MAPFRE SA is exiting five states in the U.S. where it generates underwriting losses and has limited scale as part of its plan to reorganize its business in the country.
During an investor day presentation, the insurer revealed plans to pull out of New York, New Jersey, Kentucky, Tennessee and Indiana. It has hired an investment bank to pursue a sale for its MAPFRE Insurance Co. of New York subsidiary, and its plans for an orderly withdrawal in the other four states, include pursuing replacement carrier transactions.
The company said its operations are not big enough to compete with peers in those states, which in aggregate account for 5% of premiums and 15% of earnings before tax for MAPFRE USA. The states had a combined ratio of 117.0% for the first nine months of 2017.
The planned moves will narrow the company's U.S. focus to three regions, with the Northeast region growing in importance. In Massachusetts, MAPFRE had a combined ratio of 96.3% for the first nine months of the year and boasts market shares of 25.5% in private passenger auto, 13.5% in homeowners and 13.3% in commercial auto.
The company executed a "soft launch" of VERTI USA in October, providing auto insurance to digital customers in Pennsylvania.
MAPFRE Insurance, which does not include Verti, targets to generate a combined ratio of 97%, a return on equity of 8% and an annual growth of 4% in 2020.
