AM Best

A.M. Best Affirms Ratings of MAPFRE RE and MAPFRE GLOBAL RISKS Following Acquisition Announcement by MAPFRE S.A.

Tim Prince
Associate Director, Analytics
+(44) 20 7397 0320

Carlos Wong-Fupuy
Senior Director, Analytics
+(44) 20 7397 0287

Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


LONDON - OCTOBER 17, 2014 10:59 AM (EDT)
A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit ratings of "a" of MAPFRE RE, Compania de Reaseguros S.A. (MAPFRE RE) (Spain) and MAPFRE GLOBAL RISKS, Compania Internacional de Seguros y Reaseguros S.A. (MAPFRE Global Risks) (Spain), following the recent announcement that MAPFRE S.A. (MAPFRE) (Spain) has acquired the European operations of the Direct Line Insurance Group plc (Direct Line Group). The outlook for all ratings is stable.

The ratings of MAPFRE RE and MAPFRE Global Risks reflect their integral role within 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 to them from the group.

On 25 September 2014, MAPFRE announced that it had acquired the German and Italian operations of the Direct Line Group for EUR 550 million. The purchased business wrote approximately EUR 700 million of gross premiums in 2013, and has a strong competitive position in the direct personal motor markets of Italy and Germany. While the acquired business is relatively small compared with the overall MAPFRE group, it is not immaterial. However, MAPFRE's balance sheet strength is not expected to be significantly impacted by the acquisition. Although the MAPFRE group has a good legacy of successful acquisitions, particularly in Latin America, this represents MAPFRE's second development in European personal lines business outside of Spain and Portugal after the acquisition of a controlling stake in Middlesea Insurance p.l.c. in Malta, in 2011.

The acquisition is not expected to have a material impact on the operations or financial strength of MAPFRE RE or MAPFRE Global Risks. Both companies have reported good earnings during the first half of 2014, and are operating broadly in line with expectations.

Negative rating pressure could occur if there is deterioration in risk-adjusted capitalisation of either MAPFRE RE or MAPFRE Global Risks, or of MAPFRE. Additionally, negative rating pressure may arise if the economic conditions in Spain were to deteriorate. Upward 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

Key insurance criteria reports utilised:

    • Analyzing Insurance Holding Company Liquidity

    • Catastrophe Analysis in A.M. Best Ratings

    • Evaluating Country Risk

    • Insurance Holding Company and Debt Ratings

    • Rating Members of Insurance Groups

    • Risk Management and the Rating Process for Insurance Companies

    • Understanding Universal BCAR

    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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