A.M. Best Affirms Rating of Mapfre Re, Compania de Reaseguros S.A.Business Editors OLDWICK, N.J., U.S.A.--(BUSINESS WIRE)--May 12, 2004 A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Mapfre Re, Compania de Reaseguros S.A. (Mapfre Re) (Spain). The rating outlook is positive, in line with the parent. The rating reflects Mapfre Re's status as a core subsidiary of Mapfre Mutualidad de Seguros y Reaseguros, the ultimate parent of the Sistema Mapfre, its enhanced risk-adjusted consolidated capitalisation, strong position in the Spanish-speaking markets and improved operating performance. Offsetting factors include substantial growth expectations from group and third party business (in particular in Europe and the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ) in a potentially softening market. Mapfre Re is regarded as a core company to Mapfre Mutualidad, playing an integral role in the group's strategy. The company is the main reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. of the majority of underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. entities within the group. Enhanced risk-adjusted consolidated capitalisation--Capitalisation has been strengthened through a capital injection of EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 150 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 177 million) from a rights issue in April 2004. Subject to no adverse loss experience, A.M. Best expects Mapfre Re's capitalisation to be further bolstered through retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . Moreover, additional capital injections are planned for the next two years to support the company's ambitious expansion plans. Volatility inherent in writing global catastrophe cover will continue to be contained through conservative use of retrocession RETROCESSION, civil law. When the assignee of heritable rights conveys his rights back to the cedent, it is called a retrocession. Erskine, Prin. B. 3, t. 5, n. 1; Dict. do Jur. h.t. . Strong business position in Spanish-speaking markets--Mapfre Re maintains a leading position in the Spanish market (market share of approximately 12% including business from group companies) and a strong presence in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . A.M. Best expects the company's strong premium growth to further accelerate in 2004 due to the planned expansion in core Spanish-speaking markets as well as Europe and the United States. The expansion during a softening market will require maintenance of strict underwriting policies. Improved operating performance--A.M. Best expects the company's conservative business model to continue ensuring profitability in line with the levels achieved in 2003. The non-life combined ratio is expected to increase in 2004 due to the need to bolster reserves from expanding business volumes, following an improvement of 5.1 percentage points to 88.2% in 2003. Return on equity (ROE) is expected to remain at above market average levels. 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. |
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