Fitch Ratings has affirmed Spanish insurer
The Outlooks are Stable. A full list of rating actions is below.
KEY RATING DRIVERS
The ratings reflect MAPFRE's very strong business profile, as well as capitalisation and leverage, and strong earnings. These factors are somewhat offset by MAPFRE's significant exposure to Spanish sovereign debt, which is used to match domestic life insurance liabilities in
Fitch ranks MAPFRE's business profile as 'Favourable' compared with other European-based insurance groups' and scores it at 'aa-'. MAPFRE has a very strong market position in
Fitch views MAPFRE as well-capitalised, based on a 'Very Strong' score by the agency's Prism Factor-Based Model (FBM). The group's regulatory Solvency II (S2) ratio was very strong at 201% at end-1Q21 (end-2020: 193%, end-2019: 187%). Own funds backing the S2 ratio largely consist of unrestricted Tier 1 capital. MAPFRE's financial leverage was stable at 24% at end-1H21 (end-2020: 23%). We view the group's leverage as 'Strong', comparing favourably with similarly rated peers'.
MAPFRE's underwriting performance remained resilient in 2020 and 1H21, despite losses from natural catastrophe events and the impact of the coronavirus pandemic. The group reported a combined ratio of 95.1% in 1H21 and 94.8% in 2020 (2019: 97.6%) and targets on average a combined ratio (excluding natural catastrophe events) of 96%-97% for 2019-2021. For 2021 the group expects to achieve a combined ratio of around 95% for 2021. Overall profitability also remained strong in 1H21 with a net result (excluding minorities) of
Fitch believes that MAPFRE's financial performance is susceptible to challenges stemming from the coronavirus crisis, such as higher claims activity, lower premiums growth and currency volatility, in particular in
MAPFRE's significant exposure to Spanish sovereign debt totalled 123% of total equity at end-1H21 (end-2020: 130%, end-2019: 180%). MAPFRE is also substantially exposed to the Spanish economy as about 60% of its attributable result originates from
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Material improvement to the group's capital position, as measured by a Prism FBM score of 'Very Strong', and to financial performance, as measured by a net income return on shareholders' equity of 10% or more on a sustained basis.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Deterioration to the group's capital position, as measured by the Prism FBM score falling below 'Strong'
Downgrade of
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
RATING ACTIONSENTITY/DEBT RATING PRIOR
MAPFRE Asistencia Compania Internacional de Seguros Y Reaseguros, S.A. Ins Fin Str A+ Affirmed A+
MAPFRE, S.A. LT IDR A- Affirmed A-
subordinated
LT BBB- Affirmed BBB-
senior unsecured
LT BBB+ Affirmed BBB+
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
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