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TMCNet:  A.M. Best Revises Outlook to Stable for MAPFRE PRAICO Group Members

[April 09, 2014]

A.M. Best Revises Outlook to Stable for MAPFRE PRAICO Group Members

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 the issuer credit rating of "a" for 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 stable. All companies are domiciled in San Juan, Puerto Rico.

The ratings reflect MPG's excellent capitalization, solid operating performance historically driven by investment income, long history of 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 Rico market, and integral role as a member of MAPFRE S.A. (MAPFRE), the largest insurance group in Spain. The revised outlook reflects stabilizing economic conditions in Spain, where MAPFRE has material investment and underwriting exposure.

Partially offsetting these positive rating factors is MPG's geographic risk concentration, which exposes capital to potential frequent and severe weather-related events. Additionally, operating almost exclusively within Puerto Rico exposes the group's results to potenial changes within the judicial, regulatory and economic climate.


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 stabilized 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 strongly.

A.M. Best feels the current ratings of MPG are properly positioned and does not anticipate upward movement in the near term. However, negative rating actions could occur should risk-adjusted capitalization weaken considerably due to investment losses, a significant increase in catastrophe-related losses, or a significant, sustained deterioration in operating performance. Additionally, there could be negative rating pressure if there is further deterioration or volatility within the Spanish economy.

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 RESERVED.


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