Reuters logo
Fitch Upgrades Mapfre SA to IDR 'A-'; Affirms at IFS 'A-'
June 7, 2017 / 1:08 PM / 6 months ago

Fitch Upgrades Mapfre SA to IDR 'A-'; Affirms at IFS 'A-'

(The following statement was released by the rating agency) LONDON, June 07 (Fitch) Fitch Ratings has affirmed Spanish insurer Mapfre SA's (Mapfre) core operating subsidiaries' Insurer Financial Strength (IFS) Ratings at 'A-' and upgraded Mapfre's Issuer Default Rating (IDR) to 'A-' from 'BBB+'. The Outlooks are Stable. A full list of rating actions is at the end of this commentary. The IDR upgrade of Mapfre, the holding company of the group, follows the upgrade of Mapfre's unconstrained IFS assessment to 'A+' from 'A'. The holding company's IDR is notched down twice from the unconstrained IFS assessment of 'A+'. Fitch continues to apply a sovereign constraint of 'A-', meaning that Mapfre's IFS ratings are capped at 'A-'. Fitch has also assigned a rating of 'BBB-' to Mapfre's EUR600 million subordinated bond issued in March 2017. The notes are rated three notches below Mapfre's IDR of 'A-' to reflect their subordination (two notches) and moderate risk of non-performance (one notch), in line with Fitch's notching criteria. KEY RATING DRIVERS The upgrade of Mapfre's unconstrained IFS to 'A+' from 'A' reflects the group's strong and resilient earnings and solid capital position. However, Mapfre's exposure to sovereign debt is reflected in the sovereign constraint of 'A-' being applied to Mapfre's ratings, one notch higher than the sovereign rating of Spain (BBB+/Stable) due to international diversification of Mapfre's earnings. Mapfre is substantially exposed to the Spanish economy as around 60% of its operating profits originate from Spain. Mapfre has consistently demonstrated resilient operating performance despite the downturn in Spain during the financial crisis and the most recent recession in Brazil. The group reported a combined ratio of 97.4% in 2016 (2015: 98.6%). The improvement in the combined ratio reflects improved underwriting discipline and cost-saving initiatives in Mapfre's core markets. Mapfre's five-year average combined ratio is 96.7% and its target combined ratio is unchanged at 96% or less. Fitch expects the group to maintain robust underwriting performance. Fitch assesses Mapfre as being strongly capitalised, based on a 'Strong' score from Fitch's Prism Factor Based Model (FBM). Shareholders' funds increased 6% to EUR9.1 billion at end-2016, supported by strong retained earnings and appreciation of main currencies. The group's Solvency II ratio was also strong at 210% at end-2016 (2015: 198%). Mapfre's financial leverage ratio of 15% is low compared with peers and is a positive rating factor. Mapfre's ratings are heavily influenced by the group's exposure to Spanish sovereign debt (EUR17 billion at end-2016, 1.5x shareholders' funds). This holding represents a large concentration risk and a potential source of volatility for capital adequacy. However, based on the results of scenario tests, Fitch believes that Mapfre's capital position is resilient against potential stress from the substantial exposure to Spanish sovereign debt. The ratings also reflect Mapfre's strong franchise and access to distribution in Spain and Latin America, particularly Brazil. Mapfre is a leader in the non-life insurance segment in Spain with a 14.6% market share and has strong positions in Spanish life insurance with a 6.3% market share and Latin American non-life market with a share of 8.2% in 2015. This makes it the 10th largest European and the third-largest Latin American insurance group. RATING SENSITIVITIES Mapfre's ratings could be downgraded if exposure to the core insurance markets or sovereign debt results in losses with a material impact on the group's capitalisation. Mapfre's ratings could also be downgraded if the Spanish sovereign is downgraded. Factors that could trigger an upgrade include an upgrade of Spain's sovereign rating, providing that Mapfre maintains strong earnings and capitalisation. FULL LIST OF RATING ACTIONS Mapfre SA Long-Term IDR upgraded to 'A-' from 'BBB+'; Outlook Stable EUR1,000 million senior debt upgraded to 'BBB+' from 'BBB' EUR700 million 5.921% subordinated debt due 2037 with step-up in 2017 upgraded to 'BBB' from 'BBB-' EUR600 million 4.375% subordinated debt due 2047 assigned a long-term rating of 'BBB-' The IFS Ratings for the following entities have been affirmed at 'A-'/Stable: Mapfre Espana Compania de Seguros y Reaseguros S.A. Mapfre Global Risks S.A. Mapfre Vida S.A. de Seguros y Reaseguros Mapfre Re Compania de Reaseguros S.A. Contact: Primary Analyst Ekaterina Ishchenko Associate Director +44 20 3530 1532 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Harish Gohil Managing Director +44 20 3530 1257 Committee Chairperson Chris Waterman Managing Director +44 20 3530 1168 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: athos.larkou@fitchratings.com; Pilar Perez, Barcelona, Tel: +34 93 323 8414, Email: pilar.perez@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below