A.M. Best Co. has commented that the financial strength ratings (FSR) of A (Excellent) and issuer credit ratings of "a" of the members of MAPFRE USA Group (MAPFRE USA) are unchanged following the recent market volatility surrounding Spain's economic conditions, derived from uncertainty underpinning the country's banking sector.

The lead company in MAPFRE USA is The Commerce Insurance Company (Webster, MA) and includes its inter-company pool 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).

This comment corresponds with the comment A.M. Best Europe - Rating Services Limited has made in relation to the ratings of MAPFRE RE, Compania de Reaseguros, S.A. (MAPFRE RE) (Spain), a key subsidiary of MAPFRE S.A. (Spain), the ultimate parent of the members of MAPFRE USA Group, and follows the announcement that Spain will borrow up to EUR 100 billion from the European Financial Stability Facility or the European Stability Mechanism, to recapitalize its banks. In A.M. Best's view, the perceived reduction in financial flexibility of the Spanish sovereign does not have an immediate and direct impact on the rating fundamentals of MAPFRE RE. This view is supported by stress tests undertaken on the company's risk-adjusted capitalization, with results remaining within A.M. Best's tolerance levels. However, the high level of investments in Spanish sovereign and financial institutions debt remains a concern, together representing 153 percent of MAPFRE S.A.'s shareholders' funds as at the first quarter of 2012. A.M. Best acknowledges that there are outstanding uncertainties relating to the terms of the EUR 100 billion loan and the external audits of Spain's banking sector, and may take negative actions on the ratings in the event of further erosion to Spain's sovereign creditworthiness.

On June 6, A.M. Best downgraded the issuer credit rating to "a" from "a+" and affirmed the financial strength rating of A (Excellent) of the members of MAPFRE USA Group. All ratings were removed from under review with negative implications and assigned a negative outlook.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; "Catastrophe Analysis in A.M. Best Ratings"; and "Rating Members of Insurance Groups." Best's Credit Rating Methodology can be found at ambest.com/ratings/methodology.

A.M. Best Company is an insurance rating and information source.

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