AMSTERDAM--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” to Mutua de Riesgo Maritimo, Sociedad de Seguros a Prima Fija (Murimar) (Spain). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Murimar’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
AM Best expects Murimar’s risk-adjusted capitalization, as measured by the Best’s Capital Adequacy Ratio (BCAR) to remain at the strongest level over the medium term supported by low net underwriting leverage. The company demonstrates adequate reserving and consistently favourable reserve developments. Offsetting factors include the mutual’s high dependence on reinsurance, significant exposure to Spanish real estate holdings and the small size of its capital base, EUR 11.8 million, which exposes the balance sheet to potential volatility.
Murimar has a niche business profile focused on insurance for small-to medium vessels in Spain. Despite limited gross premiums of EUR 19.7 million in 2018, Murimar is the second largest fishing vessel hull insurer in Spain, with distribution through a strong agency network and effective client retention aided by its mutual status. Murimar writes some international premiums in Portugal and France, and plans to grow its business in Latin America. Offsetting rating factors include the mutual’s geographical and product concentration.
The mutual’s operating performance is considered adequate based on AM Best’s expectation of stable future earnings. Murimar’s management focuses on service to its members rather than high returns. Therefore, the mutual is expected to achieve combined ratios close to 100%. AM Best expects that future earnings will have limited volatility on a net basis due to the extensive reinsurance arrangements in place, which reduce net peak loss exposures. Furthermore, the company has a low level of investment income from its asset portfolio divided between cash and real estate.
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