OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of the main property/casualty members of MAPFRE U.S.A. Group (MAPFRE U.S.A.). The outlook of these Credit Ratings (ratings) 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 Florida (Miami, FL) and MAPFRE Insurance Company (Florham Park, NJ).
The ratings reflect MAPFRE U.S.A.’s balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also reflect the implicit and explicit support provided by its parent company, MAPFRE.
The strong balance sheet strength is derived from risk-adjusted capitalization at the very strong level, which benefits from a high credit quality investment portfolio and low reinsurance dependence, partially offset by adverse loss reserve development trends and liquidity and underwriting leverage measures, which compare unfavorably with the averages for the private passenger standard automobile composite. In addition, risk-adjusted capitalization levels have declined over the recent five-year period due to sizeable dividend payments to the intermediate and ultimate parent companies.
While MAPFRE U.S.A. has generated net income in most years in the recent five-year period, its five-year average total return on revenue and total return on equity measures lag the averages for the industry composite by a significant margin. Operating results have been impacted negatively by underwriting losses driven by adverse prior-year loss reserve development and weather-related losses.
The business profile is considered neutral due to the group’s local market expertise, MAPFRE U.S.A./Commerce brand-name recognition in several states, broad distribution networks and marketing activities throughout the various subsidiaries. This is offset partially by MAPFRE U.S.A.’s concentration of business in Massachusetts and to the automobile lines of business. ERM is considered appropriate for the group’s size and complexity of its underwriting, investment and other risks based on its ERM framework and controls.
The ratings also benefit from the group’s role and strategic importance as an attractive market to its parent company, MAPFRE. MAPFRE U.S.A. is fully integrated into the operations and management of the group globally and carries the MAPFRE name commercially. MAPFRE also provides support to MAPFRE U.S.A. through reinsurance, staffing of senior leadership positions and ERM guidance.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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