July 27, 2017 / 9:05 AM / 2 years ago

Fitch Affirms MAPFRE Sigorta at IFS 'AA(tur)'; Outlook Stable

(The following statement was released by the rating agency) LONDON, July 27 (Fitch) Fitch Ratings has affirmed Turkey-based MAPFRE Sigorta's National Insurer Financial Strength (IFS) Rating at 'AA(tur)'. The Outlook is Stable. KEY RATING DRIVERS The rating reflects the good capitalisation and underwriting performance of MAPFRE Sigorta, as well as Fitch's view of its importance to its ultimate parent, MAPFRE SA (Issuer Default Rating A-/Positive). These factors are offset by a moderately weak business profile due to the insurer's significant exposure to the motor third-party liability line and risks associated with MAPFRE Sigorta's rapid growth in MTPL over recent years relative to peers. The performance of the MTPL line is expected to deteriorate following the government's introduction of the premium cap in April 2017. MAPFRE Sigorta's rating benefits from MAPFRE SA's ownership and the parent's expertise in corporate governance, operational support and risk management. Fitch believes that capital support would also be provided to MAPFRE Sigorta by the parent, should it be required. Fitch views MAPFRE Sigorta's capital as adequate for the insurer's rating. Under the Turkish solvency regime, which uses a risk-based capital measure, MAPFRE Sigorta's regulatory solvency ratio was at 104% at end-2016 (end-2015: 102%). MAPFRE Sigorta's regulatory solvency ratio remained close to the minimum in the last two years due to rapid premium growth. Net written premiums (NWP) to equity and net leverage ratios increased in 2016 to 3.0x and 5.7x respectively (2015: 2.7x and 4.8x), due to significant increases in MTPL premium rates in 2016 and higher net technical reserves as a result of additional incurred but not reported (IBNR) reserves booked in 2016. MAPFRE Sigorta maintained its profitability in 2016 and reported net income of TRY100 million (2015: TRY33 million). Its Fitch-calculated combined ratio was 98.7% in 2016 and its five-year average combined ratio was 99.6%. Fitch notes, however, that the 2016 combined ratio of 98.7% does not include the additional IBNR reserve strengthening, which MAPFRE Sigorta completed in 1Q17. MAPFRE Sigorta's expense ratio remains one of the lowest in the market and improved to 21% in 2016 from 23% in 2015, helped by higher premium volumes and conservative expense management. Fitch views MAPFRE Sigorta's business profile as moderately weak given the company's significant exposure to the MTPL line. At end-2016 the company had a 12% market share in the MTPL business. MAPFRE Sigorta increased the share of MTPL in its net written premium to 61% in 2016 from 54% in 2015, helped by market exits and through substantial premium increases. In light of the MTPL premium cap introduced by the government in April 2017, Fitch believes significant MTPL exposure could expose the company to significant underwriting losses, given that MTPL has been a major drag on the non-life sector's performance. The MTPL premium cap is expected to result in a reduction of around 30% in average premiums. Fitch believes that the introduction of the premium cap is a major negative factor for the technical profitability of MAPFRE Sigorta and the non-life sector, given the substantial share of the MTPL business. In July 2017, the government announced the creation of the MTPL pool system, which would distribute losses from high-risk policies among all insurers with a licence to underwrite MTPL business. Fitch believes that the introduction of the pooling system is marginally positive for insurers with a higher share in MTPL but the impact of the new arrangement on future performance is difficult to quantify. RATING SENSITIVITIES Key rating drivers that could lead to a downgrade include a decline in the regulatory solvency ratio to below 100% over a sustained period, deterioration in underwriting profitability (with the combined ratio above 110% for an extended period), or significant deterioration in MAPFRE Sigorta's competitive positioning in Turkey (decline in market share to below 4%). A decline in MAPFRE Sigorta's importance to MAPFRE SA could also lead to a downgrade. The ratings could be upgraded if the insurer maintains profitability at historical levels despite the possible negative impact of the MTPL premium cap and maintains regulatory solvency consistently above 100%. Contact: Primary Analyst Ekaterina Ishchenko Associate Director +44 20 3530 1532 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Harish Gohil Managing Director +44 20 3530 1257 Committee Chairperson Chris Waterman Managing Director +44 20 3530 1168 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: athos.larkou@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below