Sunday, July 3

CaixaBank vs. Mapfre, what is the impact for investors?

Caixabank has paid Mapfre 570.8 million euros for the breaking of the insurance agreement that Bankia (now part of CaixaBank) had signed with the insurer, both companies reported yesterday to the National Securities Market Commission.

The solution involves satisfying 323.7 million for the purchase of 51% of Bankia Vida owned by Mapfre and pay a compensation of 247.1 million for terminating the agreement to sell insurance at Bankia offices. The total sum may rise 52 million depending on what is determined by an arbitration to which both parties have agreed to submit. In addition, the insurer indicates that it is dissatisfied with the assessment of Bankia Vida made by an independent expert and says that it will take legal action.

But Mapfre disagrees with that value assigned to Bankia Vida. The reason for discontent is the valuation of Bankia Vida carried out by an independent expert, the firm Oliver Wyman. Mapfre considers that the market value is around 715 million, instead of the less than 600 million that were determined, and therefore announces that “it will exercise the pertinent legal actions.” These in principle would be directed against the firm of valuations, “for breach of the instructions contained in the order” to determine the value of the business. Insurer sources specified that the assessment was made with criteria, in their opinion, “not customary.” These did not contemplate the future benefits that current policies could generate. Mapfre is even considering suing Oliver Wyman.

Added to this is the arbitration that both companies have agreed to, since Mapfre not only disagrees with the valuation, but also with how to determine your compensation. This has been calculated as 110% of the market value of the affected business, but the insurer believes it should be 120%. It will be an arbitration award that indicates whether CaixaBank must also pay those 10 points of difference, which are equivalent to 52 million.

According to Victoria Torre, from Singular Bank, that Mapfre They did not like that assessment at all, but neither did the market. This lack of understanding and the decision to resort to arbitration has an impact on investors, because Mapfre had announced that if a certain level of capital gains were reached, it would return to dividend levels prior to the pandemic.

“Let us remember that Mapfre is a generous company with its shareholders,” says the expert, “and this would delay these plans, we will see if finally the arbitration agrees with Mapfre and that valuation can be raised,” she explains.

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