UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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MAPFRE SA
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-----------------------------------------------------------------------------------
Acquisition of The Commerce Group Inc.
31st October 2007
This document is purely informative. Its content does not constitute, nor can it be
interpreted as, an offer or an invitation to sell, exchange or buy, and it is not binding on
the issuer in any way. The information about the plans of the Company, its evolution, its
results and its dividends represents a simple forecast whose formulation does not
represent a guarantee with respect to the future performance of the Company or the
achievement of its targets or estimated results. The recipients of this information must
be aware that the preparation of these forecasts is based on assumptions and
estimates, which are subject to a high degree of uncertainty, and that, due to multiple
factors, future results may differ materially from expected results. Among such factors,
the following are worth highlighting: the evolution of the insurance market and of the
economic environment in general in those countries where the Company operates;
changes in the legal framework; changes in monetary policy; circumstances which may
affect the competitiveness of insurance products and services; changes in the
underlying tendencies on which the mortality and morbidity tables used in Life and
Health insurance are based; frequency and severity of claims insured, with respect to
reinsurance and general insurance, as well as to life insurance; variations in interest
rates and exchange rates; risks associated with the use of derivative instruments; the
impact of future acquisitions.
MAPFRE S.A. does not undertake to update or revise periodically the content of this
document.
Disclaimer
2
Executive Summary
MAPFRE has announced the signing of an agreement to acquire all shares of The Commerce Group
Inc. (“Commerce”) at a price of $36.70 per share. The Board of Commerce deems the offer to be fair
and will recommend the transaction to its shareholders. The transaction will be carried out through the
merger of a subsidiary of MAPFRE with Commerce, under U.S. regulations
Commerce fits MAPFRE’s growth strategy:
Leading position in motor insurance in Massachusetts
Licenses in 50 states and operations in 17 of them
Quality operations and consistent underwriting profits
Experienced management team with proven track record
Positive financial impact from the outset:
Total consideration of $2,207mn (€1,538mn), paid entirely in cash
Acquisition price implies P/E 2008 of 13.1x (First Call consensus) and P/BV (Q3 ‘07 ) of 1.65x
Premium to market of 17.9% vs. 30th October’s closing price, 22.5% vs. the 30-day average and of 20.4% vs. the
3-month average
Initial funding through a bridge loan. Long-term funding expected to come from an equity capital raising of €500mn,
the issuance of hybrid debt of up to €800mn and internal resources
Immediately EPS accretive
Upon completion, MAPFRE would retain Commerce´s management team and together both groups
would design a cautious growth strategy in a number of new states, including dedicated services for
the Hispanic community
3
Overview of Commerce
Strategic rationale for MAPFRE
Transaction details and financial impact
Appendix
4
Overview of The Commerce Group, Inc.
The Commerce Group, Inc. (“Commerce”) began operating in 1971. Today it focuses on
writing personal automobile insurance and other property and casualty lines in 17 states,
which it distributes primarily through independent agents
Since 1990, it is the largest and most profitable personal auto writer in Massachusetts. It
ranks as the 20 th largest company nationwide in this line
Its operations are rated ‘A+ (Superior)’ by A.M. Best, ‘A2’ by Moody’s and ‘A’ by S&P
% of
Total
Written and
accepted
premiums
$1.96B
Total
12%
0.23
Outside
Massachusetts
88%
$1.72B
Massachusetts
’06 Breakdown of written and accepted premiums
Private Passenger
Auto Liability
50%
Auto Physical
Damage
29%
Other
8%
Commercial Auto
Liability
4%
Homeowners
9%
5
Geographic focus
Commerce has historically written business in Massachusetts, but has recently expanded in
16 other states
WA
OR
CA
MT
WY
CO
NM
ID
NV
UT
AZ
ND
SD
NE
KS
OK
TX
MN
IA
MO
AR
LA
FL
MI
WI
IL
TN
MS
AL
GA
SC
NC
VA
KY
NY
PA
OH
IN
WV
RI
ME
VT
NH
MA
CT
DE
MD
NJ
MI
AK
HI
American Commerce
Columbus, OH
State-Wide
Insurance Co.
