OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a” of the property/casualty members of MAPFRE U.S.A. Group (MAPFRE U.S.A). Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the ICR of “a-” of MAPFRE Life Insurance Company (MAPFRE Life) (headquartered in Webster, MA). The outlook for each rating is stable.
The aforementioned companies are owned by MAPFRE U.S.A. Corp (MAPFRE USA Corp), whose ultimate parent is Spain-based MAPFRE S.A. (MAPFRE). The lead company in MAPFRE U.S.A. is The Commerce Insurance Company (Webster, MA) and includes inter-company pooling members, Citation Insurance Company (Webster, MA), Commerce West Insurance Company (Pleasanton, CA), American Commerce Insurance Company (Columbus, OH), MAPFRE Insurance Company of New York (Garden City, NY), MAPFRE Insurance Company of Florida (Miami, FL) and MAPFRE Insurance Company (Florham Park, NJ).
The ratings of the members of MAPFRE U.S.A. reflect the group's solid risk-adjusted capitalization, overall favorable operating performance and local market expertise. The group also benefits from the MAPFRE U.S.A./Commerce brand-name recognition in several states, distribution networks and marketing activities through the various U.S. subsidiaries.
These positive rating factors are partially offset by MAPFRE U.S.A.'s concentration of business in Massachusetts, which is focused on private passenger automobile insurance, and susceptibility to frequent weather-related losses, which continue to negatively impact MAPFRE U.S.A.'s underwriting results. In addition, although still supportive of the rating, the levels of risk-adjusted capitalization have declined over the most-recent five-year period due to consistently sizeable dividend payments to the intermediate and ultimate parent companies.
The ratings of the members of MAPFRE U.S.A. may come under negative pressure if there is a continuation of the unfavorable underwriting results that occurred over the previous five-year period, driven by significant catastrophe losses; any material deviation from the company's submitted financial projections occurs; the economic conditions in Spain deteriorate; or if MAPFRE U.S.A.'s relationship to its parent changes in a manner that affects the operations of the group. While A.M. Best believes that the ratings of the members of MAPFRE U.S.A are well-positioned at current rating levels, upward rating movement could occur if the group demonstrates a sustained improvement in operating results and maintenance of strong risk-adjusted capitalization.
The ratings of MAPFRE Life reflect the explicit financial support provided by MAPFRE U.S.A. Corp in the form of a full financial guarantee and net worth maintenance agreement. The ratings also reflect the company's role in offering term life products to its parent company's property/casualty client base, its ability to leverage shared services and resources with its affiliated property/casualty companies, and its use of the MAPFRE brand, which is considered a competitive advantage. Partially offsetting rating factors include the challenges of executing on its business plan, the challenge of achieving scale and profitability while minimizing earnings volatility, and its exposure to risk concentration geographically and in its product offerings.
A positive rating action on MAPFRE Life could occur if there is a positive rating action taken by A.M. Best on its ultimate parent. A negative rating action could occur if there is degradation in A.M. Best's view regarding MAPFRE Life’s strategic value to the enterprise, or if there is negative rating action taken by A.M. Best on MAPFRE Life's ultimate parent.
This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.
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