Best Affirms MAPFRE RE’s ‘A+’ Ratings

August 4, 2006

A.M. Best Co. has affirmed the financial strength rating of “A+” (Superior) and the issuer credit rating of “aa” of Spain’s MAPFRE RE, Compania de Reaseguros, S.A. “The outlook on both ratings is positive, in line with the ultimate parent company, Mapfre Mutualidad de Seguros y Reaseguros (Mapfre),” said the bulletin.

“The ratings reflect the full enhancement received from Mapfre,” said Best. “The ratings also factor Mapfre Re’s strong stand-alone risk-adjusted capitalization, excellent operating performance and its leading position in the Spanish-speaking markets.”

The rating announcement gave the following details:
— Strong risk-adjusted capitalization–Mapfre Re’s risk-adjusted capitalization is strong, and A.M. Best expects this level to be maintained through a capital increase in 2007 and retained earnings to compensate for the strong premium growth anticipated in 2006 and 2007.
— Excellent operating performance–In 2006, A.M Best believes the company is likely to achieve a combined ratio of approximately 91 percent, translating into after-tax profits of approximately EUR 90 million (USD 115 million) and a return on net premiums of approximately 8 percent as the company is expected to limit its property and natural catastrophe exposure and focus more on personal lines. A.M. Best believes Mapfre Re benefits from the stability provided by the business written by the various Mapfre subsidiaries and the good rating environment of the open market portfolio.
— Excellent business position–Mapfre Re has an excellent business profile in Spain and the Spanish-speaking markets. It is an integral component of the Mapfre group, as beginning in 2007, the company will be the sole reinsurer for various Mapfre companies (except for facultative cessions), which will account for approximately 37 percent of Mapfre Re’s total premium in 2006. A.M. Best expects Mapfre Re’s gross premiums written to increase by approximately 20 percent to EUR 1.6 billion (USD 2 billion) at year-end 2006, reflecting strong anticipated growth in Latin America.

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