|[September 06, 2013]
A.M. Best Affirms Ratings of MAPFRE PRAICO Group Members
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating of A
(Excellent) and issuer credit ratings of "a" of MAPFRE PRAICO
Insurance Company, its wholly owned subsidiary, MAPFRE Preferred
Risk Insurance Company, and an affiliate, MAPFRE Pan American
Insurance Company, collectively known as the MAPFRE PRAICO Group
(MPG). The outlook for all ratings is negative. All companies are
domiciled in San Juan, Puerto Rico.
The ratings reflect MPG's excellent capitalization, solid operating
performance driven by investment income and consistently profitable
underwriting results, established market presence within Puerto Rico and
strong risk management practices. The ratings also reflect MPG's strong
brand name recognition within the Puerto Rican market and its integral
role as a member of MAPFRE S.A. (MAPFRE), its ultimate parent and
the largest insurance group in Spain.
Partially offsetting these positive rating factors is MPG's geographic
concentration of risk, which potentially exposes capital to frequent and
severe weather-related events. Operating almost exclusively within
Puerto Rico, the company's results remain exposed to potential changes
within the judicial, regulatory and economic climate.The negative
outlook reflects the potential weakening in the consolidated
risk-adjusted capitalization of MAPFRE regarding the eurozone sovereign
debt crisis given its sizeable exposures to peripheral eurozone debt.
Economic conditions throughout the eurozone and-particularly within
Spain-add negative pressure to the ratings of MPG and are the drivers of
its negative outlook as MAPFRE maintains significant investments in the
peripheral eurozone economies. Spanish debt accounted for approximately
38% of the consolidated group's EUR 39.8 billion of invested assets at
year-end 2012, the majority of which was derived from investments in
government-related assets and domestic financial institutions. MAPFRE
also maintains sizeable commercial property investments in Spain through
its investment holdings. Despite difficult economic conditions, MAPFRE
maintains a strong level of risk-adjusted capitalization and continues
to generate robust underwriting profitability.
Negative rating actions could occur if there is deterioration in
MAPFRE's risk-adjusted capitalization. There will be negative rating
pressure in the event of further deterioration in the Spanish economy.
Although upwards rating movement is unlikely, a stable outlook could be
assigned following the economic recovery and stabilization of Spain.
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.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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