Mapfre Re reports almost 30% drop in profits in group H1 2019 results

Spanish based global re/insurer Mapfre reported modest revenue and premium growth overall in its results for the first half of 2019, but its reinsurance business Mapfre Re fared less well with a nearly 30 percent drop in net profit results.

The group's total written and accepted premiums increased 4.7 percent to €12.5 billion from €11.9 billion for the same period the year before. Mapfre group revenue rose 6.8 percent to €15.05 billion in the first six months of 2019 from €14.09 billion in H1 2018. And the non-life combined ratio improved to 95.9 percent from 97.4 percent.

Mapfre Re, which includes the Global Risks Unit, which manages global multinational insurance, reported gross written and accepted premiums (GWAP) were up slightly by 0.4 percent to €2.8 billion for the six months to the end of June 2019 from €2.7 billion for the same period a year earlier.

But its H1 attributable net profit result (ANPR) was down 29.6 percent to €84.9 million from €120.5 million for the same period a year before. The business' combined ratio also worsened rising 1.9 percentage points to 94.5 percent from 92.6 percent.

The non-life division of Mapfre Re reported GWAP was up 5.6 percent on the year before with €2.5 billion in H1 2019 up from €2.4 billion.

However, the life division of Mapfre Re saw GWAP fall by 33.5 percent from €369.2 million in H1 2018 to €245.6 million in H1 2019. Net premiums earned for this part of the business also dropped by 8.1 percent to €1.5 billion in H1 2019 from €1.6 billion a year earlier.

GWAP for Mapfre Re’s Reinsurance Business increased 3.5 percent to €2.2 billion from €2.1 billion. But the Global Risks Business GWAP had dropped by 10.2 percent to €566.9 million from €631.2 million.

The figures showed that a 90.2 percent drop in ANPR for the Global Risks business and an 18.5 percent fall for ANPR in the Reinsurance Business were largely responsible for the 29.6 percent reduction in Mapfre Re’s total ANPR.

Commenting on the Mapfre Re results in its financial report, the reinsurer said total premium issuing “remained stable” compared to the same period the previous year.

“The reinsurance business, to June 2019, had 3.5 percent premium growth, due to the increase in reinsurance participation in important clients, as well as the effect of the improvement in exchange rates in business underwritten outside of the Eurozone,” it said.

“Additionally, issuing in the first half of the year grew from the new reinsurance structure through the Mapfre Re subsidiary in Vermont (USA), for cessions in the homeowners line in Mapfre USA.

“Premiums from the Global Risks Unit, integrated in Mapfre Re, reached €566.9 million, representing 10.2 percent less than the previous period, primarily as a result of the non-renewal of some business from a portfolio review. Mapfre Re’s net result at the close of June 2019 reached €84.9 million, decreasing 29.6 percent compared to the previous period.”

It explained this was due to a number of things, including the change in estimates of technical provisions applied at the close of 2018, which led to a different distribution of earned premium accrual, making this lower in the first half of the year and higher in the second half, with a neutral impact for 2019 as well as the impact of a large claim with a retained loss of €19.9 million and the damage from the drought in Brazil which cost €11.7 million.

Another factor was the lower results from the Life Reinsurance business, which were caused by using assumptions made with more conservative, long-term calculation in Annuities in LatAm.

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