annual report 2003 - mapfre · 2011. 10. 7. · annual report·2003 mapfre has the most extensive...

ANNUAL REPORT· 2003


Governing Bodies |

GOVERNING BODIES | pag. 5

Institutional Executive Auditing Remuneration ComplianceControl Committee Committee and Appointments CommitteeCommitee Committee

Chairman D. José Manuel Martínez Martínez Chairman Chairman Chairman Chairman

First Vice-ChairmanD. Filomeno Mira Candel First First

Vice-Chairman Vice-Chairman

Second Vice-ChairmanD. Francisco Ruiz Risueño Second Second Vice-Chairman Vice-Chairman Chairman


Third Vice-ChairmanD. Alberto Manzano Martos Third Third Member Secretary Member Secretary


CEOD. Santiago Gayarre Bermejo Member

MembersD. Rafael Beca BorregoD. Eduardo Fernández de la FuenteD. Juan Fernández-Layos Rubio MemberD. Rafael Fontoira SurisD. Rafael Galarraga SoloresD. Pedro Guillén GarcíaD. Luis Hernando de Larramendi Member Member Member MemberD. Sebastián Homet Duprá MemberD. Andrés Jiménez Herradón MemberD. Luis Leguina CebreirosD. Rafael Márquez Osorio Member MemberD.ª Francisca Martín Tabernero MemberD. Antonio Miguel-Romero de OlanoD.ª Mª. Teresa Mutiloa LecumberriD. Alfonso Rebuelta Badías Member Member MemberD. Agustín Rodríguez García Member MemberD. Matías Salvá Benassar Member MemberD. Domingo Sugranyes Bickel MemberD. Pedro Unzueta Uzcanga MemberD. Francisco Vallejo Vallejo Member MemberD. Primitivo de Vega Zamora Member

SecretaryD. José Manuel González Porro

Board ofDirectors


SISTEMA MAPFRE

General Information |


SISTEMA MAPFRE (hereinafter referred to as ‘MAPFRE’ or ‘SISTEMA MAPFRE’) is an inde-

pendent group of Spanish companies which conducts insurance, reinsurance, financial, prop-

erty and service activities in Spain and another 36 countries. These activities are carried out

through a total of 248 companies, which are grouped into Operating Units with extensive man-

agement autonomy, under the co-ordination and supervision of the senior management bod-

ies of SISTEMA MAPFRE, which lay down the general directives and common policies under

which the whole Group must operate and approve the strategic lines and objectives of the var-

ious Units and companies as well as the most important decisions and investments.

The parent company of SISTEMA MAPFRE is MAPFRE MUTUALIDAD DE SEGUROS Y REASE-

GUROS A PRIMA FIJA (‘MAPFRE MUTUALIDAD’) which specialises in motor insurance in

Spain. SISTEMA MAPFRE also includes 100 joint-stock companies registered in Spain and 140

in other countries, plus six private foundations which conduct non-profit making activities as

SISTEMA MAPFRE’s contribution to the general interests of society.

Most of the aforementioned commercial companies (211) are grouped under holding compa-

ny CORPORACIÓN MAPFRE, whose shares are listed on the continuous market of the Madrid

and Barcelona Stock Exchanges and form part of the IBEX 35 index, which includes the thir-

ty-five most traded and liquid stocks in the Spanish markets.


MAPFRE has established an important strategic alliance with the CAJA DE AHORROS Y

MONTE DE PIEDAD DE MADRID (‘CAJA MADRID’), the parent company of the fourth largest

Spanish financial group. This alliance responds to the aim of achieving a more efficient and

effective management of the insurance and banking activities of both Groups by means of:

› The partial integration of the businesses referred to above in Spain through holding com-

pany MAPFRE – CAJA MADRID and through BANCO DE SERVICIOS FINANCIEROS CAJA

MADRID – MAPFRE, with MAPFRE taking a majority holding in the insurance companies

and CAJA MADRID in the banks.

› The maximum exploitation of the potential of the networks of both groups in the distribu-

tion of banking and insurance products.

› The sharing of the results of the integrated activities between both groups, with MAPFRE

taking 51% of the profits of insurance activities and 49% of the profits of banking activities

and CAJA MADRID taking 49% of the former and 51% of the latter.

This alliance is complemented by other shareholdings of CAJA MADRID in companies of SIS-

TEMA MAPFRE (MAPFRE AMÉRICA and subsidiaries of MAPFRE AMÉRICA VIDA), and by

MAPFRE in companies of the CAJA MADRID Group (GESMADRID, CAJA MADRID PENSIONES

and CAJA MADRID BOLSA).


MAPFRE has the most extensive distribution network in the Spanish insurance sector and

one of the largest of all financial companies. At the close of 2003, the said network com-

prised:

› 346 direct offices with their own manager and personnel

› 2,222 delegations run by professional agents

› 157 offices in the MAPFRE FINISTERRE network

› 23,245 agents and associates

Presence in Spain |

SISTEMA MAPFRE 2.725 CAJA MADRID 1.873CANARY ISLANDS

121 21

Las Palmas

Sta. Cruzde Tenerife

203 41

66 1744 22 132 19

51 6

16 6

78 25

383 220

316 99

69 18

184 1.003

191 64

216 133103 20

503 132

4 62 0

43 21

BALEARIC ISLANDS

Distribution network in Spain – 2003


All these offices are grouped into 22 sub-centres, which direct and co-ordinate the activities

of the network in a given area, which normally coincides with several provinces, except for two

of them which cover Madrid and a few adjoining municipalities and Barcelona and part of its

province, respectively.

