A.M. Best Affirms A- Rating of Seguros Tepeyac S.A.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 13, 2000

A.M. Best Co. has affirmed the A - (Excellent) financial strength rating of Seguros Tepeyac S.A., Mexico, D.F. The rating reflects the company's financial strength, pre-eminent position in the Mexican market, solid balance sheet and favorable earnings trends. The rating also reflects Tepeyac's experienced management team and effective operating strategies.

The rating reflects the company's relationship with its parent, Mapfre America, and the support Seguros Tepeyac receives as a member of the Mapfre Group. The company is an integral part of its ultimate parent's strategy--Mapfre Mutualidad de Seguros y Reaseguros--and is critical to the Group's ongoing success and viability. Mapfre's international strategy is the continuous improvement of existing distribution channels and consolidation of direct insurance operations in Latin America through its Mapfre America subsidiary. A.M. Best expects further operational improvements resulting from the continued implementation of their coordinated global strategy.

Based on MXP $2.1 billion in gross premiums written, Tepeyac is among the top ten insurance companies in Mexico. It underwrites mostly life/health as well as non-life coverage, through an efficient distribution network of branches, agents and brokers. The company has maintained revenue growth, achieving a strong capital and solvency position over the last five years. Seguros Tepeyac maintains favorable capitalization through effective insurance product development and a sound investment strategy. Underwriting results, while unrewarding, are offset by the company's significant investment income. As a result, the company continues to be profitable with consistent returns on equity over 13% for 1999 and the last five years. The company also continues to demonstrate effective loss and expense ratio controls, with a combined ratio at 102%, improving almost 2% over 1998 and 15% since 1995.

The company has a solid investment portfolio backing its technical and contingency reserves. On a risk-adjusted basis, the company's Best Capital Adequacy Ratio (BCAR) is solid. A.M Best expects the company to improve leverage of net-premiums-written-to-adjusted-policyholder-surplus ratios currently in the 2.2 range. Subject to the profitable development of the new life/health lines, the business plan projects reasonable volume and capital levels to support Seguros Tepeyac's insurance operations over the short- to medium-term.

The company anticipates the pension sector offers high growth potential that will boost its market presence and increase its market share in both the pension and asset accumulation sectors over the next several years. Thus, the company has created AFORE Tepeyac to participate in these markets. Considering that in Spain MAPFRE manages the largest portion of the privatized pension funds of the Sociedad Estatal de Participaciones Industriales--a state-run holding company pension fund--A.M. Best expects tangible synergies for Seguros Tepeyac's pension business.

Offsetting these strengths is the uncertainty of the local market's growth potential, as well as its volatility. While Mexico has recently shown an overall improvement in its economy, there are still concerns of a downturn on the current positive indicators. Also there are additional challenges for Seguros Tepeyac to increase and sustain its market share, especially in new lines and with the increased presence of foreign insurers in the market.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.