Mapfre Re upgraded by AM Best
AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a+” from “a” of Spain-based Mapfre Re. Mapfre Re is a subsidiary of Mapfre, the non-operating holding company of the Mapfre group.
The ratings reflect Mapfre Re’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in Mapfre Re’s strategic importance to the Mapfre group, as the group’s reinsurance specialist and catastrophe risk manager, the rating agency said.
A partially offsetting factor is Mapfre Re’s moderate dependence on retrocession, with a retention rate relatively lower than peers, AM Best noted. Nonetheless, AM Best expects the company’s balance sheet to remain very strong, supported by adequate internal capital generation.
Mapfre Re has a track record of generating strong and stable operating results, as evidenced by a five-year (2013-2017) weighted average return on equity of 12.6 percent, according to AM Best. Furthermore, the company reported “excellent technical results” in 2017 despite difficult market conditions, including continued pressure on technical rates, and the impact of significant catastrophe events occurring in the second half of the year, which translated in a solid combined ratio of 94.8 percent. The stability in technical earnings is underpinned by deep technical expertise and the effective use of retrocession protections.
Mapfre Re has good product and geographical diversification with a portfolio well balanced between group and third-party business. The planned internal restructuring of Mapfre’s global risks business unit, that should see the business of Mapfre Global Risks, Compañía Internacional de Seguros y Reaseguros be transferred to Mapfre Re, is anticipated to increase MAPFRE RE’s profile and relevance in the market, AM Best noted.
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