Hempstead, NY
Commerce Insurance Co.
Webster, MA
Commerce West
Pleasanton, CA
Citation Insurance
Webster, MA
Heartland (3% of DPW)
Northeast (80% of DPW)
West (15% of DPW) (1)
Recent Expansion States (2% of DPW) (2)
(1) Pro forma for $170mm of premium from Stonewood Insurance Agency Agreement, anticipated to write $20mm by 06/2008, $50mm by
06/2009 and $100mm by 06/2010
(2) Pro forma for $41mm of premium from SWICO acquired April 2007
RI
6
Key Strengths: competitive position
Leading market position in the Massachusetts P&C business:
Strong brand recognition
Excellent agency relationships
Leading market shares:
# 1 in personal auto (31.5%)
# 1 in homeowners (9.8%)
# 2 in commercial auto (12.7%)
Above average position in affinity group marketing programs
Outstanding customer service
Unsurpassed economies of scale
Highly experienced management team with proven track record
In-depth understanding of the Massachusetts and U.S. regulatory and underwriting
environment
7
Key strengths: distribution through independent agents
Independent agents are Commerce’s main distribution channel
Relations with agents are excellent, as evidenced by their high degree of loyalty: nearly 60%
of all agents in Massachusetts have been with the group for over 10 years
Commerce ensures the interests of agents are aligned with its own through an effective profit
sharing system, which utilises a three-year rolling plan. To qualify for profit sharing, an
agent’s portfolio generally must have a three-year average loss ratio of 60% or better
Commerce devotes considerable attention and resources to providing a high level of service
to both the agents and their customers, thus enhancing satisfaction and retention
8
Key strengths: distribution through the AAA
Commerce enjoys a strategic relationship with numerous American Automobile
Association (AAA) clubs
In Massachusetts:
Commerce has exclusive distribution agreements with all three AAA clubs, whose members
receive a 5% discount on their premiums
In 2006, 50% of all personal auto DPW came from AAA members (42% written by Commerce’s
network of independent agents and 8% through AAA agencies)
The present agreements were renewed on 01.01.2007 for a period of 20 years
Outside of Massachusetts:
Commerce distributes its products through AAA clubs in eleven states
AAA Southern New England has a 5% shareholding in American Commerce
Growth opportunities are significant, as Commerce has currently penetrated less than 1% of a
membership base exceeding 100 million
9
Distribution network
10
Independent
Agents
AAA Agents
Brokers
Total
California
120
---
1,080
1,200
Massachusetts
792
3
---
795
Arizona
294
---
---
294
Oregon
200
1
---
201
New York
---
---
72
72
New Hampshire
55
---
---
55
Ohio
37
12
---
49
Indiana
35
1
---
36
Kentucky
25
2
---
27
Idaho
---
2
---
2
Tennessee
---
2
---
2
Connecticut
---
1
---
1
Oklahoma
---
1
---
1
Rhode Island
---
1
---
1
South Dakota
---
1
---
1
Washington
---
1
---
1
TOTAL
1,558
28
1,152
2,738
Commerce competitive position
Source: A.M. Best (2006)
Personal auto
Commerce Group
1
31.5%
Safety Group
2
11.2
Arbella Insurance Group
3
9.6
Liberty Mutual Insurance Companies
4
7.7
MetLife Auto & Home Group
5
7.1
Travelers Insurance Companies
6
7.0
Plymouth Rock Companies
7
6.1
Amica Mutual Group
8
3.6
Hanover Insurance Grp Prop and Cas Cos
9
3.6
White Mountains Insurance Group