CANARY ISLANDS

La Coruña

PontevedraLugo

Orense

Asturias

León

Zamora

Salamanca

Cáceres

Badajoz

Huelva Sevilla

CádizMálaga

Granada

JaénCórdoba

CuencaToledo

Ciudad Real Albacete

Almería

Valladolid

Pal

enci

a

Cantabria

Burgos

Segovia

Ávila

Madrid

Guadalajara

Soria

La Rioja

Álava

Vizcaya

Guipú

zcoa

Navarra

Huesca Gerona

Barcelona

Tarragona

Teruel

Cast

elló

n

Valencia

Alican

te

Murcia

Ibiza

Mallorca Menorca

Zaragoza

Lérida

Las Palmas

Sta. Cruzde Tenerife

BALEARIC ISLANDS

• GALICIA NORTE• GALICIA SUR• ASTURIAS• CANTABRIA / BURGOS• NORTE• NORCENTRO• ARAGÓN• CATALUÑA ORIENTAL• BARCELONA• CATALUÑA OCCIDENTAL• CASTILLA

• CENTRO• MADRID• EXTREMADURA• LA MANCHA• LEVANTE• ANDALUCÍA OCCIDENTAL• ANDALUCÍA ORIENTAL• ANDALUCÍA NORTE• SURESTE• BALEARIC ISLANDS• CANARY ISLANDS

Melilla

Ceuta

MAPFRE sub-centres

International Presence |

London

BrusselsFrankfurt

Moscow

Paris

Milan

Tunis

Istanbul

Budapest

Luxembourg

Oporto

Lisbon

Rome

Athens

DublínGalway


As well as Spain, the companies of SISTEMA MAPFRE operate in a total of 36 countries. In

14 of them SISTEMA MAPFRE has companies which operate in Direct Insurance. The Assis-

tance business, which is present directly in 36 countries, has the largest international pres-

ence. Lastly, there are representative offices for accepting reinsurance in 15 countries. In all

these countries, SISTEMA MAPFRE had 804 offices and a total of 8,541 employees at the end

of 2003.

DIRECT INSURANCEREINSURANCE

Puerto Rico

NicaraguaEl SalvadorCosta Rica

Colombia

Peru

Ecuador

Chile

Philippines

Bahrein

New Jersey

FloridaMexico

Dominican Republic

Venezuela

Brazil

Bolivia

Paraguay

Uruguay

Argentina

ASSISTANCE

HondurasGuatemala

Toronto

Panama


By geographic area, the largest presence is on the American Continent (21 countries), fol-

lowed by Europe (12), Asia (2) and Africa (1).


In accordance with customary practice in the financial markets, MAPFRE MUTUALIDAD,

CORPORACIÓN MAPFRE and a few other companies in SISTEMA MAPFRE, in some cases due

to legal requirements and others for reasons of convenience, have been reviewed by a num-

ber of rating agencies.

The following table gives the ratings assigned to the principal companies in SISTEMA

MAPFRE according to the international scales used by those agencies. There are also a few

other ratings assigned to other subsidiaries in accordance with local scales.

It is worth pointing out that in 2003, STANDARD & POOR’S upgraded the ratings assigned to

the principal companies in SISTEMA MAPFRE: from ‘AA-’ to ‘AA’ in the case of MAPFRE

MUTUALIDAD; and from ‘A+’ to ‘AA-’ in the cases of CORPORACIÓN MAPFRE and MAPFRE

RE. A.M. BEST in turn affirmed the ‘A+’ rating assigned to MAPFRE MUTUALIDAD, MAPFRE

RE and MAPFRE ASISTENCIA, changing their outlook from ‘stable’ to ‘positive’.

The excellent ratings assigned to the companies in SISTEMA MAPFRE reflect the confidence

that the said agencies place in them on the basis of their capital strength, business position

and operating profits.

Ratings |


MAPFRE MUTUALIDAD AA- (Excellent)Positive outlook

AA (Excellent)Stable outlook

A+ (Superior)Stable outlook

A+ (Superior)Positive outlook

Company

Standard & Poor's

2002 2003 2002 2003

A.M. Best

CORPORACIÓN MAPFRE A+ (Good)Positive outlook

AA- (Excellent)Stable outlook (issuer credit rating)

–– aa- Positive outlook(issuer credit rating)

MAPFRE RE A+ (Good)Positive outlook

AA- (Excellent)Stable outlook


A+ (Superior)Positive outlook

MAPFRE ASISTENCIA –– –– A+ (Superior)Stable outlook


PRAICO –– –– A (Excellent)Stable outlook

A (Excellent)Stable outlook

MAPFRE TEPEYAC –– –– A- (Excellent)Stable outlook

A- (Excellent)Stable outlook


Organisational chart* |

DIRECT SUBSIDIARIES

EDITORIAL MAPFREEDITORIAL COLEXMAPFRE INFORMÁTICAMAPFRE INTERNET

BANCO MAPFRE - CAJA MADRID

BANCO MAPFREFINANMADRIDMADRID LEASINGBANCOFAR

MAPFRE MUTUALIDAD

CORPORACIÓN MAPFREMAPFRE CAJA MADRID HOLDING

MOTOR INSURANCE UNIT

MARESMAPFRE SEGUROS GERAIS (Portugal)CESVIMAPMAPFRE RENTINGMAPFRE MULTICENTRO DEL AUTOMÓVILCLUB MAPFRE DEL AUTOMÓVIL

MAPFRE AGROPECUARIA

FOUNDATIONS

F. MAPFREF. MAPFRE ESTUDIOSF. MAPFRE MEDICINAF. MAPFRE GUANARTEMEF. CULTURAL MAPFRE VIDAF. MAPFRE TAVERA

LIFE AND SAVINGS AND INVESTMENT UNIT

MAPFRE VIDAGENERAL AGENCY (Portugal)MAPFRE INVERSIÓN S.V.MAPFRE INVERSIÓN II S.G.I.I.C.MAPFRE VIDA PENSIONESCONSULTORÍA ACTUARIAL Y DE PENSIONESMODA SHOPPING

GENERAL INSURANCE UNIT

MAPFRE SEGUROS GENERALESMAPFRE FINISTERREMAPFRE GUANARTEMECONSULTMAPGESMAPMULTIMAPRELECMAP

MAPFRE CAJA SALUD

IGUAL SERVICIOSCENTRO MÉDICO DE CHEQUEOSCENTROS MÉDICOS ISLAS CANARIASSERVIMEDIC

COMMERCIAL INSURANCE UNIT

MAPFRE INDUSTRIALSERMAPITSEMAP, SERVICIOS TECNOLÓGICOS MAPFRE

MUSINI

MAPFRE CAUCIÓN Y CRÉDITOMAPFRE AMÉRICA CAUCIÓN Y CRÉDITOMAPFRE SEGURADORA DE GARANTÍAS E CRÉDITO (Brazil)MAPFRE GARANTÍAS Y CRÉDITO (Chile)COMPAÑÍA DE SEGUROS DE CRÉDITOS COMERCIALES (Colombia)MAPFRE SEGUROS DE CRÉDITO (Mexico)AGENCIA GENERAL (Portugal)

