MAPFRE raises revenues by nearly 6%, to 14,519 million euros, with net profits of 316 million euros
MAPFRE’s revenues totaled 14,519 million euros in the first six months of the year, up 5.8 percent, and premiums reached 12,175 million euros, which represents a 3.3 percent rise. During the first half of this year, the growth in Non-Life insurance in most strategic markets (Spain, the United States, Turkey and Mexico), as well as in reinsurance was noteworthy. Moreover, the Direct Line business in Italy and Germany has been consolidated within the accounts from June, contributing over 58 million euros in premiums. Excluding the effect of not consolidating CatalunyaCaixa, revenues would have grown by 8.5 percent and premiums by 5.7 percent in the first half of the year.
Pre-tax profits amounted to 814 million euros (down 13.5 percent) and attributable results stood at 316 million euros (down 31 percent) due to, among other factors, an exceptionally high claim level in the United States and a higher tax rate in some countries, such as Brazil and Colombia.
“The extraordinary events that occurred in the first half do not affect our capacity to generate profitable business. In the second half, the situation will improve considerably and we are sure that we will exceed last year’s results, thanks not only to expected business improvements, but also to the large capital gain that will come on the back of the CatalunyaCaixa sale”, stated Antonio Huertas, MAPFRE’s Chairman and CEO.
Total assets rose by 11.9 percent, to 67,757 million euros, and shareholders’ equity stood at 8,721 million euros, which represents a year-on-year increase of 2.8 percent.
1.- Business development:
The Insurance Unit generated premiums of 9,994 million euros (up 3.7 percent) and pre-tax profits of 754 million euros (down 11.5 percent). The Reinsurance Unit, which contributes 15.7 percent of total premiums, reported premiums of 2,036 million euros, up 8 percent, and pre-tax profits of 100 million euros, up 6.5 percent. The Global Risks Unit recorded premium volume of 597 million euros (up 5.1 percent), with pre-tax profits of 41 million euros (up 23 percent), while the Assistance, Services and Specialty Risks Unit produced revenues of 635 million euros (up 11.8 percent) and pre-tax profits of 7 million euros (down 65.5 percent).
- Premiums from the Iberia Regional Area, which represent 28.5 percent of the total, reached 3,706 million euros (down 8 percent if the CatalunyaCaixa contribution is not factored in), as a result of lower business volumes in Life-Savings insurance due to the unfavorable interest rate environment. Conversely, the Non-Life business, excluding the impact of the CatalunyaCaixa operation, grew 2.3 percent, after six and a half years of falls. Pre-tax profits in this Regional Area stood at 290 million euros (down 24.5 percent).
In the Motor line, premiums amounted to 1,019 million euros, down 0.6 percent, whereas the Health line recorded a 7.3 percent rise (nearly three points above the market), topping 456 million euros. Premiums from the Life business exceeded 868 million euros (down 40.5 percent).
In the first half of the year, managed savings increased 0.6 percent, to 30,349 million euros. There was also a noteworthy growth of 12.8 percent in mutual funds and managed portfolios, to nearly 3,800 million euros. Pension funds exceeded 4,961 million euros, which represents a rise of almost 10 percent, excluding the CatalunyaCaixa impact.
- Premium volume from the Brazil Regional Area totaled 2,512 million euros (down 7.1 percent, or 1.2 percent in local currency terms), in the main due to the depreciation of the Brazilian real and the contraction in Agricultural insurance. Pre-tax profits reached 445 million euros, up 30.4 percent with respect to the same period of the previous year. This Regional Area contributes 19.4 percent of the Group’s total premiums.
- The LATAM South Regional Area reported premiums of 1,298 million euros, down 9.2 percent, among other reasons due to the application of the SIMADI exchange rate in Venezuela and the cancellation of unprofitable Life business in Colombia. Of note is the solid business development in Peru, which grew 44.1 percent, and in Chile, which reported a 24.9 percent rise, mainly thanks to the improvement in the Motor business. Pre-tax profits in this Area stood at 87 million euros (down 1.5 percent). Premiums from LATAM South represent 10 percent of the total.