10
2.9
Allstate Insurance Group
11
2.3
USAA Group
12
2.1
Quincy Mutual Group
13
1.4
Main Street America Group
14
1.3
Homeowners
Commercial auto
Massachusetts
Rank
% of Market
1
9.8%
2
12.7%
11
3.2
3
11.0
7
5.2
4
10.5
5
6.7
9
3.6
10
3.2
--
0.0
3
8.2
1
13.5
16
2.1
6
6.0
13
3.0
44
0.1
9
3.3
5
7.9
14
2.6
8
3.8
27
1.1
--
0.0
15
2.5
--
0.0
6
5.9
36
0.2
21
1.5
16
1.4
Massachusetts
Rank
% of Market
Massachusetts
Rank
% of Market
11
Growth in market share in MA personal auto
Source: Commerce public filings & Equity Research
Since 1990, when it first became the largest writer of personal auto insurance in MA,
Commerce’ market share has risen from 11.5% to 31.5% in 2006
Commerce has significantly and consistently grown its MA personal auto business
(policies in thousands; premiums in $ million)
$733
$794
$809
$816
$868
$918
$1,046
$1,118
$1,172
$1,201
$1,253
553
600
609
615
654
693
791
834
870
889
929
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Commerce MA personal auto premiums written
Commerce MA personal auto policies in force
31.5%
30.0%
29.0%
27.6%
25.9%
23.2%
22.3%
21.3%
21.6%
21.8%
20.8%
16.3%
11.5%
12.4%
14.8%
16.0%
16.4%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Commerce market share in MA
12
Key Strengths: underwriting results and claims handling
Commerce has been delivering consistently for over 15 years positive technical results
and significant reserve redundancies, thanks to:
Effective underwriting:
The largest proprietary underwriting database in the Massachusetts market with a high degree of
data reliability, providing superior risk selection and pricing capabilities
Strict underwriting guidelines
No meaningful environmental risks legacy issues
Quick and efficient handling of claims:
24-hour claim reporting service, which improves customer satisfaction by making the initial claim
handling much faster and ultimately reduces indemnity payments
Outsourced drive-in centres, close to repair shops, allowing quick adjustment and settlement of car
body damages. Additionally, Commerce has a panel of preferred body shops with guaranteed
prices and workmanship
Sophisticated software systems used for internal and external claims processing and field
communications that increase productivity while reducing expenses and indemnity payments
Significant internal resources devoted to fighting fraud, complemented by external investigators
Regular surveys among agents, customers and third-party claimants to monitor the quality of
claims handling
Low-cost structure, high degree of centralisation and unsurpassed economies of scale
13
MA internal personal auto acquisition costs (1)
Commerce enjoys a low cost structure enabling it to compete effectively
Source: Company public filings.
(1) Policy acquisition costs include the company's general fixed expenses (i.e. salaries, advertising, etc.) allocated to acquisition costs, excluding
actual commissions payable to the agents.
14.1
Amica
14.7
Liberty
13.5
White Mountain
Percent of earned premium
Direct Writers
7.3%
USAA
7.7%
All companies
12.0
Metropolitan
7.5
State Farm
11.8
Arbella
8.5
Plymouth Rock
8.1
Hanover
6.0
Safety
4.1
Travelers
3.3%
Commerce
Percent of earned premium
Agency companies
14
Strong, consistent historical underwriting results
Source: Commerce public filings, A.M. Best.
N.B. Combined ratios are on a statutory basis.