REINSURANCE UNIT

MAPFRE REMAPFRE REINSURANCE CORPORATION(United States)CAJA REASEGURADORA (Chile)C.I.A.R. (Belgium)MAPLUX RE (Luxemboug)

BRANCHES:London, Brussels

REPRESENTATIVE OFFICES:Athens, Lisbon, Milan,Bogotá, Buenos Aires, Caracas, Lima, Mexico,Santiago de Chile,São Paulo, Manila

ALLMAP ASSIST (Germany)IBERO ASISTENCIA (Argentina)GULF ASSIST (Bahrein)BENELUX ASSIST (Belgium)ASISTENCIA BOLIVIANABRASIL ASSISTÊNCIANORASSIST (Canada)SUR ASISTENCIA (Chile)ANDI ASISTENCIA (Colombia)COSTA RICA SERVICIOS DE ASISTENCIAECUASISTENCIA (Ecuador)EL SALVADOR ASISTENCIAIBEROASISTENCIA (Spain)IBEROASISTENCIA SERVICIOS DE TELEMARKETING (Spain)FEDERAL ASSIST (United States)ROAD AMERICA (United States)FRANCE ASSIST

SOCIETÉ DE DIFFUSION DES MARQUES AUTOMOBILES (SDMA) (France)EUROSOS ASSISTANCE (Greece)QUETZAL ASISTENCIA (Guatemala)IRELAND ASSISTJDMS (Luxemboug)NOVASSIST (Italy)NUOVI SERVICI AUTO (Italy)MÉXICO ASISTENCIANICASSIST (Nicaragua)PANAMÁ ASISTENCIAPERÚ ASISTENCIAIBERO ASSISTÊNCIA (Portugal)CARIBE ASISTENCIA (DominicanRepublic)AFRIQUE ASSISTANCE (Tunis)TURASSIST (Turkey)URUGUAY ASISTENCIAVENEASISTENCIA (Venezuela)

ASSISTANCE OPERATING UNIT AMERICA UNIT

MAPFRE AMÉRICAMAPFRE ARGENTINA SEGUROSVERA CRUZ SEGURADORA (Brazil)MAPFRE COMPAÑÍA DE SEGUROS GENERALES DE CHILEMAPFRE COLOMBIA SEGUROS GENERALESLA CENTRO AMERICANA (El Salvador)MAPFRE TEPEYAC (Mexico)MAPFRE PARAGUAYMAPFRE PERÚMAPFRE USA (Puerto Rico- USA)MAPFRE URUGUAYLA SEGURIDAD (Venezuela)MAPFRE SOFT

MAPFRE AMÉRICA VIDAMAPFRE ARGENTINA SEGUROS DE VIDAVERA CRUZ VIDA E PREVIDENCIA (Brazil)MAPFRE COMPAÑÍA DE SEGUROS DE VIDA DE CHILEMAPFRE COLOMBIA VIDAMAPFRE PERÚ VIDAPRAICO LIFE (Puerto Rico)

MAPFRE ASIAN (Philippines)

MAPFRE INMUEBLES

DESURCICSERVIMAPINMOBILIARIA BRAVO UREÑA

GENERAL AGENCIES:Belgium, France, Greece, Irlanda, Italy, Portugal.

REPRESENTATIVE OFFICES:Colombia, Russia, United Kingdom, Venezuela.

BRANCHES:Philippines, Honduras, Hungría, Paraguay, Tunis.

COMMERCIAL OFFICES:Philippines, France (MAPFRE-Sage), Honduras, Hungría, Italy (SDMA), Paraguay, Puerto Rico.

BROKERS:SARL ALLIANCE OPTIMALE

VIAJES MAPFRESIAM CONSULTING, VIAJES CITEREA

MAPFRE ASISTENCIA ORO

OFF-SHORE BRANCH:Tunis

MAPFRE ASISTENCIA

MAPFRE MUTUALIDAD

CORPORACIÓN MAPFRE(56%)

MAPFRE CAJA MADRID HOLDING(51%)

MOTOR INSURANCE UNITBANCO CAJA MADRID MAPFRE(49%)

DIRECT SUBSIDIARIES(100%)

FOUNDATIONS

COMMERCIAL INSURANCE UNIT(100%)

MAPFRE CAJA SALUD(100%)

GENERAL INSURANCE UNIT(100%)

LIFE AND SAVINGS AND INVESTMENT UNIT (100%)

MAPFRE VIDA

REINSURANCE UNIT(84%)

ASSISTANCE OPERATING UNIT(100%)

AMERICAUNIT(85%)

MAPFREINMUEBLES(100%)

MAPFRE INDUSTRIAL

MUSINI

MAPFRE CAUCIÓN Y CRÉDITO

MAPFRE SEGUROS GENERALES

MAPFRE RE MAPFREASISTENCIA

MAPFREAMÉRICA

MAPFREAMÉRICAVIDA

MAPFREAGROPECUARIA


* This information does not form part of the Consolidated management report.

Relevant events in the year

INFORME ANUAL · 2003

January

› MAPFRE ASISTENCIA reaches an agreement to acquire the business of the group of com-

panies called ROAD AMERICA MOTOR CLUB, an automobile club which provides services to

its members in the United States (15.01.03).

› MAPFRE VIDA is delisted following the success of its public buy-out bid (27.01.03).

February

› CESVIMAP is awarded by AENOR (12.02.03) with the ISO 14001 certification in environmental

issues

March

› The MERCO 2003 barometer once again ranks MAPFRE as the most valued company in the

Spanish insurance sector, and 14th overall among Spanish companies, ethics and social

responsibility being the aspects which receive the highest score (17.03.03).

› MAPFRE VIDA begins marketing its first Assured Pension Plan (PPA MAPFRE Pensiones)

designed to generate final savings to supplement the State pension, with the same tax

treatment as Pension Plans (28.03.03)..

› The Annual General Meetings of MAPFRE MUTUALIDAD and CORPORACIÓN MAPFRE are

held, approving their annual accounts for 2003 and the activities of their Boards of Direc-

tors.

The General Meetings of MAPFRE MUTUALIDAD and MAPFRE AGROPECUARIA agreed the

merger of both companies, through the absorption of the second by the former one.

Relevant events in the year |

RELEVANT EVENTS IN THE YEAR | pag. 21

April

› North American magazine FORBES includes CORPORACIÓN MAPFRE among the best 400

large companies in the world (05.04.03).

