A.M. Best has assigned a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of "a" to Mapfre Espana, Compania de Seguros y Reaseguros S.A. (Mapfre Espana) (Spain). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Mapfre Espana's balance sheet strength, which A.M. 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 the strategic importance of Mapfre Espana to MAPFRE S.A.(MAPFRE), as it is a key contributor of premium revenue and earnings for the group. Mapfre Espana is the group's engine for writing non-life business in the Iberian Peninsula.
Mapfre Espana has a strong position in Spain's market as a top five domestic non-life insurer, being a market leader in the retail motor, third-party liability and homeowner business segments. The company's business profile is supported by its diverse distribution capabilities, including an extensive agent distribution network that allows excellent access to business and assists in maintaining a leading position in a highly competitive operating environment.
A.M. Best expects Mapfre Espana's balance sheet strength to remain at a very strong level, underpinned by very strong risk-adjusted capitalisation as assessed by Best's Capital Adequacy Ratio and prudent reserving that incorporates buffers over the actuarial best estimate. Furthermore, Mapfre Espana's capital position is protected against the occurrence of most local catastrophic perils, as these events are mainly covered by the Spanish government's national scheme (Consorcio de Compensacion de Seguros).
Mapfre Espana has a track record of strong operating performance emanating from technical and investment revenue streams, as evidenced by a five-year weighted average (2012-2016) return on equity of 11.6%. Despite the potential for marginally weaker results on the motor book, stemming from the change in the Baremo tables effective 1 January 2016, the company achieved an improved overall combined operating ratio of 93.6% in 2016, with the motor combined operating ratio improving to 97.3% from 99.8%. Results at 30 September 2017 showed a continuation of profitability with improvements on the motor book, as the company canceled underperforming contracts and benefited from the positive developments of reserves booked when the new Baremo tables were introduced.
Source: A.M.Best press release