S&P lowers rating on Spanish insurer to "A+" from "AA-"
Standard & Poor's has lowered its long-term counterparty credit rating on Spain-based insurance holding company Mapfre to “A+” from “AA-”.
At the same time, S&P lowered its long-term rating on the €275m 10-year senior unsecured debt issued in 2001 by Mapfre S.A.'s predecessor holding company, Corporación Mapfre S.A., and now held by Mapfre S.A., to “A+” from “AA-”. The outlook is stable.
"The rating action reflects the Mapfre group's growth and acquisition strategy, which is viewed as more aggressive than previously, albeit that it is more conventional relative to that of other major European insurance groups," said Standard & Poor's credit analyst Peter McClean.
Until now, Standard & Poor's has applied a nonstandard single-notch rating differential between the Mapfre group's operating entities, which are rated “AA”, and the holding company, which was previously rated “AA-”. This has been based on strong levels of interest coverage and debt leverage, strong diversity of earnings, and, until recently, implied support from the previous parent mutual, Mapfre Mutualidad de Seguros y Reaseguros a Prima Fija.
Following the demutualisation of the latter entity in 2006, the Mapfre group has announced a series of acquisitions, which have led Standard & Poor's to believe that there is a greater tolerance of leverage, albeit still within prudential bounds, and that the current low levels of debt leverage are unlikely to be maintained.
