A.M. Best downgrades Spanish giant to A from A+
Insurers have received further warning about the rapidly deteriorating financial situation in Europe with the downgrade of Spanish giant Mapfre Re.
A.M. Best said it was downgrading Mapfre Re partly because its parent Mapfre S.A. had exposure to the commercial property market in Spain and peripheral sovereign debt.
The downgrade takes Mapfre Re to A (excellent) as opposed to its previous stronger rating of A+ (superior).
The US rating agency said that Mapfre Re along with other insurers operating in Italy and Spain were facing rapidly growing problems.
A.M. Best said: “A.M. Best’s rating actions on Mapfre Re and other European (re)insurers reflect their exposure to the continued deterioration of the sovereign creditworthiness of several eurozone countries and the negative economic outlook for the region.
“A.M. Best has been actively monitoring this crisis and released reports on related (re)insurers’ exposure in September and November of this year.
“The rationale for taking rating action at this point is largely attributable to the current heightened level of credit and liquidity risk for insurers operating within the eurozone countries – most notably Italy and Spain.
“The perceived strain on the economies of these countries and companies operating within their borders is growing rapidly with very little evidence of a solution being formulated to address near-term concerns.
“The ratings for Mapfre Re will remain under review with negative implications while A.M. Best examines these companies’ exposure to a prolonged adverse economic environment within the eurozone.
“Of particular concern to A.M. Best is the exposure to Italy and Spain’s sovereign bonds and the potential for contagion into other asset classes, particularly holdings of European bank securities.
“In addition, A.M. Best will assess the likely impact of a prolonged financial crisis and recessionary environment on these carriers’ market position and ongoing business operations.”
No comments yet