A.M. Best Assigns Rating to Mapfre Empresas Compania de Seguros y Reaseguros S.A.OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of A (Excellent) to Mapfre Empresas Compania de Seguros y Reaseguros S.A. (Mapfre Empresas) (Spain). The outlook is stable. The rating reflects the company's strong risk-based capitalisation n. 1. same as capitalization. Noun 1. capitalisation - writing in capital letters capitalization writing - letters or symbols that are written or imprinted on a surface to represent the sounds or words of a language; "he turned the paper , leading market position in the Spanish industrial risks market and the strong support from its ultimate parent, Mapfre Mutualidad de Seguros y Reaseguros (Mapfre Mutualidad). Offsetting factors are the company's lack of geographical diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. and remaining integration risks amongst its constituent entities. Leading business position in Spain--Mapfre Empresas was created with accounting effect from 1 January 2005 through the consolidation of Musini, Mapfre Industrial and Mapfre Caucion y Credito. The company is the leading Spanish industrial risks insurer with an estimated 20% market share. Mapfre Empresas generates 11% of direct written premiums and 9% of after-tax profits of the Mapfre group. A.M. Best expects consolidated premium income in excess 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. 1.1 billion (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. 1.34 billion) in 2005--approximately 10% growth from the previous year. A.M. Best believes that Mapfre Empresas' plans to expand its geographical coverage, particularly in Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). , are essential for the long-term viability of the company, as its main international competitors possess a greater ability to service multi-national accounts. Strong risk-based capitalisation--A.M. Best believes that Mapfre Empresas' risk-adjusted capitalisation will remain strong. Mapfre Empresas' additional capital needs are not expected to be significant in the near future, given the moderate forecasted premium growth of around 10%. Mapfre Empresas' capital position is protected by intensive use of reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. , with a reserve cession The act of relinquishing one's right. A surrender, relinquishment, or assignment of territory by one state or government to another. The territory of a foreign government gained by the transfer of sovereignty. CESSION, contracts. ratio in excess of 45%. More than one third of reinsured business is ceded to its affiliate, Mapfre Re. Improving operating performance--A.M. Best believes the operating performance shown by Mapfre Empresas' constituent companies in the past will improve on a consolidated basis, with overall profits after tax expected to reach EUR 45 million in 2005 (USD 55 million)--around 5% higher than in 2004. Given the high levels of profitability expected for the new entity (return on equity in excess of 20% in 2005), retention levels are likely to gradually increase. A.M. Best believes that some risks still remain regarding the integration of the individual entities' administration and distribution systems. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. 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. |
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