June

› Rating agency STANDARD & POOR’S upgrades MAPFRE MUTUALIDAD’s financial strength

rating to ‘AA’ (excellent) and those of CORPORACIÓN MAPFRE (issuer credit rating),

MAPFRE RE and MAPFRE REINSURANCE CORPORATION (USA) to ‘AA-’ (excellent) reflect-

ing SISTEMA MAPFRE’s strong operating results, solid leadership in the Spanish and Latin

American markets and its extremely strong capitalisation (19.06.03).

› MAPFRE ASISTENCIA acquires NUOVI SERVIZI AUTO, a leading Italian company in the war-

ranty extension business (19.06.03).

› The Committee of Experts of the IBEX 35 equity index agrees to include the shares of COR-

PORACIÓN MAPFRE in such index with effect from 1 July 2003 (11.06.03).

› The shares of CORPORACIÓN MAPFRE are included in the ‘Dow Jones Stoxx Insurance’

index, an international equity index of acknowledged prestige (23.06.03).

› The Board of Directors of SEPI awards its holding in MUSINI SA to MAPFRE CAJA MADRID

HOLDING (27.06.03).

July

› Rating agency AM BEST risk rating agency affirms its ‘A+’ (superior) financial strength rat-

ings assigned to MAPFRE MUTUALIDAD and MAPFRE RE (02.07.03).

› The Board of Directors of SEPI awards MUSINI VIDA to MAPFRE CAJA MADRID HOLDING

(10.07.03).

INFORME ANUAL · 2003

› MAPFRE USA CORPORATION signs a letter of intent to acquire CANADA LIFE INSURANCE

COMPANY OF PUERTO RICO, specialising in Life, Accident and Health insurance, operating

in Puerto Rico and the American Virgin Islands, conditional on obtaining the necessary

administrative authorisations (11.07.03).

› MAPFRE is selected by magazine Actualidad Económica as one of the best companies to

work for in Spain due to its flexible work schedules, to the Group’s working environment

and to its good work conditions (14.07.03).

› MAPFRE SEGUROS GERAIS, based on the study of the consultants Deloitte & Touche and

Dun & Bradstreet (14.07.03), is selected as the best Non-life insurance company in Portugal.

› Company MAPFRE ASISTENCIA ORO is incorporated, operating in the management and

direct provision of all kinds of health and social services for the elderly and for the people

who are not self-sufficient, as well as in the running of its own and of third-party residen-

tial and day centres (23.07.03).

October

› The Executive Committee of CORPORACIÓN MAPFRE agrees to pay an interim dividend of

¤0.11 gross per share out of the results for fiscal year 2003 with effect from 14 November

2003 (22.10.03).

› The proposed new territorial structure of SISTEMA MAPFRE is approved; it will entail

extensive renovation and reinforcement of the MAPFRE Distribution Network in Spain,

enhancing its customer focus (23.10.03).

November

› The new procedure for dealing with the complaints of the financial customers of SISTEMA

MAPFRE is implemented. It aims to speed up and simplify the existing complaints handling

processes and to improve service quality, in accordance with the requirements of the

Financial Law (01.11.03).

RELEVANT EVENTS IN THE YEAR | pag. 23

› CORPORACIÓN MAPFRE wins the 34th edition of the prestigious ‘Llotja’ prize, awarded by

the Barcelona Chamber of Commerce in recognition of the ‘comprehensive, frequent and

reliable information system it has made available to its current and potential investors’

(11.11.03).

› MAPFRE wins the ‘Inversión 2003’ award for Good Corporate Governance, awarded for the

first time in order to boost the use and adoption of transparency and ethical and social

commitment practices by companies (13.11.03).

› The IX MAPFRE Road Safety campaign is initiated accompained by Forges humor (20.11.03).

› The databases of the Documentation Centre of the FUNDACIÓN MAPFRE ESTUDIOS,

together with a bibliographic catalogue with more than 43,000 references, are made avail-

able to the general public free of charge (24.11.03).

December

› MAPFRE Automóviles Riesgos Especiales (MARES) merges into MAPFRE MUTUALIDAD

(01.12.03).

› The Board of Directors of MAPFRE RE approves a business expansion plan and as a part of

this a ¤150 million capital increase which will take the capital and reserves of the reinsur-

ance company to over ¤475 million (04.12.03).

› MAPFRE CAJA MADRID HOLDING and SEPI sign before a notary public the deed of sale of

insurance company MUSINI (11.12.03).

› A MAPFRE institutional campaign is launched with the last advertisement of 2003 on TVE

(Spanish State Television). The advertisement, with a special thank you message to cus-

tomers, agents, representatives and staff, was the most viewed on Spanish television in

2003, with an audience in excess of 7 million viewers (31.12.03).

CORPORACIÓN MAPFRE | pag. 25

Consolidated Management Report, Consolidated AnnualAccounts and Audit Report


MARKET ENVIROMENT

The evolution of the main economic indicators in 2003 leads to conclude that the stagnation

period that has been affecting the global economy has ended. As the serious uncertainties

that have been bearing upon the world economy over the last few years have been overcame,

the main industrial economies are experiencing a recovery, led by the United States, in which

the Chinese economy continues to stand out for its strong rate of growth. Such global recov-

ery reflects a number of factors, including: strong growth rates in the U.S. and Japanese

economies, as well as in their respective levels of investments and productivity; positive

growth rates in the European economy in the second half of 2003; progress in business

restructuring; absence of inflationary pressures; greater business confidence; higher stock

prices; and narrower spreads on corporate bonds.

However, the current economic growth is not yet solidly supported due to factors such as the

increase in the price of gold or the high depreciation of the dollar, with historical minimum

values with respect to the euro. There exist uncertainties which should be overcame in the

following months, which mean a significant threat for the global growth: high levels of public

and private debt -mainly from North America– the scepticism on the “Pacto de Estabilidad y

Crecimiento de la Unión Europea” (France and Germany failed to comply), the low creation of

employment, geopolitical uncertainties (Middle and Near East), tension in the countries on

the other side of the Atlantic and the growing protection laws which bring negotiations to a

stand-still in the “World Trade Organization”.

The economic recovery was more evident in the markets in which the presence of SISTEMA

MAPFRE is concentrated (Spain and Latin America). It is worth mentioning the growth rates

of the Andean economies and particularly of the Spanish economy, which will end fiscal year

2003 with: the highest growth rate differential with respect to the average of the European

Economic and Monetary Union (EMU) of the last decade; a budgetary balance; high levels of

consumption of households which have been compatible with a certain recovery in saving

rates; as well as the continuous growths in the number of affiliations to the Social Security,

which have reached historical highs.

