A.M. Best Affirms Rating of Mapfre Re.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--July 2, 2003

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Mapfre Re, Compania de Reaseguros S.A., Spain. The rating outlook has changed from stable to positive, in line with the parent.

The rating reflects Mapfre Re's status as a core subsidiary of Mapfre Mutualidad de Seguros y Reaseguros--currently rated A+ (Superior)--the ultimate parent of the Sistema Mapfre, its superior risk-adjusted consolidated capitalisation, leading position in the Spanish-speaking markets and improved operating performance. Offsetting factors include the company's limited but growing international presence outside of Spain and Latin America and its increasing volume of retrocession of group business.

Mapfre Re is regarded as a core company to Mapfre Mutualidad. It plays an important role in the group's strategy, and hence, benefits from the Mapfre brand. The company is the main reinsurer of several units within the group (Mapfre Mutualidad, Mapfre Seguros Generales S.A., and Mapfre Caucion y Credito S.A.). A.M. Best continues to closely monitor this core status in line with criteria developments prompted by market trends.

Superior risk-adjusted consolidated capitalisation--According to the A.M. Best capital model, capitalisation on a risk-adjusted basis is superior. Capitalisation has been enhanced by a capital injection of EUR 60 million (USD 68.6 million) from the shareholders, which was

announced in December 2002. Furthermore, Mapfre Re's comprehensive reinsurance program effectively mitigates the impact of its catastrophe exposures, thus protecting future earnings.

Excellent business position largely in Spanish-speaking markets--In Spain, Mapfre Re is the larger of the two national reinsurance players, with a market share of approximately 12%. During 2002, gross consolidated reinsurance premium increased by 10.5% to EUR 760.1 million (USD 868.6 million), in light of significant levels of cancelled business and currency revaluations in Latin America. The company has a strong presence in Latin America, a region that accounts for over 20% of the total premium. Mapfre Re will continue to focus on Spanish-speaking countries while keeping its growth in Europe and slowly expanding in the United States through Mapfre Reinsurance Corporation.

Improved operating performance--Mapfre Re reported consolidated return on equity of 10.9% in 2002, following average returns in the preceding three years of 1.8% (in contrast to considerable losses reported by the global reinsurance industry). The non-life combined ratio has improved beyond expectations from 112.4% in 2001 to 93.3%, following restructuring of business lines and enhanced operating efficiency.

Expectation:

-- A.M. Best expects Mapfre Re's proposed expansion in Europe and

the United States to be in line with its traditional strategy

of writing short-tail risks.

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.