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FOR IMMEDIATE RELEASE
LONDON - APRIL 09, 2014 12:21 PM (EDT)
A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of A (Excellent) and issuer credit rating of "a" of MAPFRE Global Risks, Compania Internacional de Seguros Y Reaseguros, S.A. (MGR) (Spain).
The ratings reflect MGR's integral role within MAPFRE S.A. (MAPFRE) (Spain), its excellent operating performance and strong business profile. MGR's ratings benefit from the financial strength and support of MAPFRE. The revised outlook reflects the stabilising economic conditions within Spain, to which MAPFRE has material investment and underwriting exposure.
MAPFRE has a strong level of risk-adjusted capitalisation and has generated robust overall earnings in recent years, despite extremely challenging economic conditions in its domestic market. MAPFRE remains heavily exposed to the Spanish economy, with Spanish debt accounting for 40% of the group's EUR 40 billion of invested assets at 31 December 2013. While economic headwinds such as high unemployment and a continued soft housing market persist, Spain is showing early signs of economic recovery. In addition, while Spain's government debt remains elevated, Spanish--and more generally, European--financial markets have stabilised over the past year, easing the debt burden. Although Spain is a core insurance market for MAPFRE, the group's operations are well diversified geographically, particularly in the Americas. Furthermore, MAPFRE's Spanish insurance business has been resilient and continues to perform strongly.
MGR is critical to MAPFRE, providing cover for the group's commercial clients in Spain and globally. Although MGR has been affected by weak macro-economic conditions in Spain in recent years, the company maintained an excellent underwriting and overall performance during 2013, reporting a combined ratio of 85% and a return on equity of 19%. Furthermore, via internal capital generation, MGR materially strengthened its risk-adjusted capitalisation in 2013.
A negative rating action could occur if there is material deterioration in MGR's or MAPFRE's risk-adjusted capitalisation. Additionally, negative rating pressure may arise if the economic conditions in Spain were to deteriorate. Upwards rating movement could result 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 www.ambest.com/ratings/methodology.
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.