AM Best Revises Outlooks to Negative for Mutua de Riesgo Maritimo, Sociedad de Seguros a Prima Fija

AM Best has revised the outlooks to negative from stable and 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 Credit Ratings (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 (ERM).

The revision of the outlooks to negative reflects pressure on Murimar’s ERM due to AM Best’s concerns about the appropriateness of its capital management, underwriting guidelines and risk culture in the context of significant business growth seen over the past 24 months and expansion plans.

Murimar’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which remained at the strongest level at year-end 2021, as measured by Best’s Capital Adequacy Ratio (BCAR). The BCAR scores were affected negatively by a large claim reported from a new multi-risk product for small and medium enterprises. However, this was offset by positive results stemming from the mutual’s recent change in its reinsurance structure. The large claim has been paid fully and furthermore, corrective measures to address underwriting controls for co-insured policies have been put in place.

Murimar’s balance sheet strength is supported further by an adequate reserving approach, which has reported favourable reserve developments over the past five years. Offsetting factors for the balance sheet strength assessment include real estate holdings in Spain and a small capital base, which has the potential to exacerbate the sensitivity of its solvency position.

Murimar’s operating performance is considered adequate, taking into account AM Best’s expectations of stable future earnings. In recent years, the mutual’s underwriting results have shown a positive trend. In 2021, however, the large claim increased the mutual’s loss ratio to 80.4% and raised the combined ratio to 100.5% from 95.4% in 2020 (as calculated by AM Best). Prospectively, AM Best expects the mutual to achieve improved combined ratios compared with levels seen in 2020, following the change in its reinsurance structure. In addition, the mutual has taken steps to re-balance its current high-frequency and low-severity loss risk profile, as well as to improve its investment income through diversification of its asset portfolio.

Murimar is a niche insurer focused on marine hull and cargo insurance for small-to medium-sized vessels in Spain. Murimar ranks fourth overall in Spain’s marine market and first in its fishing vessel segment. In 2021, Murimar reported non-life gross written premium (GWP) of EUR 27.3 million. Distribution through Murimar’s strong agency network and effective client retention aided by its mutual status support the market positions. Although concentrated in its domestic market, Murimar has started to expand internationally over the past two years. In 2021, international business represented 22% of its GWP, reflecting a 21% increase in international premium over 2020 reported figures.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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