Management Report |

CONSOLIDATED MANAGEMENT REPORT, CONSOLIDATED ANNUAL ACCOUNTS AND AUDIT REPORT | pag. 27

With respect to the financial sector, in which MAPFRE business is concentrated, the severe

and prolonged bear market that has been affecting the main stock exchanges has reached a

turning point. This has led to a significant recovery in the value of the assets under manage-

ment of pension and mutual funds, and has also spurred a cautious return of savings to the

equity market However, savers and investors have been providing evidence of having learnt

the lesson of previous years, and have increased the degree of diversification of their invest-

ment portfolios. This, together with a greater level of concentration in the sector and with the

capital increases successfully carried out by the leaders of the insurance market, have

strengthened the solvency and market capitalisation of the main insurance companies glob-

ally. Nevertheless, Investors, particularly in Europe, continue to worry about the low return

on equity of insurance companies, accounting frauds scandals, and the increasing cost of nat-

ural catastrophes for the global insurance market, among which heat the wave which has

affected countries around the world and has caused fires must be mentioned for its econom-

ic impact.

Within this environment of global economy recovery, CORPORACION MAPFRE had another

outstanding fiscal year, exceeding by a wide margin the targets announced at the beginning

of such year, particularly with respect to the results it achieved. These results have been

obtained through the application of a rigorous underwriting policy, both in direct insurance

and reinsurance, a prudent investment policy, with a large proportion of fixed income securi-

ties, the overriding focus on the quality of management and of customer service, the control

of claims and the containment of expenses.


BUSINESS DEVELOPMENT

Revenues

In 2003, the total revenues of MAPFRE MUTUALIDAD and its subsidiaries reached ¤9,249.6

million, including ¤301.2 million from equity-accounted companies. The breakdown of these

revenues by line of business is shown in the following table:

TOTAL REVENUES

2003 2002Companies operating primarily in Spain

Direct Non-life insurance premiums 3,861.0 3,389.3Direct Life insurance premiums 1,644.9 2,226.9Investment income 1,006.7 796.6Other revenues from consolidated companies 87.1 76.8Brokerage and fund management* 133.6 140.3Real estate management and development* 49.2 34.6Other equity-accounted companies 54.5 40.1

Cumulative subtotal 6,837.0 6,704.6

Companies operating primarily outside SpainDirect Non-life insurance premiums 1,281.5 1,375.7Direct Life insurance premiums 201.1 194.6Accepted reinsurance premiums 866.4 760.1Assistance premiums and other revenues** 207.7 180.4Investment income 273.1 388.5Other revenues** 60.8 59.9

Cumulative subtotal 2,890.6 2,959.2

Total cumulative revenues 9,727.6 9,663.8Intra-group transactions eliminated upon consolidation -478.0 -358.6

TOTAL CONSOLIDATED REVENUES 9,249.6 9,305.2

Figures in millions of euros

* Equity-accounted

** Includes revenues from equity-accounted companies


Both total cumulative revenues and total consolidated revenues for 2003 reflect similar fig-

ures to those of the previous year, with the former showing an increase of 0.7% while total

consolidated revenues fell by 0.6%. This performance was unfavourably affected by the

appreciation of the Euro against the US dollar, and by the depreciation of the currencies of a

number of countries in which SISTEMA MAPFRE companies operate, as well as the decrease

in the inflow of transactions related with the externalisation of corporate pension commit-

ments underwritten in the Spanish market. Conversely, revenues were positively affected by

the inclusion of the revenues of MUSINI and its subsidiaries, whose results for the fourth

quarter of 2003 were fully consolidated.

In 2003, SISTEMA MAPFRE achieved market shares in Spain of 9.7% in the Life business and

17.3% in the Non-Life business, against 8.4% and 15.5%, respectively, in 2002. The shares of

the American subsidiaries of SISTEMA MAPFRE in their respective Non-life insurance mar-

kets (2002 figures) ranged between 2.8% in Colombia and 11.3% in Venezuela, representing, as

a whole, a share of approximately 5% of the total premiums of the markets and territories in

which they operate.

Premiums written by the companies operating primarily in Spain, including the parent com-

pany of SISTEMA MAPFRE, evolved as follows:

WRITTEN AND ACCEPTED PREMIUMS

% Var.2003 2002 2003/2002

MOTOR INSURANCE OPERATING UNIT (1) 1,935.3 1,793.0 7.9%

LIFE, SAVINGS AND INVESTMENT OPERATING UNIT 1,651.4 2,229.6 -25.9%

MAPFRE VIDA 1,622.4 2,229.6 -27.2%MUSINI VIDA 29.0 - -

GENERAL INSURANCE OPERATING UNIT 895.9 786.6 13.9%

MAPFRE SEGUROS GENERALES 525.4 443.8 18.4%MAPFRE GUANARTEME 179.9 155.3 15.8%MAPFRE FINISTERRE 190.6 187.5 1.7%

COMMERCIAL INSURANCE OPERATING UNIT 596.6 431.7 38.2%

MAPFRE INDUSTRIAL 444.3 346.4 28.3%MAPFRE CAUCIÓN Y CRÉDITO 104.6 85.3 22.6%MUSINI 47,7 - -

MAPFRE CAJA SALUD 277.1 246.1 12.6%

MAPFRE AGROPECUARIA 149.6 129.2 15.8%

TOTAL 5,505.9 5,616.2 -2.0%


(1) This Unit Includes MAPFRE MUTUALIDAD and its subsidiary MAPFRE RIESGOS ESPECIALES, mergedby takeover on 30 November 2003.


