OLDWICK, N.J.--(BUSINESS WIRE)--July 2, 2003--A.M. Best Co. has
affirmed the financial strength rating of A+ (Superior) of Mapfre
Mutualidad de Seguros y Reaseguros (Mapfre Mutualidad), Spain. At the
same time, A.M. Best has assigned an "aa-" rating to the senior debt
of Corporacion Mapfre, the group's stock company and subsidiary of
Mapfre Mutualidad. The rating outlook has changed from stable to
positive.
The rating is based on Mapfre Mutualidad's superior risk-adjusted
consolidated capitalisation, its excellent business position in Spain
and Latin America and superior operating performance. An offsetting
factor is the potential volatility of Mapfre Mutualidad's exposure to
the Latin American markets.
Superior risk-adjusted consolidated capitalisation--According to
the A.M. Best capital model, capitalisation on a risk-adjusted basis
is superior. Mapfre Mutualidad's capitalisation is supportive of the
projected business growth, and no immediate extraordinary capital
needs are envisaged. The group's balance sheet is moderately leveraged
after a EUR 275 million (USD 314.2 million) debt issued in 2001.
Excellent business position--As a group, Mapfre (commercially
referred to as Sistema Mapfre) is the largest and leading insurance
group in Spain with a 12% market share. Mapfre Mutualidad, the
ultimate parent of the Mapfre group, is the leading motor insurance
company in the domestic market. The group benefits from a very solid
and well recognized brand, well diversified business mix and a
superior multi-channel distribution network enhanced by the strategic
alliance with Caja Madrid, a leading Spanish bank. In Latin America,
Mapfre enjoys an excellent presence where it operates via multiple
subsidiaries consolidated under Mapfre America and Mapfre America
Vida. Globally, Mapfre Asistencia Compania Internacional de Seguros y
Reaseguros SA provides road, home and travel assistance services,
operating in 50 countries worldwide and issuing in excess of 32
million policies. On a consolidated basis, A.M. Best expects the risk
profile to improve through increased diversity beyond the global
Spanish-speaking markets.
Superior consolidated operating performance--Mapfre Mutualidad
reported a five-year average return on equity (ROE) of 19.8%.
Significantly, with the exception of Mapfre America Vida, all
underwriting entities returned a net profit in both 2001 and 2002.
Non-life technical results were excellent with a combined ratio of 93%
for 2002 (compared with 95.8% in 2001). Mapfre continues to streamline
its global activities, maintaining a selective approach to
underwriting and business expansion. Subsequently, A.M. Best expects
ROE above 15% in the near term.
A.M. Best Co., established in 1899, is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit A.M. Best's Web site at www.ambest.com.