First Read: Mapfre SA "2Q26: Miss; a mixed bag with an acquisition announced"

Research evidence excerpt

First Read: Mapfre SA "2Q26: Miss; a mixed bag with an acquisition announced"

ckup in competitive in the market

limit cons extrapolation; Reserves strengthening in Italy appears to be one-off and other Qian Lu

LATAM claims deterioration is being repriced for on an ongoing basis, so we see Analyst

qian-za.lu@ubs.commarginal cons. downward revision here; In Mapfre Re, we note Q2 stand-alone COR of

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94.1% was achieved with (i) benign Nat Cat experience with Venezuela earthquake loss

being low to mid single digit of COR vs 10-12ppts Cat budget and (ii) no additional Will Hardcastle, CFA

reserves build in the Q (vs UBSe 5ppts); This implies a worse than UBSe underlying COR Analyst

will.hardcastle@ubs.comand makes cons. outer year run-rate COR of c.95% appear generous. We note every

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1ppt of reinsurance COR is c.2ppt of Group earnings; 2. Acquisition of Safety: Mapfre

has agreed to acquire Safety Insurance for €1.35bn (c.10% of Mcap), a Massachusetts- Nasib Ahmed, FIA

focused personal lines franchise while strengthening its leadership position in the Analyst

nasib-za.ahmed@ubs.com

Northeast US. The deal appears strategically attractive and reasonably priced at c.10.5x

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earnings (including synergies but ex financing costs; but we await details on how the

multiple was calculated as headline figures seem to imply a much higher multiple), with

management targeting >$30m of annual cost synergies, >$140m of capital synergies

(from reinsurance optimisation e.g. lower retention) and >5% net income accretion

within three years, while remaining earnings accretive from year one. The deal is

predominantly debt funded with a c.10ppts Solvency II ratio reduction and c.7ppts

increase in leverage implying a pro forma solvency ratio of c.197%.