AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) 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 assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
Murimar’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which remained at the strongest level as at year-end 2020, as measured by Best’s Capital Adequacy Ratio (BCAR). The year-end 2020 BCAR scores declined compared with one year prior as a result of higher retention and the company’s significant growth, which surpassed management’s expectations due to favourable market conditions in Spain and abroad. AM Best will continue to monitor closely the company’s ability to generate capital to support its growth strategy. Murimar’s adequate reserving is demonstrated by the consistent favourable reserve development reported over the past five years. Offsetting factors for the balance sheet strength assessment include the mutual’s dependence on reinsurance, significant exposure to real estate holdings in Spain and the small size of its capital base, which at EUR 12 million at year-end 2020, exposes the company’s financial position to potential volatility.
Murimar has a niche business profile focused on marine insurance for small- to medium-sized vessels in Spain. Despite limited gross written premium (GWP) of EUR 24.9 million in 2020, 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 has gradually expanded internationally. In 2020, international business represented 15% of its GWP, reflecting a 50% increase in international premium over 2019 reported figures.
Murimar’s operating performance is considered adequate, taking into account AM Best’s expectation of stable future earnings. In recent years, the mutual’s underwriting results have shown a positive trend, with a combined ratio of 95.4% reported in 2020 (2019: 98.3%). AM Best expects the mutual to achieve combined ratios close to 100%, as Murimar’s management focuses on providing a service to its members rather than high returns. AM Best expects Murimar’s future earnings to 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 mainly between cash and real estate.
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Giannina Carbajal Ortiz
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