These figures include the total gross premiums written and accepted by the Portuguese

branches of MAPFRE VIDA (¤ 38.4 million) and MAPFRE CAUCIÓN Y CRÉDITO (¤ 7.4 mil-

lion).The following table shows a breakdown of such written and accepted premiums by line of

business:


% Var.2003 2002 2003/2002

Motor 2,095.2 1,935.2 8.3%Health 277.1 246.1 12.6%Multi-peril 1,049.5 825.6 27.1%Other Non-life 439.2 382.4 14.8%Total NON-LIFE 3,861.0 3,389.3 13.8%

Life Risk 142.5 121.9 16.9%Life Savings 1,502.4 1,784.6 -15.8%ExternalisationsTotal LIFE 1,664.9 2,226.9 -26.1%

GRAND TOTAL 5,505.9 5,616.2 -2.0%


The breakdown of the premiums written and accepted by the most representative subsidiaries

through the agents channel and the bank channel (CAJA MADRID) are shown in the following table:


% Var.2003 2002 2003/2002

AGENTS CHANNELMAPFRE MUTUALIDAD 1,921.3 1,782.0 7.8%MAPFRE VIDA (1) 829.7 794.3 4.5%MAPFRE SEGUROS GENERALES 838.8 739.9 13.4%MAPFRE INDUSTRIAL 413.7 320.8 29.0%MAPFRE CAJA SALUD 265.5 237.2 11.9%MAPFRE CAUCIÓN Y CRÉDITO 103.7 85.1 21.9%TOTAL 4,372.7 3,959.3 10.4%

BANK CHANNELMAPFRE MUTUALIDAD 13.9 11 26.4%MAPFRE VIDA (1) 821.7 1,114.9 -26.3%MAPFRE SEGUROS GENERALES 57.2 46.7 22.5%MAPFRE INDUSTRIAL 30.6 25.6 19.5%MAPFRE CAJA SALUD 11.6 8.9 30.3%MAPFRE CAUCIÓN Y CRÉDITO 0.9 0.2 350.0%TOTAL 935.9 1,207.3 -22.5%


(1) Excluding externalisation transactions.


The following table shows the evolution of the funds managed in savings products by MAPFRE

VIDA and its subsidiaries:

AHORRO GESTIONADO POR MAPFRE VIDA Y FILIALES (1)

2003 2002

Life technical reserves 11,554.0 9,186.1Pension funds 1,557.4 1,343.1Mutual funds 2,340.7 1,968.7

TOTAL 15,452.1 12,497.9


(1) Includes ¤428.1 million relating to the Life insurance technical reserves of MUSINI, which will be trans-ferred to MAPFRE VIDA during the course of 2004.

Excluding certain defined benefit pension transactions, which were entered into through

Life insurance policies, the net funds managed by MAPFRE VIDA and its subsidiaries

amounted to ¤14,748 million in 2003.

Premiums written by Units and Companies whose activity is primarily international evolved

as follows:


2003 2002DIRECT INSURANCEAMERICA

Argentina 142.7 96.4Brazil 311.6 325.0Chile 97.1 81.3Colombia 58.4 67.1El Salvador 27.9 33.6Mexico 306.8 352.8Paraguay 6.9 7.3Peru 46.0 50.9Puerto Rico and Florida 215.9 241.0Uruguay 6.9 13.4Venezuela 186.8 239.5Subtotal 1,407.0 1,508.3

OTHER COUNTRIESPortugal 67.6 53.5Philipines 7.9 8.6Subtotal 75.5 62.1

ACCEPTED REINSURANCE 866.4 760.1ASSISTANCE 131.3 127.5

TOTAL CUMULATIVE PREMIUMS 2,480.2 2,458.0

Intra-group transactions eliminated upon consolidation -396.8 -333.0

TOTAL CONSOLIDATED PREMIUMS 2,083.4 2,125.0



The breakdown by business line of the direct insurance premiums written by the Units and

Companies whose activity is primarily international is shown in the following table:

WRITTEN PREMIUMS

% Inc.2003 2002 2003/2002

Motor 678.5 778.8 -12.9%Health and Accident 171.7 198.7 -13.6%Other Non-life 431.3 398.2 8.3%

TOTAL NON-LIFE 1,281.5 1,375.7 -6.9%

TOTAL LIFE 201.1 194.6 3.3%

GRAND TOTAL 1,482.6 1,570.3 -5.6%


The direct insurance companies that make up the America Operating Unit wrote total premi-

ums worth ¤1,407 million, ¤201.1 million of which corresponded to Life insurance and the

remaining ¤1,205.9 million to Non-life insurance. Most countries recorded an increase in their

respective premiums figures expressed in local currency, ranging from 7.9% in Puerto Rico

to 58.5% in Argentina. In El Salvador, premiums remained stable in 2003 compared with 2002,

whereas Uruguay experienced a decrease of 37.8% due to non-recurring operations carried

out in 2002. The weighted average premium growth rate was 23%. Nevertheless, premiums

expressed in euros decreased 6.7% with respect to the previous year, as a consequence of the

depreciation of the US dollar and the local currencies of the countries in which these compa-

nies operate.

MAPFRE RE and its subsidiaries recorded consolidated premiums of ¤ 866.4 million, a 14.0%

increase. Net written premiums amounted to ¤ 579.5 million, equivalent to a retention rate of

66.9%. The breakdown of total premiums by geographical area was as follows: 46% from

Spain; 28% from Europe; 14% from Latin America; 9% from North America; and the balance

from other areas. Within these figures, MAPFRE REINSURANCE CORPORATION (New Jersey)

recorded a total premiums volume of ¤ 74.4 million.

The total revenues (premiums and revenues from the sale of services) of MAPFRE ASISTEN-

CIA and its subsidiaries reached ¤ 238.2 million. This figure, which includes revenues from

equity-accounted subsidiaries, represents a 16% increase over the previous year. The break-

down by geographical area was as follows: 36% from Spain; 32% from Latin America; 18%

from other European countries; 12% from the United States; and 2% from other areas.

MAPFRE SEGUROS GERAIS (Portugal) recorded a volume of premiums of ¤67.6 million, of

which 62% corresponded to Motor insurance, 17% to Work Accidents insurance, 4% to House-

hold insurance and the remainder to other branches.


The total premiums of MAPFRE ASIAN (The Philippines) decreased by 8.1% in euros, despite

a 17.4% increase in local currency.

