A.M. Best Co. announced that it has assigned stand-alone financial strength ratings of “A” (Excellent) to MAPFRE PRAICO Insurance Company (MAPFRE PRAICO) and MAPFRE Pan American Insurance Company (MAPFRE Panam), each a member of the MAPFRE PRAICO Group. All of the companies are located in San Juan, Puerto Rico. Best said MAPFRE PRAICO has a rating outlook of stable while MAPFRE Panam’s rating outlook is negative.
The bulletin noted that “given the termination of the pooling agreement effective December 31, 2003, between each of the members of the MAPFRE PRAICO Group, A.M. Best has removed the financial strength rating of “A” (Excellent) from the MAPFRE PRAICO Group and assigned it a rating of NR-5 (Not Formally Followed).”
“The rating of MAPFRE PRAICO is based on its excellent capitalization, strong market position in Puerto Rico and improved underwriting performance over the last two years,” said Best. “The rating also considers the financial flexibility and support of its ultimate parent, MAPFRE Mutualidad de Seguros y Reaseguros (MAPFRE Mutualidad) (Spain), as well as the strategic importance MAPFRE PRAICO has as being a part of the MAPFRE Group, the largest insurance organization in Spain.”
The announcment indicated that “MAPFRE Preferred Risk Insurance Company (MAPFRE PRICO) (San Juan, PR) is a 100 percent owned subsidiary of MAPFRE PRAICO and pulls its financial strength rating of “A” (Excellent) from its parent. MAPFRE PRICO reinsures a substantial amount of its book of business to MAPFRE PRAICO.”
Best noted that “offsetting these positive rating factors is MAPFRE PRAICO’s geographic business concentration in Puerto Rico, which exposes it to catastrophic losses and regulatory risks. In addition, although recent improvement has been noted, the company has experienced in the past adverse results and loss development on its second-largest line of business, commercial auto liability.”
Best’s rating of MAPFRE Panam “is based on its excellent capitalization, good operating performance and long standing presence in Puerto Rico, said the bulletin. “Offsetting these positive rating factors are the company’s limited business profile and A.M. Best’s view that this company is not a major player in the overall strategy of its ultimate parent company, MAPFRE Mutualidad. Accordingly, a negative rating outlook has been assigned.”
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