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MAPFRE: 9M’19 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'19 vs. 3Q'18 Results
Premiums: € 17.647 Bn (+236.2% vs. +243.2% BS(e) and +240.7% consensus);
Technical Result: € 1.207 Bn (+273.0% vs. +275.3% BS(e) and +278.6% consensus);
EBT: € 994.0 M (+196.5% vs. +233.3% BS(e) and +236.3% consensus);
Net Profit: € 462.9 M (+223.3% vs. +291.4% BS(e) and +297.2% consensus);
9months'19 vs. 9m'18 Results
Premiums: € 17.647 Bn (+2.5% vs. +4.6% BS(e) and +3.9% consensus);
Technical Result: € 1.207 Bn (0.0% vs. +0.6% BS(e) and +1.5% consensus);
EBT: € 994.2 M (-13.6% vs. -2.8% BS(e) and -2.0% consensus);
Net Profit: € 462.9 M (-12.5% vs. +6.0% BS(e) and +7.6% consensus);
Net Profit came in at € 88.6 M, which is far below the €~190 M expected and seen in previous quarters, due to the clean-up of the goodwill in Mapfre Asistencia and North America (€-66 M). Excluding this impact, performance was slightly worse than expected in Non-Life, with an increase in the CR in the 3Q’19 (997.2% vs. e 96% expected and 96% in the 1H’19) stemming from the greater impact from catastrophes in Reinsurance, whereas performance in Life was positive and in line with expectations.
By countries, the sound performance in Spain and the recovery in Brazil have continued, with a CR of ~94% and 91%, respectively, the former in line with trends and expectations and the latter better than expected. There was nothing new in the rest of the markets, where the performance and results were in line with expectations.
Despite the negative surprise in Net Profit, the underlying trend does not worsen significantly, and thus we believe that the stock could partially recover from the initial negative reaction (around -5%). With this in mind, we maintain our SELL recommendation as we do not see an appealing risk/return profile. SELL, T.P. € 2.66/sh. (+1.55% upside).