Press Release - OCTOBER 21, 2016

A.M. Best Affirms Credit Ratings of MAPFRE RE and MAPFRE GLOBAL RISKS

 Pablo Vasquez
Financial Analyst
+44 20 7397 0311

Ghislain Le Cam, CFA, FRM
Associate Director, Analytics
+44 20 7397 0268

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) 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 RE and MAPFRE GR reflect the companies’ integral role within the MAPFRE Group (MAPFRE), along with their strong level of operating performance and risk-adjusted capitalisation. The ratings of both companies benefit from the financial strength of MAPFRE and the support provided by the group.

MAPFRE exhibits a strong level of risk-adjusted capitalisation that has been supported by robust earnings in recent years. Although the group’s capital and surplus decreased in 2015, negatively impacted by currency translation movements in emerging markets and lower insurance earnings, it remains at a solid level to support MAPFRE’s insurance and investment risks. During the first half of 2016, MAPFRE’s equity increased by 7.4% to EUR 11.2 billion (including minority interests) benefiting from a weaker euro and stronger underwriting results across the group’s operations.

Despite challenging operating conditions in its core markets, MAPFRE has achieved further diversification in recent years by penetrating selective emerging markets, thereby reducing its concentration to Spain. This change in business mix exposes the group’s capital base to a degree of volatility due to potential fluctuations in the associated foreign currencies. However, earnings are expected to continue to be supported by solid underlying profitability of the core businesses in local currency terms.

Both MAPFRE RE and MAPRE GR are fully integrated into MAPFRE and critical to the group.

MAPFRE RE centralises the group’s reinsurance purchasing and writes all of the group’s third party inwards reinsurance business. Whilst MAPFRE RE’s financial performance deteriorated in 2015, chiefly stemming from attritional claims in the U.S., and in the first half of 2016, which was impacted by higher significant catastrophe events, the company’s combined ratio stands at good levels when compared to other reinsurance peers (93.9% in 2015 and 96.8% for the first six months of 2016 as reported by MAPFRE RE). Furthermore, A.M. Best expects the company to maintain a strong level of risk-adjusted capitalisation over the medium term.

MAPFRE GR provides cover for the group’s large international commercial clients in Spain and globally. The company has maintained a good underwriting and overall performance during 2015 and the first half of 2016, with net results reported for the business unit of EUR 58.3 million and EUR 25.4 million, respectively. Over the medium term, A.M. Best expects MAPFRE GR’s risk-adjusted capitalisation to evolve in line with its business plans and strategic initiatives. The support from MAPFRE remains a key factor for the ratings of this subsidiary.

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.

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