Best Places Cattolica, Mapfre Ratings Under Review/Negative

In separate bulletins A.M. Best Co. announced that it has placed the financial strength rating of “A” (Excellent) and the issuer credit rating of “a” of Italy’s Societa Cattolica di Assicurazione – Societa Cooperativa under review with negative implications.

At the same time Best placed the financial strength ratings (FSR) of “A+” (Superior) and the issuer credit ratings (ICR) of “aa” of Mapfre Mutualidad de Seguros y Reaseguros (Mapfre) and MAPFRE RE, Compania de Reaseguros, S.A.; the ICR of “aa-” of Corporacion MAPFRE, S.A. (Corporacion), Mapfre’s publicly listed non-operating holding company, and the debt rating of “aa-” on the €275 million ($358 million) 6.02 percent senior debt due 2011 issued by Corporacion under review with negative implications.

Best’s decision to put the ratings of both companies under review follows the announcement that the Mapfre Group will form a joint venture for Cattolica’s existing motor portfolio, consisting of a 50 percent stake.

Best also noted that “the recent termination of the life bancassurance joint venture with Banco Popolare di Verona e Novara Scrl could negatively impact” Cattolica’s business profile, “and the recent reserve strengthening for the motor third party liability line is also a negative factor.”

Best explained that the rating action on Mapfre reflects its opinion that the deal “could put pressure on Mapfre’s consolidated risk-adjusted capitalization as the joint venture will be financed with cash.” Best also said it’s “concerned about the future underwriting profitability of this entity as the Italian motor market is at the peak of the cycle.”

Best plans to meet with the management of both companies, and it “aims to resolve the under review status as soon as possible.”