Friday, June 21, 2024

MAPFRE’s revenue and result grew 11% in the first nine months of the year

  • The result surpasses €546 million (+11.7%). After applying a €75 million goodwill writedown in the United States, the net result reached €471 million (-3.6%)
  •  Revenue is up 10.8% and stands at nearly €24.6 billion
  • IBERIA is the unit with the highest growth, with an increase of 17%
  • LATAM, where net results soared to €284 million, is the main contributor to earnings
  • MAPFRE RE doubles its result, reaching €190 million, with solid growth
  • Non-Life improvements consolidate, with a lower combined ratio reaching 96.8% (-1.7 p.p.), and with a 26% increase in the investment result
  • The Life result improves (+7%), along with positive premium performance (+20%) and financial income
  • An interim dividend against 2023 fiscal year of 0,06 euros gross per share has been announced, repeating the amount from the previous year, which implies a dividend yield of close to 8%

“Our business continues to show robustness, both in revenue and premium growth as well as in the result, based on a high level of diversification and ability to adapt to the context. MAPFRE is overcoming the difficulties presented by inflation, thanks to continuous improvement based on our technical management”, says Antonio Huertas, Chairman and CEO of MAPFRE.

*DISCLAIMER: MAPFRE S.A. hereby informs that, unless otherwise indicated, the figures in this activity report are presented under the accounting principles in force in each country, homogenized for comparison and aggregation between units and regions. As such, certain adjustments have been applied, the most relevant of which are the following: the elimination of the goodwill amortization in Spain and the elimination of catastrophic reserves in some Latin American countries.

MAPRE

  • The 10.8% increase in revenue consolidated the trends from recent quarters and reflects both a relevant increase in business volume as well as an improvement in financial income.
  • Premiums are up 10.9%, with no relevant impact from exchange rates (at constant rates, premiums are up 12%). This growth reflects a general improvement in business, with an 8.7% increase in Non-Life and a 20% increase in Life. IBERIA, LATAM and the Reinsurance business all contribute positively.
  • Non-Life premiums are up over €1.3 billion in the first nine months of the year, with 12.5% growth in General P&C, 10.2% growth in Accident & Health and 3.9% in Auto. The combined ratio stood at 96.8% (-1.7 p.p.), and the volatility and dispersion from previous quarters, marked by the economic scenario, remain. General P&C, with a combined ratio of 87.1% (-2.8 p.p.) has compensated the high loss experience that persists in the Auto business, where the combined ratio has reached 105.9% (+0.3 p.p.), as inflationary tension remains, but is better compared to June this year. The Accident & Health combined ratio stood at 98% and shows improvement compared to the previous year (- 1.8 p.p.), as well as compared to June, since summer months tend to be more benign in terms of claims. The Non-Life gross financial result, excluding the goodwill writedown, reached €567 million, up over €115 million, growing 26.4%.
  •  In the Life business, premiums are up over €730 million, driven by Life Savings in Spain. The result for this line has benefitted from both good technical performance as well as strong financial income, especially in Latin America. The Life Protection combined ratio continues at an excellent level (82.8%). All these factors lead to a 7% improvement in the Life technical-financial result.
  •  The earthquake in Turkey in the first quarter has been the most relevant Nat Cat event so far this year, with an impact of €105 million on the net result, primarily affecting MAPFRE RE (€100 million) and, to a lesser extent, the local insurer (€5 million). In 2022, the most relevant cat claim was the drought in Brazil, with a €106 million net impact for the Group. This year, the favorable reinsurance market environment along with a more benign hurricane season to date have allowed MAPFRE RE to reach a result of €190 million, double the previous year.
  • Two relevant economic events were recorded in the third quarter: the result includes a €46.5 million positive net impact as a result of the arbitration regarding the end of the alliance with Bankia and, on the other hand, following prudent criteria, the Group recorded at September a €75 million provisional impact for a goodwill writedown for its insurance operations in the United States (11% of its book value). This writedown is based on the current context of rising interest rates and the adverse environment for the Auto line due to inflation. This estimate will be updated at year-end according to interest rates and business plans.
    • Finally, hyperinflation adjustments and the fall in the result for other activities have had a negative impact on the result.
    • Regarding the investment portfolio, shown below, there was no relevant change in the asset class structure during the third quarter. Realized gains net of impairments have had a €22.3 million impact on the net result to September (€70.8 million in 2022).