Management ratios

In accordance with internationally accepted practices, the soundness of the Non-life techni-

cal result is measured through the combined ratio, which is obtained by dividing total claims

and expenses by net premiums earned. In 2003, the consolidated Non-Life combined ratio of

SISTEMA MAPFRE was 92.6%, against 96.2% in the previous fiscal year. The evolution of the

main management ratios of the Non-life insurance subsidiaries of SISTEMA MAPFRE is

shown in the following table, which provides the percentage of total expenses and claims

incurred over premiums earned, before reinsurance. The columns to the right show the com-

bined ratios of the subsidiaries (total expenses, and claims incurred over premiums earned,

net of reinsurance)

14.4%30.2%21.1%

26.2%17.0%24.2%

31.5%28.9%17.1%

26.9%

14.5%30.2%19.8%27.5%17.0%23.5%

31.6%32.1%15.5%28.9%

76.0%64.0%60.3%60.8%80.6%69.3%

55.2%59.8%74.5%67.4%

77.0%61.9%65.9%69.8%80.4%74.4%

57.0%69.3%74.6%69.4%

90.4%95.1%93.0%85.3%97.6%94.1%

92.5%102.2%91.3%97.4%

91.6%92.2%93.2%102.1%97.4%

100.8%

98.3%112.5%90.2%

100.7%

MAPFRE-CAJA MADRID HOLDING 25.1% 25.8% 65.0% 66.3% 94.7% 93.9%CORPORACION MAPFRE 26.5% 28.5% 62.6% 66.0% 96.5% 101.3%SISTEMA MAPFRE 21.1% 22.7% 67.5% 69.9% 92.6% 96.2%

NON-LIFE MANAGEMENT RATIOS

Gross expense ratio % (1) Gross loss ratio % (2) Combined ratio % (3)31.12.03 31.12.02 31.12.03 31.12.02 31.12.03 31.12.02

(1) Net total expenses of the technical account, excluding investment expenses, as a percentage of gross premiums earned (direct andaccepted).(2)Gross claims incurred, before equalisation reserves, as a percentage of gross premiums earned (direct and accepted). (3)(Net claims incurred + variation of other technical reserves + net operating expenses + profit sharing and returns – other technicalincome + other technical expenses)/Net premiums earned.(4)Given the importance of services activities for MAPFRE CAUCIÓN Y CRÉDITO and MAPFRE ASISTENCIA, their expense ratios are adjusted to include the net other non-technical income.

Companies operating primarily in Spain

MAPFRE MUTUALIDADMAPFRE SEGUROS GENERALESMAPFRE INDUSTRIALMAPFRE CAUCIÓN Y CRÉDITO (4)MAPFRE CAJA SALUDMAPFRE AGROPECUARIA

Companies operating primarily abroad

MAPFRE REMAPFRE AMÉRICAMAPFRE ASISTENCIA (4) MAPFRE SEGUROS GERAIS

Results

The consolidated result after tax reached ¤ 446.4 million, a 36.5% increase over the previous

year. The net result attributable to the parent company of SISTEMA MAPFRE reached ¤ 298.6

million, a 45% increase over the previous year. The following table provides a breakdown of

the consolidated result by business area:

CONSOLIDATED RESULTS

2003 2002

FULLY CONSOLIDATED COMPANIES

Companies operating primarily in SpainParent company 256.6 156.8Direct insurance subsidiaries 260.1 234.0Other -20.2 -18.5Subtotal 496.5 372.3

Companies operating primarily abroadDirect insurance 63.6 47.5Accepted reinsurance 42.2 30.9Assistance 7.2 5.3Other -0.2 -1.5Subtotal 112.8 82.2

EQUITY-ACCOUNTED COMPANIES

Finance companies 2.9 5.2Brokerage and fund management 21.4 19.9Real estate management and development 5.8 3.5Other -2.3 -Subtotal 27.8 28.6

Consolidation adjustments 5,0 -5,6

Profit before tax, minority interests and amortisation of goodwill and portfolio acquisition costs 642,1 477,5Amortisation of goodwill and portfolio acquisition costs -36.1 -37.5Profit before tax and minority interests 606.0 440.0Tax -159.6 -113.0Profit after tax 446.4 327.0Result attributable to minority interests -147.8 -121.1Profit after tax and minority interests 298.6 205.9


The companies operating primarily in Spain increased their profit before tax, minority inter-

ests and amortisation of goodwill and portfolio acquisition costs by 33%, whereas those oper-

ating primarily abroad increased it by 37%. The consolidated profit and loss account contains

¤36.1 million in respect of depreciation of consolidated goodwill, relating to the purchase of

company holdings and portfolio acquisition costs. The contribution of the various companies

of SISTEMA MAPFRE and of the affiliate companies to the consolidated results varied as fol-

lows with respect to 2002:



RESULTS BY COMPANY

2003 2002 2003 2002

FULLY CONSOLIDATED COMPANIES

Units operating primarily in Spain

MOTOR INSURANCE OPERATING UNIT (1) 267.8 168.0 208.1 128.0

LIFE, SAVINGS AND INVESTMENT OPERATING UNIT 123.7 103.1 86.0 75.9 MAPFRE VIDA (2) 117.5 103.1 81.9 75.9MUSINI VIDA 6.2 - 4.1 -

GENERAL INSURANCE OPERATING UNIT 84.2 76.5 46.8 40.3MAPFRE SEGUROS GENERALES (3) 47.4 39.4 24.5 17.7MAPFRE GUANARTEME 21.0 20.7 14.2 13.6MAPFRE FINISTERRE 15.8 16.4 8.1 9.0

COMMERCIAL INSURANCE OPERATING UNIT 40.3 25.7 26.1 16.7MAPFRE INDUSTRIAL 27.6 18.6 17.8 12.1MAPFRE CAUCIÓN Y CRÉDITO 9.9 7.1 6.1 4.6MUSINI 2.8 - 2.2 -

MAPFRE CAJA SALUD 14.5 13.8 7.7 7.1

MAPFRE AGROPECUARIA 8.7 7.9 6.5 6.0

Units operating primarily abroad

MAPFRE AMÉRICA 52.0 56.3 37.8 26.5 MAPFRE AMÉRICA VIDA 4.1 -12.5 -2.7 -10.5MAPFRE RE 42.2 30.9 29.1 22.7MAPFRE ASISTENCIA 7.2 5.3 3.8 3.8MAPFRE SEGUROS GERAIS 6.2 3.5 3.2 2.0

EQUITY-ACCOUNTED COMPANIES (4)

MAPFRE INMUEBLES 9.1 5.7 5.8 3.5GESMADRID 4.7 5.0 3.0 3.2CAJA MADRID PENSIONES 1.3 1.3 0.8 0.8CAJA MADRID BOLSA 1.4 0.9 0.9 0.6BANCO DE SERVICIOS FINANCIEROS CAJA MADRID-MAPFRE 7.0 8.7 2.9 5.2


(1) Includes MAPFRE MUTUALIDAD and its subsidiary MAPFRE RIESGOS ESPECIALES, merged by takeover on 30 November 2003.(2) Includes the results of MAPFRE INVERSION and MAPFRE VIDA PENSIONES, which are accounted for by the equity method.(3) Excluding internal dividends and its subsidiary MAPFRE INDUSTRIAL, which is shown as part of the Commercial Insurance Operating Unit(4) Consolidated in proportion to the percentage of ownership in each company.

