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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - SEPTEMBER 06, 2013 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a” of the members of MAPFRE USA Group (MAPFRE USA). The lead company in MAPFRE USA is The Commerce Insurance Company (Webster, MA) and includes its inter-company pool members, Citation Insurance Company (Webster, MA), Commerce West Insurance Company (Pleasanton, CA), American Commerce Insurance Company (Columbus, OH), MAPFRE Insurance Company of New York (Garden City, NY), MAPFRE Insurance Company of Florida (Miami, FL) and MAPFRE Insurance Company (Florham Park, NJ).
Concurrently, A.M. Best has affirmed the ICR of “bbb” and debt rating of “bbb” on $300 million 5.95% senior unsecured notes due 2013 of the parent holding company, MAPFRE U.S.A. Corp. The outlook for all ratings is negative.
The ratings reflect MAPFRE USA’s solid risk-adjusted capitalization, good operating performance and local market expertise. In addition, MAPFRE USA’s inter-company pool members provide geographic diversification and rate flexibility to the group. The outlook reflects the negative pressure on the consolidated risk-adjusted capitalization of MAPFRE U.S.A. Corp. and its subsidiaries’ ultimate parent organization, MAPFRE S.A. (MAPFRE) (Spain).
These positive rating factors are partially offset by MAPFRE USA’s concentration of business in Massachusetts, which is focused on private passenger automobile insurance, as well as its susceptibility to weather-related losses.
Economic conditions throughout the eurozone—and particularly within Spain—add negative pressure to the ratings of MAPFRE USA and are the drivers of its negative outlook. Spanish debt accounted for approximately 38% of the consolidated group’s EUR 39.8 billion of invested assets at year-end 2012, the majority of which was derived from investments in government-related assets and domestic financial institutions. The MAPFRE group also maintains sizeable commercial property investments in Spain through its investment holdings. Despite difficult economic conditions, the MAPFRE group maintains a strong level of risk-adjusted capitalization and continues to generate robust underwriting profitability.
Negative rating actions could occur if there is deterioration in MAPFRE USA’s or MAPFRE’s risk-adjusted capitalization. There will be negative rating pressure in the event of further deterioration in the Spanish economy. Although upwards rating movement is unlikely, a stable outlook could be assigned following the economic recovery and stabilization of Spain.
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.
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.