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Investing.com -- Fitch Ratings has revised the outlook for Spanish insurer MAPFRE, S.A. and its key operating subsidiary, MAPFRE Asistencia Compania Internacional de Seguros y Reaseguros, S.A., from stable to positive on March 6, 2025. The credit rating agency also affirmed MAPFRE’s Issuer Default Rating (IDR) at ’A-’ and the subsidiaries’ Insurer Financial Strength (IFS) Ratings at ’A+’ (Strong).
The revised outlook is a reflection of MAPFRE’s enhanced financial performance and earnings. The ratings also take into account MAPFRE’s robust company profile, capitalisation, and leverage. However, these factors are partially counterbalanced by MAPFRE’s moderate investment risk.
In 2024, MAPFRE reported a rise in earnings with a net income, excluding minorities, of EUR968 million, up from EUR677 million in 2023. This corresponds to a net income return on equity (RoE) of 11% in 2024, up from 8% in 2023. The improved performance was driven by better underwriting results and investment income. The combined ratio, which measures underwriting profitability, was 93% in 2024, down from 96.5% in 2023, indicating improved underwriting results across all business units.
Fitch anticipates that MAPFRE will continue to deliver strong earnings in 2025, following the remedial measures it has implemented across its main business lines and regions. The agency expects the underwriting profitability to remain robust, and MAPFRE is expected to achieve its targeted combined ratio of around 95%-96% in 2025, provided there are no large catastrophic events.
Fitch regards MAPFRE’s company profile as very strong, scoring it at ’aa’. With EUR28 billion of gross written premiums in 2024, MAPFRE holds a strong market position in Spain, where it leads in the non-life segment, and Latin America, particularly Brazil. MAPFRE’s extensive diversification by geography and business line contributes positively to the stability of its earnings.
MAPFRE’s capitalisation is viewed as very strong by Fitch, based on the group’s regulatory Solvency II (S2) ratio of 202.4% at the end of September 2024, up from 199.6% at the end of 2023. The S2 ratio and Fitch’s Prism Global capital model score exclude MAPFRE’s goodwill of EUR1.4 billion at the end of 2024 from available capital.
MAPFRE’s financial leverage ratio (FLR) remained largely stable at 18.5% at the end of 2024, down from 19.3% at the end of 2023. Fitch assesses MAPFRE’s investment risk as moderate, with a risky-assets/capital ratio of 90% at the end of 2024. Despite having 83% of total investments in fixed income allocated to investment-grade instruments, 22% of the fixed-income portfolio was allocated to ’BBB’ rated instruments and 14% to ’BB’ or lower, led by Brazilian government bonds.
Fitch’s assessment of MAPFRE’s asset risk also considers the group’s substantial exposure to Spanish sovereign debt, which was 81% of total capital at the end of 2024, down from 84% in 2023.
According to Fitch, factors that could lead to a downgrade include a significant deterioration of the group’s S2 ratio to below 150%, a substantial increase in investment risk, or failing to maintain the RoE above 10% or the combined ratio below 96%. On the other hand, factors that could lead to an upgrade include a significant improvement in financial performance, maintaining a Solvency 2 ratio above 180%, an FLR below 25%, and stable asset risk.
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