Mapfre Re to target €250m new capital on existing lines and clients
Spanish reinsurer becomes the latest of several reinsurance carriers to expand its capacity to take advantage of the hardening market
Spanish reinsurer is not looking to change the balance of its portfolio with capital raise, chief executive tells Insurance Day
Mapfre Re will deploy its €250m ($262.5m) capital raise to expand its portfolio across the board, the reinsurer's chief executive has said.
Speaking to Insurance Day, Eduardo Pérez de Lema said the company was happy with the balance of its portfolio and the “vast majority” of the new capacity would go to existing clients and lines of business.
De Leman said he expected the biggest area of demand to come from property catastrophe reinsurance, a line in which Mapfre Re has seen poor results in the past few years, but he added upward price movement was needed “across the board in pretty much every line of business”.
Mapfre Re announced plans for a 15% increase in capital earlier today, as the business looks to benefit from hardening reinsurance market conditions. Significant rate increases are expected at the January 1 renewals, particularly for property business.
The reinsurer provides both treaty and facultative cover across all lines of business, including property, energy and agriculture.
The new capital will also give the Spanish reinsurer greater flexibility over its own reinsurance protections, allowing it to optimise its underwriting, the company said.
The increase is being funded from the €571m Mapfre Re received for the termination of its bancassurance agreement with Bankia in December last year following the bank’s merger with CaixaBank.
“We view our portfolio as being good and balanced and we are comfortable with that,” de Lema told Insurance Day. “It’s not that we want to change the composition of our portfolio or the approach to business, so we probably will go a step forward pretty much across the board.”
Delays to the key January 1 renewal negotiations meant Mapfre Re did not have as much clarity about the state of the market as it usually does at this point in the year, de Lema said. “We know the market is going in the direction we think it should be going, but we will deploy capacity based on the actual outcome of the market and price planning.”
But, he continued: “Right now where we see the biggest stress is everything that is catastrophe-exposed. It’s the biggest area of demand and it’s also where we have been seeing bad results over the past few years. But we think pricing movement is required across the board in pretty much every line of business.”
Mapfre Re is the latest carrier to raise capital to take advantage of the hardening market.
Last month, Beazley raised approximately £350m ($417m) through a share placing just days after its chief executive, Andrew Cox, told investors a hardening property market created “strategic opportunities” for the business.
The Lloyd’s reinsurer said the proceeds of the capital raise would “support organic growth and provide growth capital to fund attractive underwriting opportunities”.
