S&P Affirms Mapfre Re ‘AA-‘ Ratings

June 4, 2004

Standard & Poor’s Ratings Services announced that it has affirmed its “AA-” long-term counterparty credit and insurer financial strength ratings on Spanish reinsurer Mapfre Re Compania de Reaseguros, S.A. (Mapfre Re) and its U.S.-based subsidiary Mapfre Reinsurance Corp. (MRC). The outlook on both entities is stable.

The bulletin accompanied the affirmation of S&P’s ratings on Group Sistema Mapfre, the company’s parent (See previous article).

“The ratings on Mapfre Re reflect the company’s strong and improving operating performance, increasingly strong competitive position in the Spanish-speaking world, and extremely strong capitalization,” stated S&P credit analyst Peter McClean. The “company’s exposure to sovereign risk in Latin America is an offsetting factor,” S&P noted.

It also stressed that the ratings are at least partially based on the implied financial support provided by the Sistema Mapfre Group.

“The ratings on MRC reflect its strategic importance to the parent, “said S&P. “Mapfre Re has provided explicit support to MRC, which will maintain the subsidiary’s capital at prudent levels.”

S&P also indicated that the “stable outlook on Mapfre Re and MRC reflects their strategic importance to the consolidated Mapfre group–which is expected to continue to be supportive of Mapfre Re–as well as the companies’ improved stand-alone profiles.”

“Standard & Poor’s expects Mapfre Re’s operating performance to remain strong, with the combined ratio remaining below 95 percent in 2004,” McClean added. It is expected that the company will maintain its strong competitive position and continue to be the market leader in Spain, retaining its current market share of about 12 percent and increasing net premiums written by more than 30 percent in 2004.

S&P concluded that it “expects Mapfre Re’s capitalization to remain extremely strong, in the ‘AAA’ range.”

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