Mapfre highlights digital transformation in 2019 to 2021 strategic plan, 2018 results

Mapfre chairman and CEO Antonio Huertas has acknowledged that the company “could have done better” in 2018 at the company's annual general meeting for shareholders in Madrid on Friday 8 March.

Annual results for 2018, published in February, showed net earnings for the spanish re/insurer fell almost 25 percent as hurricanes, earthquakes, trade wars, hyperinflation and turbulent markets all took a toll.

Huertas told shareholders: “There is no doubt that 2018 was a challenging year for Mapfre. We have once again experienced major catastrophic impacts, we lost over €1.4 billion in foreign currency premiums and €34 million in earnings, but even so, we were able to exceed €700 million in operating earnings.

“If the net results has gone down, it is because we have decided to be more careful and partially write down some goodwill to shore-up the company's balance sheet.”

He also said that “profitability prevails over geographic footprint”, adding: “I have stated publicly that we are in the countries in which we want to be present. But that is not entirely accurate, as we have begun a process of important divestments; in the past year we have exited five states in the US, and we may exit more in the future if we do not see a path to medium-term profitability.”

He added: “Over the next three years we will continue monitoring our activities and quarantine businesses that do not fulfill the principle of profitable growth.”

Huertas said that it was good to recognise that the company could have done better in 2018 as “it is only when we are demanding with ourselves that we can improve and overcome the challenges we face”, as he set out strategic plans for 2019 to 2021.

He said that digitisation was key to the insurer’s transformation to better serve customers and drive business profitability. This includes the use and development of advanced analytics and predictive models to accelerate business processes, boost agility and provide more accurate decision making.

Mapfre also plans to “reinvent” its automobile insurance in response to new trends such as autonomous vehicles, telematics and other market innovations.

Outlining the insurer's broader growth plans he said: “We want to create more value for the shareholder, generating a return on equity of an average of 10 percent for the three year period.

“We will grow sustainably and prudently, reaching €30 billion in revenues by 2021 or having achieved average premium growth of 5 percent during the three years. We will achieve an average combined ratio of 96 percent in our non-life business.”

Huertas added that the company's technology will progress towards more open, analytical, flexible and global technology that is easily scalable in different operations, including future roll outs in Latin America.

“In advanced analytics we are fully behind data. We are developing a platform that will allow us to move from making decisions based on structured information, which is how we traditionally did it, to incorporating new sources of unstructured information. This will facilitate understanding and attending to the needs of our customers more effectively.”

He added that the transformation process the company has embarked so far on “has not yet been fully reflected in our accounts”.

In Latin America, the CEO said that “better economic growth was expected in 2019”, rising about 2.2 percent driven by strong growth in Brazil and Mexico as well as the recovery of the Andean countries.

Mapfre Re “will maintain its capacity to absorb the volatility of its business”, he said.

“It has a solid client base and enjoys an excellent reputation. As such, if market conditions improve as expected, it will continue to grow, maintaining in turn its excellent efficiency ratios.

“To achieve this we will take advantage of its greater capitalisation and new underwriting teams that have been recruited following the restructuring of Mapfre Global Risks operations, once the operations has been authorised by the appropriate authorities.”

Gender equality made progress with 41 percent of responsible posts now held by women, beating the 2018 target of 40 percent. The CEO said: “We will continue to promote gender equality through a new public commitment for the three year period in which we want to achieve at least 45 percent of vacant leadership positions being held by women.”

Get all the latest re/insurance industry news with our daily newsletter -  sign up here.

More of today's news

Hannover Re 'bridges gap' between insurtechs and insurers with new platform

Berkshire Hathaway hires marine/property experts from AXA, Zurich

CRC launches $15m catastrophe product with Amrisc

Download our whitepaper: 'Why Automation & AI Matters For Commercial Lines'