Insurer Mapfre’s profit falls as pandemic hits business

(Reuters) — Spanish insurer Mapfre on Thursday reported a 14% drop in 2020 net profit, hit by a pandemic-driven increase in medical claims while travel restrictions contributed to a drop in demand for other insurance products.

The company also projected that the snowstorm Filomena that hit central Spain last month would result in after-tax losses of between 20 and 25 million euros.

Mapfre shares fell around 3.5% and were the worst performers in the 35 blue-chip stocks included in the IBEX index, which was down 0.3%.

The insurer said the pandemic hit car insurance, life cover and savings as well as travel insurance, though demand for health cover increased.

“As a consequence of the lockdown of population, the sales of new insurance fell, which led to a reduction of premiums,” Mapfre said.

It had to pay more than 367 million euros in claims related to COVID-19, mainly at its reinsurance and health insurance divisions.

The company also wrote off 132 million euros in impairments from its Italian, Turkish and Indonesian units as business in those countries is unlikely to recover in the short term.

Mapfre's net profit fell to 527 million euros ($639 million) last year as overall premiums slid 11% to 20.5 billion euros.

Analysts had on average expected profit of 612 million euros in a poll by Refinitiv.

The results were an “overall negative for the stock as net profit came below consensus estimates,” brokerage CM Capital Markets said in a note to investors.

Mapfre’s board plans to ask shareholders to approve a dividend cut to 13.50 euro cents on 2020 results, down from 14.50 euro cents a year earlier.

More insurance and risk management news on the coronavirus crisis here.