Mapfre’s revenue in the first nine months of the year rose to EUR21.3 billion euros, a 1.6 per cent increase on the same period of the previous year.
Premiums grew by 5.1 per cent to EUR18 billion, driven by business growth in Spain, Mexico and the reinsurance and global risks businesses. Net profit stood at EUR445 million, a decrease of 22.3 per cent, due to the costs stemming from recent natural disasters in both North America and the Caribbean, the estimated impact of which is EUR176 million net. Excluding the effect of these catastrophes, attributable profit would have grown 8.6 per cent.
These catastrophes (hurricanes and earthquakes) have affected both the Group combined ratio, which now stands at 98.7 per cent, despite the severity of these events in scale and timing. Taking out the impact of these events, the combined ratio would have been 96.3 per cent. It is important to note the progress in the reinsurance business, which contributed EUR97 million to profits, with a combined ratio of 96.6 per cent, as well as the strong growth of the business in Spain, and especially in profitability.
Equity closed September 2017 at EUR10.8 billion, while shareholders’ equity rose to EUR8.8 billion and total assets at the close of September amounted to EUR67.7 billion.
Mapfre’s investments totalled EUR49.4 billion at the end of September. Of this amount, 54 per cent corresponded to sovereign debt, while 20 per cent was invested in corporate fixed income, with 9 per cent in equity and mutual funds.
The Solvency II ratio at the close of the first half of this year was 205.6 per cent, with 87 per cent of top-notch (TIER 1) capital, reflecting the robustness and stability of the Group, which is supported by broad diversification and strict investment and management policies.
During the first nine months of this year, the Insurance Unit’s premium volume rose to EUR14.8 billion, a 6.3 per cent increase relative to the same period last year.
The Iberia Regional Area (Spain and Portugal) recorded very favourable increases in both premiums (+3.7 per cent) and profits (+8.2 per cent).
Spain showed a premium increase of 3.7 per cent to EUR5.2 billion, well above the growth registered by the sector as a whole. The automobile business performed particularly well, with close to EUR1.7 billion in premium volume (+3.3 per cent), with growth outpacing the market, and the combined ratio improved by 4.4 percentage points to 91 per cent. It is important to note the improved claims ratio thanks to the cancellation of unprofitable policies, mainly in fleets, as well as VERTI’s positive business performance. The general P&C insurance business recorded premiums of almost 1.3 billion (+2.4 per cent), with the third-party liability business and the majority of the individual and corporate Non-Life lines performing solidly. Health and accident premiums surpassed EUR606 million (+3.6).
Mapfre VIDA grew 4.7 per cent, recording premium volume of EUR1.6 billion, with the bank channel contribution, especially that of BANKIA Mapfre VIDA (+65.4 per cent), being worthy of mention. Mutual funds and others grew by 19.5 per cent to reach almost EUR3.7 billion, while pension fund assets were up 9.9 per cent, standing at EUR4.9 billion.
The attributable profit of the business in Spain in the first nine months of the year grew 9.2 per cent to EUR390 million.
Premiums from the Brazil Regional Area totalled EUR3.5 billion, representing a 7.8 per cent increase against September of 2016, reflecting the revaluation of the Brazilian real (+8.8 per cent). General P&C insurance also made a strong contribution (EUR1.4 billion, up 14 per cent growth), while the Life business generated EUR1.1 billion, (+4.5 per cent), with Automobiles producing EUR955 million, (+3.8 per cent).
The LATAM North Regional Area grew its business by 53.4 per cent to EUR1.5 billion euros, with Mexico’s contribution of EUR1 billion euros (+83.8 per cent), which includes the renewal of the Pemex policy, being a particular highlight. Panama generated EUR166 million (+11.3 per cent), and the Dominican Republic was 5.9 per cent better, producing EUR90 million in premiums.
The LATAM South Regional Area’s premiums amounted to EUR1.3 billion, 0.3 per cent better than the figure recorded for the comparable period of last year. It is important to note that all countries in this region enjoyed growth increases with the exception of Chile, which suffered falls in the Automobile and general P&C insurance business due to the non-renewal of some loss-making business and portfolio cleansing. Peru contributed EUR359 million (+1.7 per cent), while the growth of Colombia was another particular highlight, being 1.3 per cent better with premiums of EUR309 million and a Group profit contribution of EUR10 million, against the more than EUR22 million in losses for the same period last year.
The North America Regional Area recorded premium volume of almost EUR2 billion, which is 1.2 per cent lower than the same period last year. In the United States, premiums slipped 0.1 per cent to 1.7 billion, as a consequence of the cancellation of loss-making business outside Massachusetts, with the objective of improving profitability in those states. In Puerto Rico, premiums were down 8 per cent to 260 million. This decrease also comes on the back of the non-renewal of loss-making business and a significant reduction in sales activity in September, as a consequence of the hurricanes that hit the country.
Premiums in the EMEA Regional Area stood at EUR1.4 billion, down 4.1 per cent. In Turkey, premiums shrank by 18.8 per cent (remaining stable in local currency) to EUR501 million, due, among other reasons, to the depreciation of the Turkish lira and a stricter underwriting policy focused on profitable growth. In Italy, business grew by 2.1 per cent to 352 million as a consequence of portfolio cleansing and a pricing policy in line with the objective of profitable growth. Premiums in Germany grew by 7.5 per cent to EUR259 million. It is important to note that since June in Germany, Mapfre has operated under the VERTI brand, with solid progress both in new business and renewals.
The APAC Regional Area raised premium volume during the first nine months of the year by 63.5 percent, to EUR56 million. This growth was driven by the inclusion of the ABDA business (Indonesia) from June onward. Mapfre now controls 62.3 per cent of ABDA since the public takeover was launched.
Premiums at the Reinsurance Business Unit increased 3.8 per cent during the first nine months of the year, reaching EUR3.3 billion. It is important to note the positive contribution of this business to the Group, both in premium and result terms. At the close of September, Mapfre RE recorded earnings of EUR97 million (-20.7 per cent); this despite catastrophic events involving a net cost of approximately EUR73 million for this business unit. However, Mapfre RE’s non-catastrophic risk portfolio maintains excellent profitability levels. Mapfre RE contributed 21.9 per cent of the Group’s attributable profit.
The Global Risks Business Unit registered premium growth of 6.9 per cent in the first nine months of the year, producing EUR950 million. The LATAM North and EMEA Regional Areas performed especially well, posting double-digit growth. Recent catastrophic events have cost this unit EUR73 million, giving rise to losses of EUR87 million.
Finally, the restructuring process continues at the Asistencia Business Unit, with exits from unprofitable markets.
The Board of Directors has ratified maintaining the interim dividend against 2017 earnings at €0.06 per share.
