OREANDA-NEWS. Fitch Ratings has affirmed Mapfre SA's (Mapfre) Issuer Default Rating (IDR) at 'BBB+' and its core operating subsidiaries' Insurer Financial Strength (IFS) rating at 'A-'. The Outlooks are Stable. A full list of rating actions is at the end of this release.

KEY RATING DRIVERS
The affirmation of Mapfre's IDR reflects the group's sustained robust operating performance and consistently 'Strong' risk-adjusted capitalisation as measured by Fitch's Prism Factor Based Model (FBM), despite operating within markets characterised by difficult economic conditions. This resilience is also reflected in the group's operating companies' IFS ratings being one notch higher than the Spanish sovereign rating (BBB+/Stable).

In 3Q15 Mapfre reported a deterioration in its combined ratio to 98.7% (3Q14: 95.8%) as a result of a large volume of weather-related claims in the US, which contributed 1.7% to the loss ratio. However, the five-year average combined ratio is strong at 96.4% and Fitch expects Mapfre to maintain a robust underwriting performance.

Fitch considers Mapfre strongly capitalised, based on a 'Strong' score from the agency's FBM. Shareholders' funds declined by 3.9% to EUR8.6bn driven by the decrease in the market value of the investment portfolio in 2Q15 but the group's regulatory solvency ratio remains strong at 253% at 1H15 (end-2014: 259%).

The ratings also reflect Mapfre's strong franchise and access to distribution in Spain and Latin America, particularly Brazil. Mapfre is the sixth-largest European non-life insurer and the largest insurance group in Latin America.

However, Spain's sovereign rating continues to weigh on the group's ratings. The ratio of Spanish fixed income instruments to shareholders' funds remained high at 1H15 at 145% (YE14: 142%), which leaves Mapfre substantially exposed to the Spanish economy.

RATING SENSITIVITIES
Mapfre's ratings could be downgraded if its exposure to the Spanish insurance market or sovereign debt results in investment losses with a material impact on its capital. Mapfre's ratings could also be downgraded if the Spanish sovereign is downgraded.

Factors that could trigger an upgrade include an upgrade of Spain's sovereign rating, together with strong group capitalisation (as measured by, for example, the group's Prism FBM remaining 'Strong') or exposure to Spanish sovereign debt falling below 100% of group shareholders' funds.

FULL LIST OF RATING ACTIONS
Mapfre Familiar
Mapfre Global Risks Cia De Seguros Y Reaseguos
Mapfre Vida SA De Seguros Y Reaseguros
Mapfre Re Compania De Reaseguros S.A
IFS affirmed at 'A-'; Outlook Stable

Mapfre SA
Long-term IDR affirmed at 'BBB+''; Outlook Stable
EUR700m 5.91% subordinated debt due 2037 with step-up in 2017 affirmed at 'BBB-'.