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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 31, 2013 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (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 the $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 potential weakening in the consolidated risk-adjusted capitalization of MAPFRE USA's ultimate parent organization, MAPFRE S.A. (Spain).
These positive rating factors are partially offset by the group's concentration of business in Massachusetts, which is focused on private passenger automobile insurance, as well as it’s susceptibility to weather-related losses.
MAPFRE S.A. faces higher country risk due to deterioration in the sovereign creditworthiness of Spain over recent years. At the 2012 year end, Spanish sovereign debt accounted for nearly 25% of the consolidated group’s EUR 39 billion of invested assets. MAPFRE S.A. also maintains sizeable exposure to Spanish financial institutions and commercial property via its Spanish holdings. The Spanish insurance market remains important to MAPFRE S.A., with approximately 33% of its consolidated gross written premiums and 38% of its consolidated insurance result derived from domestic business in its home market. Although the consolidated group enjoys a geographically diversified portfolio, particularly in Latin America and the United States, the majority of its business is derived from countries with sovereign creditworthiness equal to or lower than that of Spain.
Upward rating movement is unlikely over the near term. Negative rating pressure would likely originate from MAPFRE S.A. and would arise if there were a worsening of risk-adjusted capitalization tied to investment losses or a deterioration of the operating environment in 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.