Combined Ratio
Loss and Loss Adjustment Expense Ratio
Expense Ratio
Reserve Redundancies
($83.8)
($87.8)
Additions to (reductions in) reserves for earlier losses ($ millions)
($35.3)
($39.9)
($61.4)
($42.4)
($14.4)
($43.7)
($61.4)
($57.0)
($25.2)
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
107.2%
101.2%
89.1%
87.3%
87.8%
96.3%
99.3%
99.1%
96.9%
98.6%
98.7%
96.9%
98.9%
92.6%
98.9%
100.1%
115.7%
110.3%
108.0%
106.0%
101.7%
106.1%
80
90
100
110
120
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Commerce
U.S. P&C Industry
59.9%
60.8%
62.9%
73.4%
75.5%
74.6%
71.8%
72.1%
71.7%
71.1%
71.7%
65.5%
75.3%
73.6%
75.0%
81.5%
88.4%
81.4%
78.9%
76.4%
72.7%
78.7%
50
60
70
80
90
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
22.9%
24.9%
27.2%
29.2%
26.5%
23.8%
24.4%
25.1%
26.5%
27.1%
25.9%
26.2%
26.3%
25.4%
24.9%
24.6%
25.1%
26.5%
27.4%
27.9%
27.6%
27.0%
15
20
25
30
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
15
Key Strengths: investment portfolio and returns
Commerce generates recurring investment yields from a portfolio made up primarily of high
quality fixed income investments:
Nearly 90% of ABS instruments are AAA-rated and an equal percentage is mortgage-backed
Sub-prime exposure is very limited ($28mn) and has caused losses of $4.7mn to date
12/31/06 Total : $3,071mn
Private sector: 52%
Public sector: 48%
16
Key Strengths: profitability and cash generation
Commerce has consistently recorded growing profits and above-industry-average returns
on the back of its recurring positive underwriting results and strong net financial income
Source: Commerce public filings, A.M. Best
($ in millions)
Cash generation is also strong, as evidenced by a cash flow from operating activities of
$344 million (18.8% of NPW)
($ in millions)
17
Key strengths: experienced management team
Source: Company public filings.
Appointed COO/EVP of non-MA operations in January 2007
17 years at California State Auto Association
COO and EVP of Non-MA
Operations
50
Lawrence Pentis
Appointed EVP of MA operations (responsible for underwriting,
product/pricing and marketing) in August 2006
Senior VP for Commerce Group in May 2001 until August 2006
Appointed General Counsel of Commerce Group in February 2000
Secretary of ACIC Holding and Commerce West
General Counsel and EVP of
MA Operations
44
James A. Ermilio
Appointed Senior VP of Policyholder Benefits in 1988 and appointed
EVP of country-wide policyholder benefits in August 2006
Became responsible for the Claims Operations of ACIC in August 2001
and of Commerce West and State-wide in 2007
Vice President – Mortgage Operations, 1981 – 1988
EVP, Policyholder benefits
(claims)
51
Arthur J. Remillard III
A Certified Public Accountant, was appointed CFO and Senior VP of
Commerce Group in February 2006
Treasurer and Chief Accounting Officer of Commerce Group from 1994
through 2006
Assistant Treasurer and Comptroller of Commerce Group from 1990 to
1994
CFO
46
Randall V. Becker
A Certified Public Accountant, was appointed CEO to replace Arthur
Remillard, Jr. in July 2006
Previously President and COO of Commerce Insurance since 2001
Appointed Executive Vice President of Commerce Group in 1989
CEO, President, Chairman of
the Board
63
Gerald Fels
Biography
Position
Age
Name
18
Overview of Commerce
Strategic rationale for MAPFRE
Transaction details and financial impact
Appendix
19
Consistency with MAPFRE´s current strategy
“Fit” of Commerce with MAPFRE
Criteria
Earnings per share accretive from the first year assuming the
announced financing mix
Return on Investment above MAPFRE’s cost of capital
The discontinuation of listing will increase Commerce’ EBT by about
$7mn/year
Operations that
increase earnings
per share in the
first three years
Commerce’s performance will be enhanced by the access to
MAPFRE’s:
Experience competing under different regulations, which will facilitate the
transition to the new regulatory environment in Massachusetts
Product knowledge across several countries in all P&C lines
Integrated and unified IT platform
Reinsurance solutions for the most appropriate protection of the portfolio
Companies whose
growth and
profitability can be
enhanced through
the application of
MAPFRE’s
expertise
US was indicated in the past as a target market for MAPFRE
Joint growth opportunities exist through:
The introduction of a specific offering for the Hispanic community (21.8 million
people in the states in which Commerce presently operates, equivalent to 14%
of their total population)
Business expansion in and outside of Massachusetts, including an increased
penetration of the AAA club members’ base
Markets or
segments that are
not fully penetrated
or developed by
MAPFRE
20
MAPFRE Insurance Company Of Florida
Company domiciled and licensed in Florida, currently writing commercial lines business and more
recently personal Auto. Rated ‘A-’ by A.M. Best
MAPFRE Insurance Company
Company domiciled and licensed in New Jersey, as well as in 34 other states. Rated ‘A-’ by A.M.
