Hurricanes, quakes stress Mapfre’s financialsPosted On: Sep. 26, 2017 11:37 AM CST
Mapfre S.A. on Tuesday said it will take a 2017 bottom-line hit of between €150 million and €200 million ($179.2 million and $239.0 million) related to recent natural catastrophes, causing the company to adjust some of its financial performance goals.
Mapfre’s estimates take into account the effects of hurricanes Harvey, Irma and Maria, and the earthquakes in Chiapas and Puebla in Mexico on both Mapfre Re and Mapfre Global Risks, as well as Mapfre’s insurance business in the U.S., Puerto Rico, the Dominican Republic and Mexico, the Majadahonda, Spain-based insurer said in a statement.
The affected period runs from last year to next year, the company said in its statement.
“This extraordinary increase in expenses makes it necessary for Mapfre to re-evaluate its expectations of fulfilling its public objectives for the 2016-2018 period, specifically the 11% average (return on equity) and the 96% average combined ratio announced in March 2016,” Mapfre said in the statement.
According to data supplied by A.M. Best Co. Inc., Mapfre North American Group has the largest market share in Puerto Rico, at 29.13% ranked by direct written premiums of $81.8 million. Maria devastated Puerto Rico after making landfall last Wednesday, causing flooding and leaving millions without power and water.
On Monday, AIR Worldwide said insured losses from Hurricane Maria could be between $40 billion and $85 billion.
In a research note early Tuesday, however, Credit Suisse A.G. analysts said the AIR estimate seemed high given the Mapfre loss range. The bank added that although it is now assuming $25 billion in Maria losses, it had been using $15 billion as a “placeholder” for Maria losses and that calculations showed the Mapfre loss more in line with these expectations than the AIR estimates.
Despite the losses, the company said it has “has adequate protection in place to cover the claims that may arise from these events.”