- Business volume in the LATAM North Regional Area, which contributes 9.1 percent of total premiums, grew by 82.6 percent, exceeding 1,182 million euros in premiums. Of note is the good Non-Life business development, especially in the Industrial Risks and Transport lines. Mexico enjoyed outstanding growth, doubling its business volume to 887 million euros, largely thanks to winning the Pemex policy, worth 387 million euros. Pre-tax profits in this Area were up 6 percent, to 46 million euros.
- Premiums from the North America Regional Area, which represent 10.5 percent of the total, increased by 34.1 percent, to 1,363 million euros, among other reasons thanks to the appreciation of the U.S. dollar. The U.S. market itself stands out, producing nearly 1,164 million euros in premiums (up 34 percent), as a result of strong Motor, Home and Assistance business development, while Puerto Rico grew 34.9 percent, to 199 million euros. Before taxes, this Regional Area produced a negative result of 93 million euros, mainly due to exceptional losses arising from the heavy snowstorms that hit the United States in February, the worst weather-related catastrophe recorded in the region.
- Premium volume from the EMEA Regional Area exceeded 816 million euros, up 32.7 percent, driven by the insurance and Assistance businesses in Turkey and the Global Risks and Assistance businesses in the United Kingdom, and also by the inclusion, from June, of Direct Line (58 million euros). Of note is growth in Turkey, with premiums of 342 million euros (up 21.3 percent), and in the United Kingdom, which reported premiums of 144 million euros (up 26.4 percent). Pre-tax profits in this Area reached 26.5 million euros (down 39.5 percent), due to an increase in claims. This Area represents 6.3 percent of the Group’s total premiums.
- Premiums in the APAC Regional Area, which account for 0.5 percent of the Group’s total premiums, exceeded 61 million euros, up 32.5 percent. Pre-tax profits in this Area amounted to 3 million euros (down 19.4 percent).
Recently, Standard & Poor’s ratified MAPFRE’s rating as “BBB+”, as well as the “A” rating for its MAPFRE RE and MAPFRE GLOBAL RISKS subsidiaries. Likewise, Moodys raised the rating on MAPFRE GLOBAL RISKS and MAPFRE ASISTENCIA from “Baa1” to “A3”with outlook positive, while A.M. Best reaffirmed its “stable” outlook and the “A” financial strength rating of several Group subsidiaries.
The MAPFRE Board of Directors has approved the appointment of María Leticia de Freitas Costa, as an Independent Director. The new director, who is of Brazilian nationality, has extensive experience in the fields of international strategic consulting, economics and business management, in addition to an in-depth knowledge of Brazilian social and economic realities. This latest appointment underpins the professional and geographic strength of MAPFRE’s Board of Directors.
Additionally, two new Corporate General Managers have been appointed:
- José Luis Jiménez Guajardo-Fajardo, General Manager, Corporate Investment Area, replacing Miguel Ángel Almazán Manzano, who will retire at the end of this year. José Luis Jiménez is currently General Manager for March Management.
- Fernando Mata Verdejo, Deputy General Manager, Corporate Strategy and Development Area. With 18 years at MAPFRE, Fernando Mata was until now Regional Manager for Finance and Resources at MAPFRE IBERIA, and Deputy General Manager for Control and Support at MAPFRE SPAIN.
4.- Other resolutions:
During the first half of the year, MAPFRE approved its Institutional, Business and Organi-zational Principles, the basic rules that replace the Code of Good Governance, and which shall be applicable to all Group companies in the 49 countries where it is present, and which are aligned with the latest Good Governance recommendations. Moreover, the Board of Directors has approved a series of Policies on several issues that strengthen MAPFRE’s management model in relation to its stakeholders and which reflect the com-pany’s commitment to meet the recommendations set out in the Recommendations of the Code of Good Governance for Listed Securities issued by the Spanish Securities and Exchange Commission (CNMV).
The policies approved are as follows:
- Corporate Governance Policy
- Director Recruitment Policy
- Internal Rule on Listed Securities Conduct
- Dividend Policy
- Conflict of Interest and Related Operations Management Policy
- Corporate Security Policy
- Business Continuity Policy
- Environment Policy
The complete set of Institutional Principles and Policies can be consulted at www.mapfre.com.
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