Company Profiles – Mapfre

Mapfre is a Insurance company. Due to its history it has a complex structure, which is changing over time and will change more in the (near) future.

The main characteristic of the structure is that it has been a mutual and the holding still is. In 2006 MAPFRE initiated a process of breaking down the mutual-character of the company’s structure and in which it transformed into a corporation. (Wiki on Mapfre) This is still the current structure for which the corporation (holding) acts as the main stakeholder (57{a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697}) and serves as a financial vehicle to support the business units.

About the business:

In 2003 the return on Equity increased to 13{a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697}, in previous years the ROE grew from 7,9{a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697} (in 1999) to 10,1 in 2002. Funds under management were: 19,8 million euros and insurance and reinsurance premiums added up to about 5,3 million euros. The distribution of employees in that year was between Spain 40{a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697} and (South) America 56 {a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697}. In total the were 13,868 employees. It acquired the Road America Motor Club and Mapfre-life got de-listed from the Stock-Exchange. The chairman by that time was: Carlos Alvarez Jimenez.

In 2007 the company had changed some more. Mr Domingo Sugrnyes Bickel was retired as executive president of the executive committee. Mr. Jose Manuel Martinez Martinez was chosen to be the new chairman. Growth has been achieved through acquisitions: The Mutual Valanciana was acquired in 2007 and so was the Commmerce group (US). The strategic alliance with Caja Madrid was restructured. The distribution of Human resources: Managers 12{a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697}, Administrative 29{a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697}, Sales 13{a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697} and Technical / other 44{a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697}.

One of the main issues remains the structure of this hard to understand organization. The long term strategic alliance with Caja Madrid is one of the main factors for the complexity of the overall structure. Recently this structure has been redesigned. In the old situation before (may) 2008 there was a separate holding Mapfre-Caja Madrid (of which Caja Madrid owned 49 {a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697}) that took care of the life insurance and the national insurance part of the corporation. Also the investment branch and the stock-broker branch were separate entities.

In the new situation these have been integrated and reside below the overall Mapfre holding (of which Caja Madrid now owns 15{a53f8b9175db1cb75ce5b82618aa6abd494f11d315012478667eece155d9c697}). Now all autonomous units (automotive, life, Real estate, America and international and reassurance are autonomous business units.

Ignacio Hernando de Larramendi was the first president of a insurance company that entered the insurance Hall of Fame (1) … (he) was a pioneer in the development of the modern-day MAPFRE Corporation … he created, in the l970’s, an early model of a global insurer with a business philosophy he named “specialized diversification”. His successful model of “ONE stop financial shopping” would later be emulated by many other companies around the world…. the absolute devotion to the development of customer services. He initiated many creative user friendly services for customers which were later replicated by others, including a travel assistance plan for motorists, home assistance programs linked to homeowner’s multi-risk insurance. (1)

But there is something else special about this Spanish miracle. This will become clear when comparing MAPFRE with two other companies: ING and AEGON, which also figure in the Hall of fame: “… Mr. Jacobs (ING) has always been an advocate of making prudent provisions to protect policyholders. He emphasized the need for adequate provisions to cover the longevity risk.” (1)

“Under his aspiring and creative leadership, AEGON achieved strong growth throughout the world, becoming an international company through autonomous growth but also through acquisitions, such as with Providian Corporation, Transamerica Corporation, the direct marketing services of J. C. Penney in the United States and Guardian Royal Exchange in the united Kingdom. Under Kees Storm’s personal efforts, AEGON received a license from the Chinese government to start life insurance activities in China. Mr. Storm is noted for his charismatic leadership and management skills. He wrote a small volume called “Management with a Smile.” And has said that he is convinced that pleasure and job involvement can go hand in hand. Other attributes of the Storm approach to leadership included traveling to every office, reaching out and meeting people and always respecting individuality. His motto which helped create AEGON’s success was: “Respect People, Make Money, Have Fun.” (1)

Typically for either company is that ING has combined Insurance with banking, Aegon on the other hand has never developed a banking activity to support it’s insurance business.

Mapfre is a company that chose a strategic right in the middle: it had developed a banking business in the eighties but that was unsuccessful. Instead it determined to setup a strategic alliance with Caja Madrid. This was the (main) responsibility of José Manuel Martinez: “… until 2000, new distribution channels were becoming increasingly relevant in Spain and in other European countries… MAPFRE was quick in seizing the opportunity when CAJA MADRID, Spain’s second largest savings bank and fourth largest financial group, declared its willingness to discuss an alliance in 2000.”(1)

H.J.B.

(1) – http://www.insurancehalloffame.org/laureates.php