"MAPFRE's stock price has more upside than its current level"

MAPFRE shares increased in value by more than 7% in 2023, enabling the insurance group to close the year with a market capitalization of almost €6 billion. Despite last year’s improvement, this figure is still far from its book value, which is more than €2 billion higher.

José Luis Jiménez, deputy CFO and Group Chief Investment Officer at MAPFRE, underscored this point at a meeting with private shareholders on March 4 in Madrid when presenting the 2023 results. These periodic meetings are an exercise in transparency that the Group has been conducting for five years. On this occasion, around 100 people attended both in person and online.

“We think MAPFRE’s potential is even greater than what we've reached, and we’re working on it,” insists Jiménez. Felipe Navarro, Director of Capital Markets and Treasurer at MAPFRE, explains that the book value corresponds mainly to shareholders' equity, which in 2023 closed at €8.071 billion, 10.7% higher than the previous year.

The dividend for the fiscal year 2023 is 15 cents per share, higher than the amount paid in previous years, with MAPFRE distributing €462 million among its shareholders. The dividend yield stood at 7.7% in 2023, one of the highest on the IBEX 35 index.

“We remain committed to promoting a dividend that is both profitable and sustainable, backed by the company’s growth, as has been the case in recent years,” says the deputy CFO.

Jiménez highlights that 2023 has been a “very satisfactory” year for the Group, achieving historical peaks in premiums totaling €26.917 billion, up by 9.7%. Financial income rose by 20.6% to €3.068 billion. The key to this improvement in results is diversification, encompassing various lines of business and geographic regions.

“Despite all the uncertainties, it’s been a satisfactory year for us, characterized by historical growth in premiums and income. The broad diversification across 38 countries and various lines of business has proven effective for the Group, providing considerable stability in our results,” he remarks.

The Group also saw improvements in the combined ratio, although further reduction is necessary, particularly in certain lines of business such as automotive. By geographic regions, the profit growth in Brazil was particularly noteworthy, reaching €233 million—a 62% increase—coupled with improvements in both the technical aspect (combined ratio) and the financial aspect. Latin America as a whole was the main contributor to profit, with €373 million.

Looking ahead to this year, MAPFRE’s objective is to make progress on the transformation of the strategic plan, adapt as much as possible to the changing environment, regain profitability in the automotive business, and continue working on growth. The company will also continue to monitor the impact of climate-related catastrophes, a reality the entire industry is adjusting to in response to the uptick in events in recent years.

On the other hand, 2023 marked the first year of implementation of the new accounting standards IFRS 17 and IFRS 9, which have impacted the accounting treatment of investments and insurance contracts. In any case, Leandra Clark, Head of Investor Relations, stressed during the presentation that this change doesn’t affect either the Group’s solvency or the payment of the dividend.

Increase in financial income

The current context, characterized by rising inflation and the subsequent increase in interest rates, had a positive impact on the Group’s financial income, which rose 20.6% to €3.068 billion. The investment portfolio amounted to €43.953 billion at the end of the year—6.2% more—of which 82.6% was invested in bonds, 8.3% in equities, 4.7% in cash, and 4.1% in real estate. The group’s investment result grew by 26%.

MAPFRE has partnered with top-tier firms such as Macquarie, Iberdrola, Swiss Life, and Munich RE to invest in infrastructure, real estate, and private equity. These alliances have improved profitability and financial income.

Ordinary General Meeting

The Ordinary General Meeting of the MAPFRE Group will be held on March 15 at 11:30 am. At this meeting, attendees will vote on the approval of the annual accounts, the re-election and appointment of the accounts auditor, various other appointments, and the remuneration of directors, among other matters. You can find complete information about the meeting at this link.