AMSTERDAM–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a+” of MAPFRE RE, Compañía de Reaseguros, S.A. (MAPFRE RE) (Spain). MAPFRE RE is a subsidiary of MAPFRE S.A. (MAPFRE), the non-operating holding company of the MAPFRE group. The outlook of these Credit Ratings (ratings) remains stable.
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 (ERM). The ratings also reflect the lift MAPFRE RE receives due to being part of the MAPFRE group. MAPFRE RE is strategically important to the MAPFRE group, as the group’s reinsurance specialist and catastrophe risk manager.
MAPFRE RE’s strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative and liquid investment portfolio, prudent reserving and good internal capital generation collectively contribute to an overall balance sheet assessment of very strong. A partially offsetting factor is MAPFRE RE’s moderate dependence on retrocession; however, the risk associated with this dependence is partly mitigated by the credit quality of the retrocession panel, which remains excellent, with the majority of reinsurance recoverables held with highly rated counterparties. AM Best expects the company’s balance sheet to remain very strong, supported by good internal capital generation.
MAPFRE RE has a track record of generating strong and stable operating results, indicated by a five-year (2014-2018) weighted average return on equity of 12.8% (as calculated by AM Best). MAPFRE RE’s 2018 operating results were impacted by numerous catastrophe events, including typhoons in Japan and storms in the United States. Nonetheless, the company reported a strong technical result as evidenced by a combined ratio of 95.4% (as calculated by AM Best). The five-year weighted average combined ratio is 94%, which highlights the effectiveness and robustness of MAPFRE RE’s risk underwriting and retrocession programme over the long term.
MAPFRE RE is an established player in the global reinsurance market with a presence in 19 countries and business written in more than 100 countries with extensive experience in catastrophe risk management, having been established initially as the MAPFRE group’s internal reinsurer. The company has good product and geographical diversification with a portfolio that is well-balanced between group and third-party business. MAPFRE RE’s profile and relevance in the market is expected to grow further following the completion of an internal restructuring of MAPFRE’s global risks business unit earlier this year, which involved the transfer of MAPFRE GLOBAL RISKS, Compañía Internacional de Seguros y Reaseguros S.A.’s reinsurance business to MAPFRE RE.
MAPFRE RE’s ERM is considered to be developed and appropriate for the company’s risk profile and operational scope.
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