MAPFRE Sigorta's regulatory solvency ratio strengthened to 132% at end-2024 from 109% at end-2023, due to an increase in shareholders' equity arising from very strong retained earnings and capital provided by the parent, MAPFRE, says Fitch Ratings.
MAPFRE, a Spanish multinational insurance group, has committed to providing TRY550m ($13.7m) of capital in 2024-2025. MAPFRE Sigorta's Prism Global model score improved to 'Adequate' at the end of 2024 from 'Somewhat Weak' at end-2023. Fitch expects MAPFRE Sigorta to maintain its regulatory solvency ratio above 100% and 'Adequate' Prism score in 2025.
Ratings affirmed
Fitch has affirmed MAPFRE Sigorta’s National Insurer Financial Strength (IFS) Rating at 'AA+(tur)'. The outlook is “Stable”.
The affirmation reflects MAPFRE Sigorta's importance to its parent, MAPFRE (Issuer Default Rating: A-/Positive), and its strengthened capitalisation and financial performance. These factors are partially offset by the insurer's weakened competitive position.
Fitch also highlights other key rating drivers, including:
Ownership Benefits Rating: Fitch views MAPFRE's ownership of MAPFRE Sigorta as supportive of the rating and assesses MAPFRE Sigorta as 'Important' to its parent under its group rating methodology. MAPFRE Sigorta benefits from MAPFRE's expertise in corporate governance, operational support and risk management, and its strategic direction mirrors that of the parent.
Fitch believes MAPFRE would provide support to MAPFRE Sigorta and that the parent remains committed to the Turkish market, despite continued economic pressures in Turkiye, as demonstrated by the recent capital injection to strengthen MAPFRE Sigorta's capital.
Weakened Competitive Position: The insurer's share of the Turkish non-life market stabilised at 2.6% in 2024, after having fallen over the last two years. This was due largely to the continued reduction of its share in motor third-party liability (MTPL), which has been heavily loss-making over the past 10 years. The lower market share weakens MAPFRE Sigorta's competitive positioning. Its substantially lower exposure to MTPL versus its peers' supports Fitch’s view of the company's lower business risk profile. MAPFRE Sigorta has an established franchise.
Domestic Risk Drives Asset Quality: The insurer's investment portfolio carries similar risks to its Turkish peers, with a high exposure to the Turkish banking sector through its bank deposits and some concentration in Turkish sovereign bonds. In 2023 and 2024, MAPFRE Sigorta increased its exposure to Turkish lira-denominated bank deposits to take advantage of the higher interest rates on these instruments.
Financial Performance Improved: MAPFRE Sigorta reported further improved financial performance in 2024, with net income of TRY1,560m (2023: TRY723m). This was driven by sharply increased investment income as interest rates remained high in 2024 and improved underwriting performance across all lines of business. MAPFRE Sigorta's Fitch-calculated combined ratio improved to 105%, from 119% in 2023. Fitch expects financial performance to remain commensurate with the rating, supported by strong investment income and smaller underwriting losses in 2025.