 

mapre2

• Shareholders’ equity for the Group under homogenized local criteria reached over €7.6 billion at the close of September, €360 million more than at the close of 2022 (+4.9%). Currency conversion differences, mainly from Latin American currencies, have had a €158 million positive impact.

MAPRE4

MAPRE5

IBERIA grows above the market both in Life and Non-Life

  •  Premiums in IBERIA surpass €6.7 billion (+17%), with Spain standing out with over €6.5 billion (+16.3%). Premiums in Portugal reached €233 million (+40.9%).
  • The Life business volume is almost 1.5 times higher than the previous year, reaching over €1.9 billion, of which almost €1.7 billion correspond to Life Savings (just over €1.0 billion in 2022).
  •  Non-Life premiums are up 7.9% and reflect the positive development of General P&C (+9.8%) driven by Commercial lines and Accident & Health (+8.3%).
  • In Auto, premiums are up 5.1% due to the gradual adaptation of tariffs to the inflationary context. The fleet stood at close to 6.2 million insured vehicles, with a slight reduction related to risk-selection measures. Therefore, the average premium is estimated to be up around 6.2%.
  •  The Non-Life result and combined ratio have been affected by the volatility in the Auto business, which had a combined ratio of 102.9% (+2.1 p.p.). This line is affected by the  recovery of mobility to pre-pandemic levels, the high inflation scenario, and the Baremo update. The performance of this segment will be based on strict cost control, while tariffs will be adapted as needed based on the development of expected costs.
  • General P&C, driven by Commercial lines as well as the Life Protection business, with combined ratios of 98.1% and 67.2%, respectively, continue contributing positively to results. The intense storms in Spain in the third quarter impacted the technical result of the Homeowners and Condominiums segments.
  • The financial result continues to improve in a more favorable environment, with a €103.3 million gross contribution to the Non-Life result (€98.3 million in 2022).
  • The net result stood at €245.5 million, of which Spain contributed €238.6 million and Portugal €6.9 million. Realized gains net of impairments have had a €9.9 million impact on the net result (€49.4 million in 2022). This also includes a €46.5 million net impact  from the arbitration for the end of the Bankia alliance (€29.4 and €17.1 million in Life and Non-Life, respectively).

Business in LATAM consolidates the strong trends of recent quarters with over €7.6 billion in premiums and a result of €284 million, the largest contributor to Group earnings.

BRAZIL continues showing strong growth and its result nearly doubled thanks to improvements in both the technical and financial result

  • In Brazil, premiums reached nearly €4.0 billion (+7.3%), despite a slight depreciation of the Brazilian real (-0.7%). This improvement in written premiums is due above all to the positive development of the Agro Insurance and Life Protection, which grew in euros 9.9% and 8.8%, respectively.
  • The Auto business is up 2.5%. This line continues to quickly adapt tariffs to inflation. The fleet surpassed 1.2 million insured vehicles, with a continued reduction in the year related to risk-selection measures.
  •  The Non-Life combined ratio has reduced significantly to 78%, due to a 13.9-percentage point improvement in the Auto line compared to the previous year after tariff increases. Further, the quarterly stand-alone ratio improved 1.1 percentage points compared to the second quarter, reaching 100.5%. Additionally, the Agro business improved its positive development after the impact of the drought in 2022, and the General P&C ratio stood at an excellent 68.6%.
  • The Non-Life financial result also continues to contribute very positively, with €66.7 million gross (€57.9 million in 2022).
  • The Life Protection business also posts a solid combined ratio, standing at 79.7%. The Life financial result also improved supported by the high interest rates in the country.

