Mapfre sees decline in profit despite 'limited' impact of COVID-19

Spanish re/insurer Mapfre's first quarter 2020 result was dragged down by natural catastrophe losses amounting to €68 million, while the impact of COVID-19 pandemic was "limited".

Net earnings at Mapfre for the first three months were €127 million, down 32 percent on a year earlier, hit by the earthquake in Puerto Rico (€54 million), and the effects of Storm Gloria in Spain (€14 million). Emerging-country currencies also had a negative impact, cutting more
than €6 million from the net result.

Mapfre noted excluding the impact of these catastrophic events, the adjusted result would have been €190 million, with growth of more than 3 percent.

Mapfre's combined ratio rose 4.1 percentage points to 100 percent. However, the combined ratio of the insurance unit stood at 97.2 percent.

Company-wide Mapfre saw revenues of €7.33 billion, down 4.5 percent on a year earlier, and premiums fell by 4.7 percent to €6.1 billion euros. The re/insurer attributed the decrease to depreciation of the main currencies of Latin America and the Turkish lira (12 percent).

The company stated that although the effect of the coronavirus crisis was "limited" in the first quarter, it has seen a decline in new insurance policies.

Mapfre expects an increase in the claim experience in health, burials and life lines. "The economic standstill and confinement will translate in the short-term into a decrease in claims in the Automobile insurance and General P&C lines, and in the medium- to long-term will result in a reduction in premium revenue," it said.

The premiums for Mapfre's insurance unit in the quarter amounted to €5.09 billion, down 5.2 percent on previous year.

Mapfre Global Risks (MGR), the unit of insurer Mapfre that targets multinational companies, premiums rose by 41.6 percent to €349 million, while premiums at the Asistencia unit decreased by 5.6 percent to €220 million, due to the impact of the shutdown in global tourism, and its result (-€12 million), particularly affected by the collapse in travel insurance coverage due to COVID-19.