A.M. Best Affirms and Downgrades Ratings of MAPFRE RE, Compania de Reaseguros S.A.; Removes From Under Review

A.M. Best Co. has affirmed the financial strength rating (FSR) of
A+ (Superior) and downgraded the issuer credit rating (ICR) to "aa-"
from "aa" of MAPFRE RE, Compania de Reaseguros S.A. (Mapfre Re)
(Spain). Concurrently, A.M. Best has removed the ratings from under
review and assigned a stable outlook, which is in line with the
ratings of its parent company, Mapfre S.A. (See today's related press
release.)

These ratings factor the downgrading of Mapfre S.A.'s ICR ,
although A.M. Best's views Mapfre Re as an integral part of the Mapfre
group. Other factors include Mapfre Re's maintenance of its strong
stand-alone risk-adjusted capitalisation, excellent operating
performance and its leading position in the Spanish-speaking markets.

Despite higher capital requirements from anticipated substantial
growth, A.M. Best expects Mapfre Re to maintain its strong
risk-adjusted capitalisation from retained earnings and lower dividend
payments to its parent company. Mapfre S.A. has supported Mapfre Re in
the past to finance its strong growth and expects this continue, if
necessary.

A.M. Best expects that despite prices in non-life reinsurance,
overall earnings are likely to remain excellent with an after-tax
profit in the region of EUR 75-80 million (USD 103-110 million),
supported by higher investment returns and a profitable life
reinsurance portfolio. Non-life underwriting performance is likely to
deteriorate as a result of strong competition, but also based on A.M.
Best's expectation that the benign catastrophe season experienced
during 2006 is unlikely to be repeated in 2007. Consequently, A.M.
Best anticipates a combined ratio of approximately 95% (89% in 2006).

In A.M. Best's view, Mapfre Re has an excellent business profile
in Spain and Spanish-speaking markets (which comprises approximately
60% of the total gross premiums written). It is an integral component
of the Mapfre group as the company acts as the main reinsurer for
various Mapfre companies, which account for approximately 36% of
Mapfre Re's total premiums. A.M. Best expects Mapfre Re's gross
premiums written to increase by approximately 11% to EUR 1.6 billion
(USD 2 billion) at year-end 2007, reflecting strong anticipated growth
in Latin America (around 10%) and in the Middle East, but also higher
cessions from Mapfre group companies (approximately 10%).

Founded in 1899, A.M. Best Company is a full-service credit rating
organization dedicated to serving the financial services industries,
including the banking and insurance sectors. For more information,
visit www.ambest.com.