Best
Road America Motor Club
Acquired by MAPFRE Asistencia in 2003. Founded in 1978, provides a variety of B2B services
related to roadside assistance and ancillary services to the OEM, telecom and insurance industries
More than 19 million customers
Two state-of-the-art call center facilities in Columbus, GA and Miami, FL
Overall capacity for more than 2 million services annually
Coverage of Canada (Road Canada) and Puerto Rico
Federal Assist, subsidiary of MAPFRE Asistencia specialised in providing Medical Travel Assistance,
Medical Case Management and Home Repairs Assistance since 1993
Furthermore, MAPFRE operates in the Associated Commonwealth of Puerto Rico through MAPFRE
Puerto Rico, the oldest and third-largest insurer in the island, writing P&C, Life and Health insurance.
Rated ‘A’ by A.M. Best
MAPFRE current operations in the US
21
U.S. personal auto markets
MA has attractive demographics for personal auto insurance
Source: NAIC, Bureau of Economic Analysis, U.S. Census Bureau, Insurance Information Institute, National Auto Dealers Association and AIPSO. Data as of 2005.
840
843
845
845
849
926
931
945
962
983
991
1,028
1,059
1,063
1,113
1,122
1,182
$1,184
Average
Premium for personal
auto insurance
96.9
86.3
91.8
93.5
98.6
92.5
121.7
91.7
97.3
105.5
92.5
98.4
87.7
104.0
92.3
85.7
87.0
96.3%
Combined Ratio
Washington
Hawaii
California
Texas
Pennsylvania
Arizona
Michigan
Maryland
Alaska
Nevada
Connecticut
Delaware
Rhode Island
Florida
Massachusetts
New York
District of Columbia
New Jersey
State
4,225,106
770,475
24,523,124
NA
8,281,032
3,661,581
6,323,287
3,779,282
392,662
1,631,401
2,403,762
589,277
673,359
10,879,575
4,146,762
9,100,868
216,217
5,132,615
Number of Cars
Insured
35,730
8.5
2.1
34,818
5.7
1.9
37,283
34.2
2.5
33,160
34.7
1.9
34,810
3.7
1.8
30,384
27.9
1.6
32,719
3.6
1.8
41,587
5.3
1.9
36,636
4.6
2.5
37,420
23.2
1.3
47,701
10.0
2.1
37,080
5.7
2.0
35,757
9.4
1.8
34,712
19.1
1.9
43,601
6.7
2.0
40,916
13.5
1.5
53,594
6.8
0.8
$43,318
14.1%
1.8
Per Capita
personal Income
% of Population
Hispanic
Vehicles Per
Housing Unit
22
Impact on MAPFRE’s business mix
MAPFRE Standalone(1)
Impact on
Geographic
Mix
MAPFRE Pro Forma
On the basis of
Premiums
Impact on
Product Mix
(1) Pro forma including recent acquisitions
Spain
58%
UNIDAD
AMERICA
19%
MAPFRE RE
11%
MAPFRE
ASISTENCIA
2%
MAPFRE INTL.
10%
Spain
53%
UNIDAD
AMERICA
17%
MAPFRE RE
10%
MAPFRE
ASISTENCIA
2%
MAPFRE INTL.
9%
EE.UU.
9%
Non-life
80%
Life
20%
Non-life
81%
Life
19%
23
Impact on MAPFRE’s business profile
MAPFRE’s business profile will be strengthened by the integration of Commerce:
Addition of an established and solid platform to develop a business in the U.S.
