MADRID (Reuters) – Spanish insurer Mapfre on Thursday reported a 16% drop in its 2022 net profit, which the company said was due to soaring global inflation and severe natural disasters in Puerto Rico, Brazil and Paraguay.
The net profit of Spain’s second-largest insurance company by premiums stood at 642.1 million euros ($688.8 million), down from 765.2 million euros posted in 2021.
Analysts had expected on average a full-year net income of 643.4 million euros, according to a company-provided poll. The in-line profit pushed shares 1.7% up in early afternoon trading.
Despite booking higher revenues from insured people and companies, devastating natural disasters in 2022 as well as the return of global inflation hit Mapfre’s profitability.
The drought in the Parana river basin that affected its units in Brazil and Paraguay had a negative impact of about 113 million euros, while Hurricane Fiona in Puerto Rico represented a hit of 31 million euros to its bottom line, Mapfre said.
Skyrocketing inflation in Turkey and Argentina cost Mapfre a further 41 million euros, it added.
“The impact of inflation in most – if not all – the countries we operate in has put significant upward pressure on costs,” Chief Executive Antonio Huertas told reporters.
Soaring prices hit Mapfre’s car insurance business hard in 2022. Higher car and car parts prices made the business less profitable, most notably in the United States, where the company ended up losing money for the first time ever, as a result.
The insurer reported all-time record revenues of 29.51 billion euros last year, with a 10.8% year-on-year rise in the volume of premiums to 24.54 billion euros.
Mapfre reiterated its targets for the 2022-2024 period and said it expects an average non-life combined ratio of about 96% in 2023 and 2024. Shareholders are set to receive a gross dividend of 0.085 euros per share for 2022.
The company expects its average return on equity to rise to between 9% and 10% in the next three years, up from 8.2% in 2022.
The earthquake that struck central Turkey and northwest Syria on Monday “will not have a significant impact on our P&L, but it’s very early days,”.
The war in Ukraine has had no material impact on Mapfre’s activities nor on its investments in Russia and Belarus, the company said in a statement.
($1 = 0.9321 euros)
(Reporting by Marta Serafinko, editing by Inti Landauro, David Latona, Alexandra Hudson)
