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Mapfre concluded the day this Monday with a fall close to 4%, after having announced that it will have to review the financial objectives of its strategic plan due to the millionaire impact of the typhoons in Japan and the riots in Chile. In this regard, Mapfre has recognized a negative impact of between 130 and 140 million euros in its attributable profit for the year 2019 due to the recent typhoons Faxai and Hagibis in Japan in the months of September and October and the damage caused by the riots. in Chile.
This impact on its attributable result, mainly through the reinsurance business, will force Mapfre to have to review the financial objectives included in its strategic plan for the three-year period ending in 2021. This is a setback for the evolution of its actions and it seemed that in the last stock market sessions it had soared its flight in the equity markets. With an uptrend that now seems to have been questioned again as a result of this business warning.
For the year 2020 it seems that we will have to act with more caution with the value of what was expected until a few days ago. With very few positive effects for the interests of small and medium investors. Where the shares of the Spanish insurer have concluded at 2.45 euros, which represents a correction of 3.7% compared to the 2.57 euros per share reached at the end of last week. Finally, a jug of cold water that can remove the intentions of minority investors to take positions in this value of the selective index of Spanish equities.
Will keep the dividend
The reference insurer of the Ibex 35 has informed the market today that its attributable result for the year 2019 will imply an impact of between 130 and 140 million euros as a result of the recent typhoons Faxai and Hagibis that occurred in Japan in the months of September and October, as well as, to a lesser extent, the damage produced in the recent riots in Chile.
Estos hechos no disponen un impacto significativo en la posición de solvencia y fortaleza de capital de MAPFRE. Por ello, el Consejo de Gestión de la aseguradora ha acordado, en su momento, proponer a la Junta General de Accionistas mantener el dividendo de 2019 en un monto idéntico al de 2018. Los tifones que han sacudido la región Asia-Pacífico esta temporada ha sido concretamente virulenta. Hagibis ha sido considerado el peor tifón registrado en Japón en los últimos 70 años. Más de 100 persons perdieron la vida como resultado del accidente. El costo estimado para el sector asegurador de ambos eventos supera los 20.000 millones de dólares.
Impact on business accounts
The impact for Mapfre of 130-140 million will be reflected mainly in the reinsurance business, and has been calculated according to the estimates made by the company from the communications of the ceding insurers. While on the other hand, this wonderful cost increase will cause a revision of the current Strategic Plan 2019-2021. The result of this analysis will be presented to the General Shareholders' Meeting of the Group next March.
Es, en cualquier caso, un escenario que no había sido programado por los diferentes analistas financieros. Hasta el punto de que no se puede descartar que en el corto plazo se pueda bajar su precio target y por tanto generar un bearish pull that could bring its shares to levels of around two euros per share. In spite of everything, if this scenario is fulfilled, it would be a good possibility to open positions from those levels. Because it would have a more adapted assessment than until a few weeks or even months ago. And therefore, with a greater potential for revaluation, such as accepting this type of operation in the financial equity markets.
Mapfre: the key is 2.80 euros
Sea cual sea el caso, todo pasa si consigue superar la importante resistencia que tiene en este momento en los niveles de los 2,80 euros. Será el punto de inflexión para lograr de lleno la tendencia alcista que tanto tiempo se deseaba y que tanto tiempo está tardando en lograr. Mucho más en estos momentos tras el anuncio de esta ‘advertencia de beneficios’ que ha llevado a sus acciones a caer con gran fuerza en la Bolsa. Hasta el punto de que gran parte de los pequeños y medianos inversores se preguntan si pueden keep going down henceforth.
On the other hand, no less important is the fact that this value has been kept under very narrow price margins. Between 2 and 2.90 euros for each share and that generates that there are no large movements in its contracting volume, without much joy for investors who this year have not provided benefits in operations of this value in the insurance companies sector. While on the other hand, a factor that keeps it above 2.30 euros is the high dividend it distributes to its shareholders.
7% dividend yield
Whatever the case, one of the incentives of this national insurer is that it distributes a dividend with an interest rate close to 7%. In other words, one of the highest in the national variable income and which is above even some of the most relevant electricity companies of the Ibex 35. Through two fixed and guaranteed payments each year, whatever happens in the financial markets. As has happened now with the negative impact of between 130 and 140 million euros in its attributable profit for the year 2019 due to the recent typhoons in Japan.
It is, therefore, an initiative on the Stock Market that is rather aimed at more defensive or conservative investor profiles. Because it is one of the most conducive values at this time to create a stable savings bag in the medium and especially in the long term. In particular, as a result of the price of money in the euro zone, which has been in negative territory for a long time, standing at 0%. As a result of this scenario, bank products barely perform above 0.25%. In other words, it would make a very significant difference in terms of the levels of fixed-term bank deposits.
Savings products
As a result of this trend, Mapfre has launched the “PIAS 6M” product, a new life-saving product with unlimited duration and reviewable interest. It is a savings insurance long-term which can be contracted with a single or periodic premium, and at the same time makes it possible to make additional contributions at any time. This Individual Systematic Savings Plan (PIAS) designed for a saver with a conservative profile and that can alleviate the decline in the profitability of these financial instruments. Even when it is developed for a longer period of permanence than in the rest of the formats.
Whatever the case, this insurer considers a wide range of products with these characteristics in its current offer. With interest rates that range between 1% and 2,50%, and with more benevolent contracting conditions in terms of the savings models developed by credit institutions. Through an initiative that is characterized by being very uniform in its structure and the profitability it offers to the owners of these products. No commissions or other expenses in its administration or maintenance to encourage users to hire from now on. In other words, it would make a very significant difference in terms of the levels of fixed-term bank deposits.
Business possibilities in the stock market
Bargains exist in equities, but they pop up from time to time. If this were the dominant tonic in parquets All investors would have huge capital gains. What happens is that they are very difficult to detect. Many investors believe that very cheaply priced securities are excellent buying possibilities. Serious error, since this is not comparable to the purchase possibilities, but they are quoted at that price. for many reasons And it is the price dictated by the market, neither more nor less. In other words, it is not because Mapfre has lowered its stock market valuation that it is cheaper than before. If not, on the contrary, this parameter is governed by other very different variables that you have to take into account.
The chances are exactly when a stock has fallen in price without any justification or due to manipulations of the runners that for various reasons push the value down and then make purchases at a cheaper price. In general, it occurs with small and medium capitalization stocks, which also have little liquidity. It is in those precise moments in which purchase operations can be carried out that can be very beneficial for the interests of investors since they are quoted with significant discounts over what their target price should be. With higher priority on the objectives.
