Mapfre Reports a 39% Profit Increase Amidst Milder Weather Conditions
Spain's largest insurance company, Mapfre, reported a significant increase in its net profit in the first nine months of the year, reaching 654 million Euros, a rise of 39%. This growth is attributed to a combination of rising insurance policy prices, fewer natural disasters, and milder weather conditions. These factors collectively boosted the profitability of the company's non-life business segment.
The insurer's shares experienced a notable increase on Tuesday, rising by 4.7% as of 12:43 PM (UTC+3), making it the best-performing stock on Spain's IBEX 35 index. The company's revenue from premiums amounted to 21.62 billion Euros.
The non-life combined ratio, a significant indicator of profitability in the insurance sector, decreased by 2 points to 94.8% for Mapfre. This improvement signals a positive trend for the company, influenced by the previously mentioned factors.
Mapfre's Investment Director, Jose Luis Jimenez, emphasized that the third quarter was relatively calm, noting that the most significant weather event was the storms in Europe and that there were no major catastrophic loss claims. However, the company prudently increased its reserves for the non-life business unit, taking into account the variability of weather events and the rise in medium-severity loss claims.
In contrast, Mapfre faced a challenging situation earlier this year due to a devastating earthquake in Turkey, resulting in loss claims exceeding 100 million Euros in the first half of 2023.
The insurer also reported a 90 million Euro accounting loss attributed to impairment in its car insurance unit, Verti Germany, due to high inflation levels affecting the automotive sector in Germany. Chief Financial Officer Fernando Mata pointed out the specific challenges in the German market and indicated that the company's digital operations do not currently operate in other non-life business areas that could potentially offset losses in the automotive segment.
This situation poses a similar issue to last year when Mapfre recorded a 75 million Euro impairment in its car insurance business in the United States due to the rapid increase in the prices of cars and car parts outpacing the increase in insurance premiums.
Looking ahead, Mapfre announced plans to distribute an interim dividend of 0.065 Euros per share on November 29, 2024. This amount represents an 8% increase compared to last year's dividend.