Despite challenging market conditions in its core segments, MAPFRE has maintained robust results, supported by resilient technical profitability and good investment income. The group continues to prudently increase its geographical diversification, thereby reducing its concentration to Spain and enhancing its business profile, by penetrating selected emerging markets.
MAPFRE RE and MAPRE GR are fully integrated into MAPFRE and are considered critical to the group.
MAPFRE RE centralises MAPFRE’s reinsurance purchasing and writes all of the group’s third-party inward reinsurance business. MAPFRE RE’s financial performance significantly improved in 2016, supported by the increase in group business following the acquisition by MAPFRE of the German and Italian operations of Direct Line Insurance Group plc in 2015, coupled with benign loss experience from large and catastrophic losses during the year. This positive trend continued in the first half of 2017, as demonstrated by the 92.3% combined ratio reported for the period despite various catastrophic events, such as the Chile wildfires and Peru floods. A.M. Best expects the company to maintain strong risk-adjusted capitalisation over the medium term.
MAPFRE GR provides cover for the group’s large international commercial clients in Spain and globally. Whilst the company maintained a good overall performance during 2016, with a net result of EUR 96.0 million, technical profitability was impacted by higher-than-expected frequency of large losses. Furthermore, large claims were also the key driver for MAPFRE GR’s net loss of EUR 13.0 million for the first half of 2017, highlighting the volatility inherent in the business underwritten by the company. However, A.M. Best expects MAPFRE GR’s risk-adjusted capitalisation to remain strong over the medium term.
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