MAPFRE Earns 127 Million to March (-32 Percent), and Revenues Exceed 7.33 Billion Euros (-4.7 Percent)

The emergence of the coronavirus has marked a before and after in business, insurance and social activity, and since the second half of March, it has presented an unprecedented situation. In this context, MAPFRE has developed a series of measures aimed at ensuring the safety of its employees and collaborators and guaranteeing the continuity of operations, maintaining service levels for its clients.

The most relevant actions are as follows:

MAPFRE’s net earnings for the first three months of this year were 127 million euros, 32 percent lower than in the same period of the previous year. The result was dragged down by the earthquake suffered by Puerto Rico at the beginning of the fiscal year, the impact of which amounted to 54 million euros, and the effects of Storm Gloria in Spain, with an impact of 14 million euros. Emerging-country currencies have also had a negative impact, cutting more than 6 million from the net result. Excluding the impact of these catastrophic events, the adjusted result would have been 190 million euros, with growth of more than 3 percent.

Revenues stood at 7.33 billion euros, 4.5 percent less than between January and March 2019, and premiums fell by 4.7 percent to 6.1 billion euros. This decrease is mostly explained by the depreciation of the main currencies of Latin America and the Turkish lira (12 percent). At constant exchange rates, the decreases in revenues and premiums would have been 1.6 and 1.5 percent respectively.

Although confinement as a result of the coronavirus crisis has reduced the taking out of new insurance policies, the health and economic crisis in Europe and America has occurred mainly in April, so the effect on the accounts for the first quarter was limited.

However, an increase in the claim experience is expected in the lines directly related to this illness, such as Health, Burials and Life. The economic standstill and confinement will translate in the short-term into a decrease in claims in the Automobile insurance and General P&C lines, and in the medium- to long-term will result in a reduction in premium revenue.

MAPFRE’s combined ratio at the close of March was 100 percent, increasing by 4.1 points. However, the combined ratio of the insurance unit stood at 97.2 percent, which represents an increase of less than one point, despite the impact of the earthquake in Puerto Rico.

The sharp drop in the stock markets and the depreciation of the currencies in several emerging countries have affected the value of the Group’s assets and capital. Thus, assets under management have fallen by 6.9 percent to 59.27 billion, and shareholders’ equity stands at 7.86 billion, 11.2 percent less than in December 2019.

The Solvency II ratio at the close of December 2019 stood at 187 percent, compared with 195 percent in September. It is important to emphasize that both the Group’s capital position and solvency remain excellent, with limited exposure to interest rate risk, given the high percentage (56 percent) of sovereign debt in MAPFRE’s investment portfolio. The Group’s investments amount to 50.3 billion euros, of which, in addition to 56 percent in sovereign debt, 18 percent are in corporate fixed income and 4 percent in equity.

Also of note are the financial flexibility and high liquidity levels, which have become a hallmark of MAPFRE’s resilience in the current situation: most financial assets are liquid and the cash position is significant (over 2.7 billion, 5 percent of total investments) and, in addition, credit lines are available, as are pre-approved but not yet drawn down bank financing.

Premiums for the Insurance Unit between January and March amounted to 5.09 billion euros (-5.2 percent), while attributable earnings increased by 10 percent to 197 million euros.

At MAPFRE GLOBAL RISKS, premiums rose by 41.6 percent to 349 million euros, and the negative result of 8 million euros corresponds almost entirely to the earthquake in Puerto Rico.

Finally, premiums at the Asistencia unit decreased by 5.6 percent to 220 million euros, due to the impact of the shutdown in global tourism, and its result (-12 million euros) is particularly affected by the collapse in travel insurance coverage, due also to COVID-19.

The Board of Directors has agreed to pay the final dividend for the fiscal year 2019, approved at the Annual General Meeting on March 13, and equivalent to 8.5 euro cents per share, on June 25 of this year. With regard to the 2020 interim dividend, which is generally paid in December, and following the recommendations of the Supervisor, the Board has decided to postpone its decision on the dividend until the second half of the fiscal year when more accurate information is available on the economic impact of COVID-19 on MAPFRE.