Enhanced geographical, business cycle and currency diversification
Considerable strengthening of management resources and skills in North America
24
Overview of Commerce
Strategic rationale for MAPFRE
Transaction details and financial impact
Appendix
25
Transaction highlights
Expected Timetable
Commerce operations to remain in Massachusetts
Management retention in place
Operations
2Q 2008
Estimated closing
Initial funding through a bridge loan
Expected long-term funding through an equity capital raising of €500mn, hybrid debt issuance
of up to €800mn and internal resources
Financing
Total consideration of $2,207mn (€1,538mn), $36.70 per share
Acquisition price implies P/E 2008 of 13.1x (First Call consensus) and P/BV (Q3 ‘07) of 1.65x
Premium to market of 17.9% vs. 30th October’s closing price, 22.5% vs. the 30-day average
and of 20.4% vs. the 3-month average
Pricing
All cash consideration
Structure
Acquisition of 100% of The Commerce Group Inc.
Transaction Overview
Subject to the relevant regulatory authorisations and to the requisite approval of the merger
agreement by the holders of at least two-thirds of the shares of Commerce common stock
Approved by the Board of MAPFRE and recommended by the Board of Commerce
Conditions and other
26
Financial impact: value creation for MAPFRE shareholders
The acquisition of Commerce will be immediately additive to MAPFRE’s EPS
Projected returns exceed MAPFRE’s cost of capital
Funding mix aimed to protect present solvency position by combining equity issuance
with a rational use of the Group’s hybrid capacity
0.005
--
0.005
2007
0.008
0.007
Commerce
0.021
0.016
Previously announced
acquisitions (1)
0.031
0.025
Total
2008
2009
(1) Genel Sigorta, CCM, MCA, Bankinter Vida, shareholding in Cattolica
(Euros per share)
27
Transaction structure
1.
MAPFRE creates a Special Purpose Vehicle (SPV) and capitalises it with the financial
resources needed to acquire Commerce
2.
The merger between the SPV and Commerce is approved by the holders of at least two
thirds of Commerce common stock
3.
SPV and Commerce merge
4.
The resulting company buys back Commerce´s shares. In exchange, shareholders will
receive cash
28
Overview of Commerce
Strategic rationale for MAPFRE
Transaction details and financial impact
Appendix
29
Organisational structure
Source: Company financials.
N.B. Ratings represent S&P/Moody’s senior unsecured debt ratings at holding company and AM Best financial strength rating at insurance subsidiary.
(1) Pro forma for $170mn of premium from Stonewood Insurance Agency Agreement, anticipated to write $20mn by 06/2008, $50mn by 06/2009 and $100mn
by 06/2010.
(2) Announced in December 2006, completed in April 2007.
100%
Commerce
Insurance Co.
(Webster, MA)
A+
ACIC Holding Co.
(RI)
American Commerce
(Columbus, OH)
A+
Citation Insurance
(Webster, MA)
A+
100%
100%
95%
The Commerce Group, Inc.
(Webster, MA)
BBB/Baa2
AAA Southern New
England
5%
State-Wide Insurance (2)
(Hempstead, NY)
A+
Bay Finance Co.
(Webster, MA)
stopped doing business in
Aug. 2007
100%
NA
3
NA
MA, CT
--
1,846
# of Employees
’06 DPW ($mn)
Distribution
States
$95
795 Agents
MA
$1,544
795 Agents
MA, NH
$226 (1)
90
1,231 Agents
CA, OR, AZ
N/A
246
# of Employees
$168
738 Agents
WA, AZ, OK, RI, OR, OH, KY, IN,
TN, ID, SD,CT
’06 DPW ($mn)
Distribution
States
$38
145 Brokers, Direct
NY, NJ
A.M.Best FSR
Headquarters
A.M.Best FSR
Headquarters
Commerce West
(Pleasanton, CA)
A+
30
Commerce’s historical financials
Source: Company financials.
