AMSTERDAM–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Mutua de Riesgo Maritimo, Sociedad de Seguros a Prima Fija (Murimar) (Spain). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Murimar’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
AM Best expects Murimar’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), to remain at the strongest level over the medium term supported by low net underwriting leverage. The company demonstrates adequate reserving and consistently favourable reserve developments. Offsetting factors include the mutual’s high dependence on reinsurance, significant exposure to Spanish real estate holdings and the small size of its capital base, which at EUR 11.9 million at year-end 2019, exposes the balance sheet to potential volatility.
Murimar has a niche business profile focused on insurance for small- to medium-sized vessels in Spain. Despite limited gross premiums of EUR 20.8 million in 2019, Murimar is the second-largest fishing vessel hull insurer in Spain, with distribution through a strong agency network and effective client retention aided by its mutual status. Although concentrated in its domestic market, Murimar is expanding slowly internationally; however, these geographies represent a small share of gross premiums (approximately 10% in 2019).
Murimar’s operating performance is considered adequate, based on AM Best’s expectation of stable future earnings. Over the past three years, the mutual’s underwriting results have shown an improving trend, generating a combined ratio of 98.3% in 2019. Murimar’s management focuses on providing a service to its members rather than high returns. Therefore, AM Best expects the mutual to achieve combined ratios close to 100%. AM Best also anticipates that Murimar’s future earnings will have limited volatility on a net basis due to the extensive reinsurance arrangements in place, which reduce peak net loss exposures. Furthermore, Murimar has a low level of investment income from its asset portfolio, which is divided between cash and real estate.
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