With a financial strength rating of “A +”
The credit rating agency Standard & Poor’s has published its decision to maintain MAPFRE’s issuer credit rating at “A-” with a stable outlook, that of its simple obligations at “A-” and that of its subordinated obligations. in “BBB”.
Standard & Poor’s considers MAPFRE’s business model to be “very solid”, as it benefits from “wide geographic diversification and has leadership positions in its main business units”. In addition, the Group is “successfully developing its strategic plan to improve the underlying profitability of businesses such as Brazil and the US.” “The size and diversification of its distribution channels, the focus on customer service and the successful exchange of best practices within the Group support its leadership positions.”
S&P’s specifically highlights three great strengths of the Group: 1) A well-recognized international brand that occupies leadership positions in Spain and Latin America, 2) an effective implementation of the transformation measures that the company is executing to improve profitability, diversification and group competitiveness, and 3) high capital strength against Solvency II requirements with limited volatility.
Among the risks that the entity envisions regarding MAPFRE’s business, it mentions distribution capabilities in the Spanish life insurance business as a result of the loss of bancassurance contracts, a moderate sensitivity to exchange rate fluctuations, mainly from operations in emerging markets, and geopolitical and pandemic-related uncertainties in Latin America, mainly Brazil.
“Exceptional” liquidity position
The financial profile of the company also is defined as “solid” by S&P’s, while it considers that the liquidity levels are “exceptional, given the high percentage of easily redeemable assets and the strong operating cash flows”.
“We expect strong earnings to continue to support the Group’s capital levels, while funding organic and inorganic growth and the payment of expected dividends of at least 50% of net income.” The agency’s perspective is based on an expectation that the MAPFRE Group’s profits “will increase in 2021 to more than 1 billion euros, including minority partners, and to more than 1.2 billion euros in 2022”.