A.M. Best Affirms Rating of Mapfre Mutualidad; Affirms Ratings of Corporacion Mapfre and Revised Outlook to Stable.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Mapfre Mutualidad de Seguros y Reaseguros (Mapfre Mutualidad) (Spain), the ultimate parent of the Mapfre Group (commercially referred to as Sistema Mapfre). The outlook on this rating remains positive.

At the same time, A.M. Best has affirmed the issuer credit rating of "aa-" of Corporacion Mapfre (Corporacion), Mapfre Mutualidad's publicly listed non-operating holding company, and the "aa-" rating on the EUR 275 million 6.02% senior debt due 2011 issued by Corporacion. The outlook for these two ratings has been changed to stable from positive, reflecting the uncertainty related to Sistema Mapfre's repeated indications of its willingness to consider potential acquisition opportunities.

The ratings reflect Mapfre group's leading business position in Spain and Latin America, very strong risk-adjusted consolidated capitalisation and excellent operating performance.

Leading business position--Mapfre Mutualidad is the leading motor insurer in Spain. Sistema Mapfre, via numerous subsidiaries, is the domestic leading insurance group, and it is also a leader in many Latin American countries. In 2004, net premiums grew above market average in most business lines, with the total consolidated premiums increasing by 15%. In 2005, premiums are likely to continue to grow--albeit at a reduced rate of around 10%--reflecting the non-recurrent effect from Musini and a stagnant Spanish savings life market dominated by a climate of low interest rates. Sistema Mapfre benefits from a multi-channel distribution network, and the strength of its domestic agent network is excellent. However, some integration challenges are likely to arise as Sistema Mapfre creates "Red Mapfre," an umbrella unit aimed to consolidate all direct channels in Spain. Having successfully integrated Musini and consolidated its position in Latin America, Sistema Mapfre's long-term goal is to establish an international holding company to ease growth abroad.

Very strong risk-adjusted consolidated capitalisation--A.M. Best expects Mapfre Mutualidad's consolidated risk-adjusted capitalisation to remain very strong through the retention of earnings despite its projected business growth. The successful rights issue of EUR 500.5 million (USD 599 million) by Corporacion in April 2004 is evidence of the group's excellent financial flexibility.

Excellent operating performance--Mapfre Mutualidad reported a strong 23% increase in consolidated net profits (EUR 549.6 million (USD 669 million)) at year-end 2004 with all underwriting entities returning a net profit. Group capital efficiency is very strong as indicated by a 20% consolidated return on equity. The combined ratio remained excellent at 91.5%, which was 1.1 percentage points lower than in 2003, reflecting Mapfre's enhanced risk selection and reduced expenses. Life technical results decreased slightly to EUR 104.9 million (USD 127 million) despite a premium growth above market average due to increased surrenders. A.M. Best expects both underwriting and overall performance to remain excellent with an increase in consolidated net profits in excess of 10% during in 2005.

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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 http://www.ambest.com.