Improving contribution from the rest of LATAM to the Group result

  •  Premiums in the region grew 15.7%, while the net result reached €101.8 million, with relevant contributions from Mexico and Peru. Written premiums in local currency grew in all countries, with noteworthy growth in Mexico (26%), Colombia (14%), the Dominican Republic (12%) and Peru (8%).
  •  The combined ratio rose to 101.9% due to an uptick in General P&C that was partially offset by an improvement in the Auto business.
  • The Life business and financial income continued improving and contributing very positively to results.
  • In Mexico, premiums reached nearly €1.2 billion, up 42.5%, driven by the renewal of the industrial risks policy in the second quarter and the favorable performance of the Mexican peso, which appreciated 12.7%. The net result reached €29.7 million, improving 41.5% compared to September 2022. The combined ratio stood at 98.4%, up 2 p.p. mainly due to the Accident & Health line.
  • In Peru, premiums reached €566 million, growing 6.6%, while the net result reached €28 million. The combined ratio in the country rose to 101.1% to September, affected by the weather-related impacts of the coastal El Niño which have especially affected the General P&C line.

NORTH AMERICA business volume increases, supported by tariff updating

  • Premiums reached nearly €2.1 billion in September, growing 4.1% in euros. The largest contributor was the United States with over €1.7 billion and 2.6% growth. Puerto Rico recorded a 12.6% increase, reaching over €330 million in premiums.
  •  The Auto business grew 2.6%. The fleet stood at 1.4 million insured vehicles, down slightly in the year.
  •  The Non-Life combined ratio stood at 106.8%, affected by the inflationary environment.
  •  The Auto combined ratio stood at 107.4% (+0.8 p.p.), down 1.3 p.p. compared to June (108.7%). Loss frequency is stable, and the already-implemented tariff increases in our main market (more than 20% since January 2022) along with the expected future increases should offset the expected increase in claims costs.
  • In General P&C, the combined ratio stood at 111%, affected by various weather-related events during the year, as well as the relevant increase in costs associated with catastrophic reinsurance protection. In the Homeowners line, in addition to the 15% increase applied in May in our main market, tariff increases are still being considered in the region to offset the expected increase in costs. Realized gains net of impairments had a €3.9 million impact on the result (€23.6 million in 2022).

EMEA

  • Premiums reached over €1.0 billion, representing a 1.9% decrease, which reflects the deceleration in the Life business in Malta.
  •  The region recorded €31 million in losses, mainly related to the complicated Auto environment, worsened by the severe storms in Italy and Germany
  •  In Turkey, the positive performance of financial investments in euros has offset the impact of the earthquake.

MAPFRE RE consolidates its strong growth and increases its contribution to earnings

  • MAPFRE RE premiums, which include the Reinsurance and Global Risks business, grew  9.3%, reaching nearly €6.1 billion.
  • The Reinsurance business grew 8.6%, and the Global Risks business 11.3%.
  • The combined ratio improved significantly in the quarter, reaching 95%, supported by adequate pricing in the reinsurance market.
  •  The most relevant event in the year has been the earthquake in Turkey, with an estimated gross cost of €142 million, and a €100 million impact on the Group net result. There have been other relevant events, including the storms in Europe, which have been offset by the positive development of the hurricane season so far.
  •  The financial result also grew, with a €97 million gross contribution to the Non-Life result (€52.9 million in 2022). Realized gains net of impairments had an €8.4 million impact on the net result (-€2.4 million in 2022).
    • The net result reached €189.5 million, more than double the previous period.

ASISTENCIA (MAWDY) continues to focus on strategic markets for the Group, with a focus on more digital activity

• Revenue reached €350 million, growing 7.9%, and showing a slight profit.

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