|[April 09, 2014]
A.M. Best Revises Outlook to Stable for Members of MAPFRE U.S.A. Group
OLDWICK, N.J. --(Business Wire)--
A.M. Best has revised the outlook to stable from negative and
affirmed the financial strength rating of A (Excellent) and issuer
credit ratings of "a" of the members of MAPFRE U.S.A. Group
(MAPFRE USA). The lead company in MAPFRE USA is The Commerce
Insurance Company (Webster, MA) and includes its inter-company pool
members, Citation Insurance Company (Webster, MA), Commerce
West Insurance Company (Pleasanton, CA (News - Alert)), American Commerce
Insurance Company (Columbus, OH), MAPFRE Insurance Company of New
York (Garden City, NY), MAPFRE Insurance Company of Florida
(Miami, FL) and MAPFRE Insurance Company (Florham Park, NJ).
The ratings reflect MAPFRE USA's solid risk-adjusted capitalization,
good operating performance and local market expertise. In addition,
MAPFRE USA's inter-company pool members provide geographic
diversification and rate flexibility to the group.
These positive rating factors are partially offset by MAPFRE USA's
concentration of business in Massachusetts, which is focused on private
passenger automobile insurance, as well as its susceptibility to
weather-related losses, which has been evident in MAPFRE USA's
underwriting results over the last several years.
The revised outlook reflects the stabilizing economic condition within
Spain, to which MAPFRE USA's ultimate parent organization, MAPFRE S.A.
(MAPFRE) (Spain), has material investment and business exposure.
MAPFRE has a strong level of risk-adjusted capitalization and has
generated robust overall earnings in recent years, despite extremely
challenging economic conditions in its local market. MAPFRE remains
heavily exposed to the Spanish economy, with Spanish debt accounting for
40% of the group's EUR 40 billion of invested assets at December 31,
2013. While economic headwinds such as high unemployment and a continued
soft housing market persist, Spain is showing early signs of economic
recovery. In addition, while Spain's government debt remains elevated,
Spanish, and more generally European, financial markets have stabilised
over the past year easing the debt burden. Although Spain is a core
insurance market for MAPFRE, its operations are well diversified
geographically, particularly in the Americas. Furthermore, MAPFRE's
Spanish insurance business has been resilient and continues to perform
Negative rating pressure could occur if there is deterioration in MAPFRE
USA's or MAPFRE's risk-adjusted capitalization. Additionally, there
could be negative rating pressure if there is further deterioration or
volatility in the Spanish economy. Upwards rating movement is most
likely to be generated from improving economic conditions within Spain
over the longer term.
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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS
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