Mapfre earns 317 million euros until June, 6% less due to the car business and the earthquake in Turkey

Mapfre has increased the average auto insurance premium in the Iberian market by around 5.5%

Mapfre has obtained a net profit of 317 million euros in the first half, which is 6.1% less, due to the situation in the car business and the earthquake in Turkey, as reported this Friday to the National Commission of the Stock Market (CNMV).

Revenues have increased by 15% and have stood at 17,026 million, thus consolidating the trend of recent quarters and reflecting both a significant increase in business volumes and an improvement in financial income.

Premiums have increased by 14.7%, with no significant impact from exchange rates. This growth reflects a general improvement in Mapfre's business, with increases of 11.2% in non-life and 29.4% in life, mainly due to the performance of Spain and Brazil.

These premiums have also been boosted by the two-year renewal of an industrial risk program in Mexico, registering 307 million euros corresponding to the first year.

Regarding the non-life business, premiums have increased by around 1,130 million euros in the first half, with growth of 14.8% in general insurance, 10.7% in health and accidents and 4.4% in Auto .

The combined ratio stands at 97.1%, with a decrease of 1.3 percentage points, and the volatility and dispersion of previous periods marked by the economic scenario are maintained.

General insurance, with a combined ratio of 85.9% --with a drop of 4.1 percentage points- has offset the high accident rate still experienced by the Automobile business, whose combined ratio has increased by 1.1 percentage points up to the 106.2%; however, it improves slightly compared to March of this year. In this regard, Mapfre explains that in some geographies the increases in rates and management efficiencies are beginning to translate into decreases in the combined ratio of the automobile business.

For its part, health and accidents presents an improvement in the combined ratio compared to the first half of the previous year, standing at 100.4% (1.9 percentage points less). In this way, the non-life financial result reached 359 million, with an increase of more than 74 million, equivalent to a growth of 26%.

As for the life business, premiums rose by around 700 million, driven by the savings life business in Spain. The result of this branch has benefited from both "good technical performance" and "strong financial income", especially in Latin America. Thus, the combined life-risk ratio stood at 82.9%. All this produces an improvement in the technical financial life result of 16.4%.

On the other hand, the insurer reports that the earthquake in Turkey last February was the most relevant catastrophic event of the semester. Mapfre Re has proceeded to update its estimates based on the damage communications received in recent months. At the end of June, an impact of 104 million on the net result has been estimated, mainly affecting Mapfre Re (with 99 million) and, to a lesser extent, the local insurer (with 5 million), with no additional communications expected. of significant damage in the coming months.

However, the company points out that, in the absence of other relevant catastrophic events and with a favorable environment in the reinsurance market, Mapfre has achieved a result of 121 million, 70.7% more than in the first half of 2022.

Regarding the investment portfolio, there have been no significant changes in the first half of the year, and Mapfre has realized net capital gains of 18.4 million in the semester, after taxes and minorities, compared to 22 million in 2022.

The group's own funds at the end of the first semester, under homogenized local criteria, reached 7,683 million euros, 394 million more than at the end of 2022, equivalent to a growth of 5.4%. The drivers of growth have been a recovery in the valuation of investments available for sale, of 295 million, and in the positive translation differences due to the increase in value in currencies in Latin America, of 82 million.

BUSINESS IN IBERIA

The insurer highlights that the Iberia business is the one that grew the most in the first semester in premiums, with 20% more, up to 5,137 million euros, Spain standing out with 5,005 million (21%). Premiums in Portugal amount to 132 million (36%).

However, net profit was cut by 33.2%, to 122.7 million euros, due to the situation in auto insurance. Of this result, 116.9 million correspond to the business in Spain and 5.8 million to that in Portugal.

The life business has multiplied its volume by 1.7 times compared to the previous year, reaching 1,522 million, of which 1,328 million correspond to life savings, compared to 677 million in 2022.

Non-life business premiums grew by 7.7% and reflect the good evolution of the general insurance business, where they increased by 9.3%, driven by business lines; health and accidents, with an increase of 8.8%; and automobiles, with an increase of 4.8%.

CAR BUSINESS IN IBERIA

Regarding the automobile business, Mapfre points out that the progressive adaptation of rates to the inflationary context and based on individual risk profiles has continued. The portfolio stands at around 6.2 million insured vehicles, with a slight reduction during the first half of the year related to risk selection measures, while the average premium increase is estimated at around 5.5%.

"This branch is affected by the recovery of mobility to pre-pandemic levels, the high inflation scenario, and the update of the injury scale," explains Mapfre.

Thus, the result and the non-life combined ratio are impacted by the automobile business, whose combined ratio amounts to 103.5%, 3.5 percentage points more than in the first half of 2022, although with respect to the first quarter, the ratio improves almost six percentage points.

Mapfre affirms that the behavior of this indicator during the rest of the year will be based on a "strict control" of costs, while it will carry out the "necessary adaptation" of the rate based on the evolution of expected costs.

LATIN AMERICA, THE LARGEST CONTRIBUTOR TO PROFIT

Regarding the business in Latin America, premiums increased by 15%, to 4,982 million euros, and net profit was 193 million euros, 70.4% more than in the first half of 2022, in such a way that it is the largest contributor to the benefit of the entire group.

In North America, premiums reached 1,332 million euros in June, growing by 5%. The largest contributor has been the United States with 1,115 million and a growth of 4.7%. Puerto Rico, for its part, has registered an increase of 6.3% reaching 217 million premiums. This region, however, has registered net losses of 17.7 million euros, compared to profits of 32.8 million in the first half of 2022.

In the EMEA region, premiums stood at €673 million, which represents a decrease of 4.9% and reflects the slowdown in the life business in Malta. The region registers losses of 13.8 million mainly related to the "complicated" automobile environment in Italy and the earthquake in Turkey, with an impact of five million.

Lastly, income from the assistance business amounted to 231 million, which represents a growth of 9.3% and records a profit of 1.6 million, 80.2% less compared to the profit of 8.2 million of the first semester of 2022.