A.M. Best Affirms Ratings of Mapfre Mutualidad de Seguros y Reaseguros and Corporacion MAPFRE, S.A.

OLDWICK, N.J. -- OLDWICK, NEW JERSEY, U.S.A., Aug. 3, 2006--A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and the issuer credit rating (ICR) of "aa" of Mapfre Mutualidad de Seguros y Reaseguros (Mapfre) (Spain), the ultimate parent of the Mapfre group (commercially referred to as Sistema Mapfre). The outlook on these ratings is positive. E[acute accent]At the same time, A.M. Best has affirmed the ICR of "aa-" of Corporacion MAPFRE, S.A. (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 ratings is stable. E[acute accent]The ratings reflect Mapfre group's strong risk-adjusted consolidated capitalisation, excellent operating performance and leading business position in Spain and Latin America. E[acute accent]Strong risk-adjusted consolidated capitalisation--A.M. Best expects Mapfre's consolidated risk-adjusted capitalisation to remain supportive of the rating as excellent retained earnings compensate for higher capital requirements due to anticipated strong growth. In A.M. Best's view, Mapfre also benefits from an overall conservative and diversified risk profile. A.M. Best believes that the planned group restructuring in 2006 increases Mapfre's financial flexibility and in turn should facilitate the funding of any potential significant acquisition. E[acute accent]Excellent operating performance--A.M. Best expects overall operating performance to remain excellent in 2006 with an anticipated increase in consolidated after tax profits by approximately 15% to EUR 750 million (USD 946 million), which translates into a return on net premiums of approximately 7%. This will be mainly driven by the non-life segment, where A.M. Best expects an improvement in the combined ratio to 92% (compared to 93.8% in 2005), following a modest deterioration in 2005 due to the U.S. hurricanes. In A.M. Best's opinion, Mapfre benefits from a strong non-life portfolio, particularly the highly profitable motor business in Spain, although profitability of the fast growing operations in Latin America is lower than that in its domestic markets. E[acute accent]In the life business (mainly concentrated in Spain), A.M. Best estimates excellent, but stable, profits of approximately EUR 130 million (USD 164 million) in 2006. A.M. Best believes that the potential for profit improvements is limited given the challenges that Mapfre faces in an increasingly competitive market dominated by strong bancassurance agreement. E[acute accent]Leading business position--Mapfre is the leading general insurer in Spain, and through numerous subsidiaries, it is also a leading market participant in many Latin American countries. It benefits from a multi-channel distribution network and has a strong franchise in all territories where it operates. In 2006, gross premiums written are likely to continue to grow by approximately 10% to EUR 11 billion (USD 14 billion) as Mapfre continues its expansion, both in Spain and in Latin America, particularly in the non-life segment. E[acute accent]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.