AM Best Affirms Credit Ratings of MAPFRE U.S.A. Corp.’s Main Insurance Subsidiaries

AM Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Ratings of “a” of the main
property/casualty members of MAPFRE U.S.A. Group (MAPFRE U.S.A.). The
outlook of these Credit Ratings (ratings) is stable.

The aforementioned companies are owned by MAPFRE U.S.A. Corp. (MAPFRE
USA Corp), whose ultimate parent is Spain-based MAPFRE S.A. (MAPFRE).
The lead company in MAPFRE U.S.A. is The Commerce Insurance Company
(Webster, MA) and includes inter-company pooling members, Citation
Insurance Company (Webster, MA), Commerce West Insurance Company (Sam
Ramon, CA), American Commerce Insurance Company (Columbus, OH), MAPFRE
Insurance Company of Florida (Miami, FL) and MAPFRE Insurance Company
(Florham Park, NJ).

The ratings reflect MAPFRE U.S.A.’s balance sheet strength, which AM
Best categorizes as strong, as well as its marginal operating
performance, neutral business profile and appropriate enterprise risk
management (ERM). The ratings also reflect the implicit and explicit
support provided by its parent company, MAPFRE.

MAPFRE U.S.A.’s balance sheet strength reflects the group’s strongest
level of risk-adjusted capitalization, as measured by Best’s Capital
Adequacy Ratio (BCAR), which is partially offset by adverse loss reserve
development trends and liquidity and underwriting leverage measures,
which compare unfavorably with the averages for the private passenger
standard automobile industry composite. Surplus levels have declined
over the most-recent five-year period due to sizeable dividend payments
to the parent company.

Operating results over the most-recent five-year period have been
volatile. The group’s five-year average return on revenue and return on
equity measures lag the averages for the industry composite by a wide
margin. Operating results have been impacted negatively by underwriting
losses, driven by adverse prior-year loss reserve development,
weather-related losses and an above-average expense ratio mainly due to
high commission expenses.

The business profile is considered neutral due to the group’s local
market expertise, MAPFRE U.S.A./Commerce brand-name recognition in
several states, broad distribution networks and marketing activities
throughout the various subsidiaries. This is partially offset by MAPFRE
U.S.A.’s concentration of business in Massachusetts and to the
automobile sector. ERM is considered appropriate for the group’s size
and complexity of its underwriting, investment and other risks, based on
its ERM framework and controls.

The ratings also benefit from the group’s role and strategic importance
as an attractive market to its parent company, MAPFRE. MAPFRE U.S.A. is
integrated fully into the operations and management of the group
globally and carries the MAPFRE name commercially. MAPFRE also provides
support to MAPFRE U.S.A. through reinsurance, staffing of senior
leadership positions and ERM guidance.

This press release relates to Credit Ratings that have been published
on AM Best’s website. For all rating information relating to the release
and pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

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