Press Release - APRIL 09, 2014

A.M. Best Revises Outlook to Stable for MAPFRE RE, Compania de Reaseguros S.A.


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Tim Prince
Associate Director, Analytics
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Mahesh Mistry
Director, Analytics
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Rachelle Morrow
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Jim Peavy
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FOR IMMEDIATE RELEASE

LONDON - APRIL 09, 2014
A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of A (Excellent) and issuer credit rating of "a" of MAPFRE RE, Compania de Reaseguros S.A. (MAPFRE RE) (Spain).

The ratings reflect MAPFRE RE's integral role within MAPFRE S.A. (MAPFRE) (Spain), its good operating performance and strong business profile. MAPFRE RE's ratings benefit from the financial strength and support of MAPFRE. The revised outlook reflects the stabilising economic conditions within Spain, to which the MAPFRE group has material investment and underwriting exposure.

MAPFRE has a strong level of risk-adjusted capitalisation and has generated robust overall earnings in recent years, despite extremely challenging economic conditions in its domestic market. MAPFRE remains heavily exposed to the Spanish economy, with Spanish debt accounting for 40% of the group's EUR 40 billion of invested assets at 31 December 2013. While economic headwinds such as high unemployment and a continued soft housing market persist, Spain is showing early signs of economic recovery. In addition, while Spain's government debt remains elevated, Spanish--and more generally, European--financial markets have stabilised over the past year, easing the debt burden. Although Spain is a core insurance market for MAPFRE, the group's operations are well diversified geographically, particularly in the Americas. Furthermore, MAPFRE's Spanish insurance business has been resilient and continues to perform strongly.

MAPFRE RE is integral to MAPFRE, centralising the group's reinsurance purchasing and exclusively writing all third party inwards reinsurance business. MAPFRE RE's financial performance has been good in recent years, particularly in 2012 and 2013, when it benefitted from improved loss experience relating to large claims. The company is expected to maintain a strong level of risk-adjusted capitalisation over the medium term.

Negative rating pressure could occur if there is deterioration in MAPFRE RE's or MAPFRE's risk-adjusted capitalisation. Additionally, negative rating pressure may arise if the economic conditions in Spain were to deteriorate. Upwards rating movement could be generated from improving economic conditions within Spain over the longer-term.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This rating announcement has been issued by A.M. Best Europe - Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.


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