The company admits that auto insurance prices will rise to cover the industry’s high costs in recent months
Mapfre recorded a profit of EUR 642 million in 2022, which is 16.1% less than the previous year, a period in which revenues increased by 8.3% to EUR 29,510 million and premiums increased by 10.8% to more than 24,540 million euros. compared to 2021, when the Bankia divestment became a reality, the adjusted profit was 715 million, which would have meant a 7% lower result. With these results, the shares will be revalued by 1% on the stock exchange this Thursday.
As explained by the company, the company’s strong diversification has made it possible to face, with a “sustainable” result, the most negative impacts of the year, marked among others by the increase in the number of accidents in the automotive sector. In this sense, Mapfre’s president, Antonio Huertas, has admitted that “prices must be adapted to the realities of current costs” in this type of insurance. It is not, he indicated, a general price increase. But he did point out that “we need to be aware and realistic that insurance needs to have an adequate adjustment process.” And he has nuanced: “If it is said that insurance prices are not going to rise, that is not the truth.”
The motor insurance business has influenced the increase in claims costs due to greater frequency and seriousness; the company’s own internal costs increase; the higher cost of repairs and lack of supplies in many cases; as well as a return to reality after premium cuts during the pandemic in a context that, the group says, is now very different.
High inflation rates in most markets have also impacted Mapfre’s business in 2022; and catastrophic claims, especially those arising from the drought in the Paraná basin, the impact of which for the group exceeds EUR 112 million.
On the positive side, as the group has indicated, the “excellent” performance of Latin America, the “wonderful” evolution of the reinsurance unit and the “high” growth in both Non-Life and Life insurance stand out.
The company attributes the increase in premiums to a general improvement in the insurance business in virtually all regions, with significant increases in Latin America and North America, as well as in the reinsurance and high-risk businesses, and the favorable behavior of nearly all currencies against the euro.
The evolution of premiums is influenced on the one hand by the absence in 2022 of the biennial exceptional policy in Mexico (477 million euros in 2021) and the sale of Bankia Vida (which contributed 159 million euros in 2021), as well as the appreciation of currencies against the euro in 2022. If these effects are eliminated, the increase would have been 8.7%, a growth in both Non-Life (+10.8%) and Life (+2.1%).
The combined ratio increased by 0.6 percentage point to 98%, impacted by the increase in car accidents, a consequence of high inflation rates and the increase in mobility following the lifting of Covid restrictions.
At the end of 2021, the group’s attributable equity amounted to 7,289 million euros and the balance sheet total to 59,626 million euros. Mapfre’s investments for its part amount to 41,388 million euros, almost half of which correspond to government bonds.
The assets of pension funds also amounted to 5,701 million euros at the end of 2022, while investment funds grew by 2.3% to 5,526 million euros.
Regarding the investments and savings products offered by the company, Antonio Huertas has indicated that Mapfre has “enough conditions” to compete with the current high interest in Treasury bills among many minority savers. “There is no need to queue at the Bank of Spain,” said the director. “We have products with almost the same profitability as government debt, but with much more additional coverage,” which makes their products “much more interesting.”
Board reconstitution
The Board of Directors has agreed to propose to the General Meeting of Shareholders a final dividend to be charged to the 2022 financial year of 8.5 Euro cents gross per share. The total dividend charged to the 2022 financial year thus amounts to 14.5 euro cents gross per share, which amounts to a payout of 69.5%.
It has also been approved to propose to the General Meeting of Shareholders to appoint Francesco Vanni d’Archirafi and Elena Sanz Isla as members of the Board of Directors. Francesco Vanni d’Archirafi will serve on the board as an independent, while Elena Sanz will serve as an executive member.
Once both appointments are formalized, Mapfre’s highest decision-making body will consist of a total of 15 members, more than half of which will be independent directors.
The company thus takes the next step in the internationalization of the board of directors, in which three nationalities are represented (Spanish, Brazilian and Italian) and the presence of women is increasing, to 47% of the total number of board members. Board of Directors.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
