A.M. Best Affirms Financial Strength Rating and Downgrades Issuer Credit Ratings of the MAPFRE USA Group Members

A.M. Best Co. has downgraded the issuer credit ratings (ICR) to "a" from "a+" and affirmed the financial strength rating (FSR) of A (Excellent) of the members of MAPFRE USA Group (MAPFRE USA). These ratings have been removed from under review with negative implications and assigned a negative outlook. The lead company in MAPFRE USA is The Commerce Insurance Company (Webster, MA) and includes its inter-company pool members, Citation Insurance Company, Commerce West Insurance Company (Pleasanton, CA), American Commerce Insurance Company (Columbus, OH), MAPFRE Insurance Company of New York (Garden City, NY) and MAPFRE Insurance Company of Florida (Miami, FL).

Concurrently, A.M. Best has upgraded the FSR to A (Excellent) from A- (Excellent) and the ICR to "a" from "a-" and removed the ratings from under review with positive implications for MAPFRE Insurance Company (Florham Park, NJ). The assigned outlook is negative. These rating actions reflect MAPFRE Insurance Company's recent inclusion in MAPFRE USA's inter-company pooling agreement, effective January 1, 2012.

In addition, A.M. Best has downgraded the ICR to "bbb" from "bbb+" and debt rating to "bbb" from "bbb+" and removed from under review with negative implications the $300 million 5.95% senior unsecured notes due 2013 of the parent holding company, MAPFRE U.S.A. Corp. The outlook assigned to these ratings is negative.

These rating actions were driven by the ultimate parent company, MAPFRE S.A.'s (Spain) exposure to the continuing negative developments regarding the eurozone sovereign debt crisis and corresponds with the action A.M. Best Europe – Rating Services Limited has taken in relation to the ratings of MAPFRE RE, Compania de Reaseguros, S.A. (MAPFRE RE) (Spain),a key subsidiary of MAPFRE S.A.

MAPFRE RE and MAPFRE S.A. (the consolidated group) face higher country risk due to the deterioration in the sovereign creditworthiness of Spain as Spanish debt accounts for 53% of the consolidated group's EUR 38 billion invested assets at year-end 2011, the majority of which is derived from investments in government and financial institutions. MAPFRE S.A. also maintains sizeable commercial property investments in Spain through its investment holdings. Spain remains the main profit center for the consolidated group, with approximately 40% of consolidated gross written premiums and 60% of insurance results derived from its core market. Although the group enjoys a well spread geographically diversified portfolio, particularly in Latin America and the United States, the majority of its business is derived from countries with sovereign creditworthiness equal to or lower than that of Spain.

Further negative rating actions could occur if there were a worsening of the organization's risk-adjusted capitalization tied to investment losses or a deterioration of the operating environment in Spain.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; "Catastrophe Analysis in A.M. Best Ratings"; and "Rating Members of Insurance Groups." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts:

A.M. Best
Jacqalene Catrino Lentz, 908-439-2200, ext. 5762
Senior Financial Analyst
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or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
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or
Greg Williams, 908-439-2200, ext. 5815
Managing Senior Financial Analyst
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or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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