Income Statement
Key Balance Sheet Items and Ratios
For the Year Ending December 31
2004
2005
2006
YTD 3Q'06
YTD 3Q'07
Total Investments and cash
$2,527.7
$2,765.3
$3,070.8
$2,985.3
$2,846.6
Premiums Receivable
459.8
475.1
480.6
511.6
497.9
Total Assets
3,612.2
3,927.0
4,110.9
4,089.1
3,979.7
Unpaid Losses/Loss Adjustment Expense
990.3
989.2
971.9
957.0
1,011.9
Unearned Premiums
902.6
933.2
935.4
986.0
989.9
Bonds Payable
298.2
298.4
298.6
298.5
298.7
Stockholders Equity
1,116.2
1,305.1
1,503.3
1,477.0
1,339.9
Shareholder Dividends Paid
43.0
49.4
66.0
49.1
57.9
Key Performance Ratios:
Return on Average Equity, Ex. AOCI
21.7%
20.2%
17.1%
13.1%
12.0%
Operating Return on Average Equity, Ex. AOCI
20.4
18.9
16.4
12.8
10.7
Loss and LAE Ratio
62.9
60.8
59.9
59.8
64.9
Underwriting Expense Ratio
24.9
26.5
29.2
27.5
29.1
Combined Ratio
87.8
87.3
89.1
87.3
94.0
Debt to Cap
21.1
18.6
16.6
16.8
17.8
($ in millions)
For the Year Ending December 31
2004
2005
2006
YTD 3Q'06
YTD 3Q'07
Revenues:
Direct Premiums Written
$1,838.2
$1,874.2
$1,864.2
$1,445.0
$1,447.7
Premiums Assumed
128.2
132.1
99.0
78.4
78.6
Earned Premiums
1,638.8
1,709.9
1,760.7
1,302.9
1,363.6
Net Investment Income
119.4
124.0
153.0
104.1
119.8
Premium Finance and Service Fees
28.4
28.3
28.6
21.4
23.5
Net Realized Investment Gains
23.6
22.9
16.6
7.7
28.9
Total Revenue
1,806.6
1,884.4
1,949.5
1,436.0
1,535.8
Expenses:
Loss and Loss Adjustment Expenses
1,044.8
1,050.2
1,068.4
778.9
885.2
Policy Acquisition Costs
439.2
463.3
516.3
381.5
395.0
Interest Expense and Amortization of Bond Fees
18.3
18.3
18.3
13.7
13.7
Total Expenses
1,502.4
1,531.8
1,603.0
1,174.1
1,293.9
Earnings before Income Taxes and Minority Interest
304.2
352.6
346.4
261.9
241.8
Income Taxes
89.0
107.8
104.0
79.1
69.2
Earnings before Minority Interest
215.2
244.8
242.4
182.8
172.6
Change in Accounting Principles
0.0
0.0
0.0
0.0
0.0
Minority Interest in Earnings of Affiliates
(0.8)
(0.9)
(0.9)
(0.7)
(1.2)
Net Earnings
$214.4
$243.9
$241.5
$182.1
$171.4
Net premiums written
1,712.5
1,736.2
1,825.3
1,428.6
1,400.5
31
Investor Relations Department
Luigi Lubelli
Finance Director
+34-91-581-6071
Jesús Amadori Carrillo
+34-91-581-2086
Alberto Fernández-Sanguino
+34-91-581-2255
Beatriz Izard Pereda
+34-91-581-2061
Antonio Triguero Sánchez
+34-91-581-5211
Marisa Godino Alvarez
Secretaria
+34-91-581-2985
MAPFRE S.A.
Investor Relations Department
Carretera de Pozuelo, n° 52
28220 Majadahonda
relacionesconinversores@mapfre.com
32
In connection with the operation hereby disclosed, COMMERCE will file with the Stock
Exchange Commission (“SEC”), among other materials, a proxy statement. We urge investors
to read the proxy statement and these other materials when they become available because
they will contain important information about COMMERCE and the proposed acquisition.
Investors will be able to obtain free copies of the proxy statement (when available) as well as
other filed documents containing information about the Company on the SEC’s website at
http://www.sec.gov. Likewise, free copies of the COMMERCE's SEC filings are also available
at http://www.commerceinsurance.com (Investor Relations). MAPFRE and its directors and
executive officers may be deemed, under SEC rules, to be participants in the solicitation of
proxies. Information regarding such individuals is available at the web page
http://www.mapfre.com and will also be available in a Schedule 13D to be filed by MAPFRE
with the SEC.
Disclaimer
33