A.M. Best Affirms Ratings of MAPFRE U.S.A. Corp.’s Insurance Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Besthas 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 all ratings is stable.

The aforementioned companies are owned by MAPFRE U.S.A. Corp. (MAPFRE USA Corp) (Webster, MA), whose ultimate parent is MAPFRE S.A. (MAPFRE) (Spain). The lead company in MAPFRE U.S.A. 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).

The ratings of the members of MAPFRE U.S.A. reflect the group’s solid risk-adjusted capitalization, favorable operating performance and local market expertise. As the leading writer of personal lines business in Massachusetts, the group benefits from MAPFRE U.S.A.|Commerce’s brand-name recognition and management’s in-depth understanding of the personal lines marketplace. The various U.S. subsidiaries of MAPFRE U.S.A. also provide some diversification in geography, distribution channels and marketing, as the group continues its efforts to grow and expand outside of Massachusetts.

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. MAPFRE U.S.A. has also been susceptible to frequent weather-related losses, which continue to negatively impact the group’s underwriting results. In addition, although still favorable, the levels of risk-adjusted capitalization have declined somewhat over the latest five-year period, due to consistently sizeable dividend payments to the intermediate and ultimate parent companies.

MAPFRE U.S.A.’s ratings may come under negative pressure if there is a material deterioration in MAPFRE U.S.A.’s or MAPFRE’s risk-adjusted capitalization, the economic conditions in Spain were to deteriorate or MAPFRE U.S.A.’s relationship to its parent changes in a manner that affects the operations of the company. Upward rating movement could be generated from improving economic conditions within Spain over the longer term.

The ratings of MAPFRE Life reflect the explicit financial support provided by MAPFRE USA Corp in the form of a full financial guarantee and net worth maintenance agreement. The ratings also reflect the added diversification MAPFRE Life offers MAPFRE USA Corp by offering simplified term life insurance to the property/casualty independent agency distribution. New business growth, which has been modest to date, will be supported by reinsurance and capital from its parent, as needed. Partially mitigating factors include delays in the rollout of its life product, challenges in executing its business plan to date, volatility in earnings until the life block of business achieves scale and modest contribution to group earnings.

Positive rating movement is unlikely in the near to medium term for MAPFRE Life. Downward rating pressure may occur if actual results deviate significantly from planned results or there is a change in A.M. Best’s view of the strategic value to the enterprise or support provided by MAPFRE USA Corp.

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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Catastrophe Analysis in A.M. Best Ratings
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for Property/Casualty Insurers
• Understanding BCAR for U.S. and Canadian Life/Health Insurers

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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Jacqalene Lentz, (908) 439-2200, ext. 5762

Senior Financial Analyst—P/C

[email protected]

or

Christopher Sharkey,

(908) 439-2200, ext. 5159

Manager, Public Relations

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or

Frank J. Walko,(908) 439-2200, ext. 5072

Financial Analyst—L/H

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or

Jim Peavy,

(908) 439-2200, ext. 5644

Assistant Vice President, Public Relations

[email protected]

Source: A.M. Best