Before tax, minority interestsand amortisation

of goodwill and portfolio acquisition costs

After tax, minority interestsand amortisation

of goodwill and portfolio acquisition costs


The breakdown by geographical area of the net consolidated result of SISTEMA MAPFRE in

2003 was as follows:

PROFIT BY GEOGRAPHICAL AREA

GROSS PROFIT (1) NET PROFITMillions of euros % of total Millions of euros % of total

Spain 557.5 86.8% 268.7 90.0%North America 34.6 5.4% 12.5 4.2%South America 37.4 5.8% 12.4 4.1%Other areas 12.6 2.0% 5.0 1.7%

TOTAL 642.1 100.0% 298.6 100.0%

(1) Before tax, minority interests and amortisation of goodwill and portfolio acquisition costs.

INVESTMENTS AND LIQUID ASSETS

The investments and liquid assets of SISTEMA MAPFRE at 31 December 2003 amounted to

¤18,347 million, a 23.6% increase over the previous year. Their breakdown and percentage

distribution is shown in the following table:

2003 2002Millions of euros % Millions of euros %

Investments matching Life reservesFixed income investments 7,531 94.4% 5,346 90.3%Investments on behalf of policyholders 446 5.6% 575 9.7%

Subtotal 7,977 100.0% 5,921 100.0%

Other investmentsReal estate investments 1,068 10.3% 1,034 11.6%Fixed income investments 6,359 61.3% 5,393 60.4%Investment fund holdings 965 9,3% 823 9,2%Investments in equities and in Group companies 619 6,0% 527 5.9%Cash and banks 1,290 12.4% 1,080 12.1%Deposits for accepted reinsurance 69 0.7% 66 0.8%

Subtotal 10,370 100.0% 8,923 100.0%

GRAND TOTAL 18,347 14,844


In 2003, investment income increased 5.4% with respect to the previous year to ¤1,241.6 mil-

lion. Its breakdown is shown in the following table:

INVESTMENT INCOME

Non-life Life Non-technical technical account technical account account

From real estate investments 26.5 19.4 6.9From financial investments 282.1 641.0 65.6Realisation profits 67.6 41.6 10.7Other (1) 23.1 21.9 35.2

TOTAL 399.3 723.9 118.4


(1) Includes the share in the results of equity-accounted companies, positive translation results, releaseof provisions for the depreciation of investments and monetary adjustment.

Changes in investment income in comparison with the previous year are shown below:

INVESTMENT INCOME

2003 2002 % Variation

From real estate investments 52.8 60.0 -12.0%From financial investments 988.7 968.7 2.1%Realisation profits 119.9 73.9 62.2%Other (1) 80.2 75.2 6.6%

TOTAL 1,241.6 1,177.8 5.4%


(1) (1) Includes the share in the results of equity-accounted companies, positive translation results,release of provisions for the depreciation of investments and monetary adjustment.

Investment expenses amounted to ¤384.6 million in 2003, slightly less than the previous year’s

figure of ¤394.7 million.

OWN FUNDS AND PROFITABILITY

The consolidated own funds reached ¤2,496 million, from ¤2,204.7 million at the end of 2002.

This variation sums up the positive impact from the results of the Units, as well as the nega-

tive impact from the depreciation of some American currencies and the appreciation of the

Euro against the US dollar. Of the total amount detailed above, ¤1,102.5 million correspond to

the holdings of minority shareholders in subsidiaries, and ¤1,393.5 million to the parent com-

pany of SISTEMA MAPFRE, MAPFRE MUTUALIDAD.


The consolidated shareholders’ equity, expressed in euros, of MAPFRE AMÉRICA and its sub-

sidiaries decreased during 2003 by ¤ 34.3 million, due to the appreciation of the Euro against

the US dollar and the Latin American currencies. The decrease in the consolidated equity of

MAPFRE AMÉRICA does not imply a weaker solvency of its subsidiaries, as all their liabilities

are reduced by the same proportion, nor does it have an impact on the consolidated result of

SISTEMA MAPFRE, although it does have an impact on consolidation reserves.

The return (profit after tax) on average own funds of SISTEMA MAPFRE reached 19.0%. The

return on average equity of its principal Units and companies is shown in the following table:

PPRINCIPAL UNITSRETURN ON SHAREHOLDERS’ EQUITY(ROE) (1)

2003 2002Average Profit ROE % ROE %

own funds (1) (1)

MAPFRE MUTUALIDAD (non-consolidated) 1,002.4 200.8 20.0 14.3

CORPORACIÓN MAPFRE 1,082.7 141.3 13.0 10.1

MAPFRE-CAJA MADRID HOLDINGMAPFRE VIDA 388.9 86.0 22.1 21.0MAPFRE SEGUROS GENERALES (2) 198.7 46.8 23.5 20.1MAPFRE INDUSTRIAL 46.8 17.8 38.0 29.2MAPFRE CAUCIÓN Y CRÉDITO 18.6 6.1 32.9 25.9MAPFRE CAJA SALUD 87.3 7.7 8.8 8.8

MAPFRE AMÉRICA 517.8 37.8 7.3 4.8

MAPFRE RE 296.3 29.1 9.8 8.5

MAPFRE ASISTENCIA 57.3 3.8 6.6 7.6

(1) Net result after taxes and minority interests/ Average own funds(2) Without its subsidiary MAPFRE INDUSTRIAL.

CONSOLIDATED MANAGEMENT REPORT, CONSOLIDATED ANNUAL ACCOUNTS AND AUDIT REPORT

PRINCIPAL ACTIVITIES IN THE YEAR

Policyholders and Customers

The focus on ensuring that its more than ten million policyholders and customers receive high quality

service and are treated with maximum fairness is one of the institutional principles of MAPFRE, and all

companies that belong to SISTEMA MAPFRE use their best endeavours to make sure this principle is ful-

filled.

In 2003, the insurance companies in SISTEMA MAPFRE together paid out indemnities to the value of

¤4,156 million, an increase of 10.3% on 2002, as detailed below:

2003 2002 Change (%)Amount Amount Amount

UNITS Indemnity Indemnity Indemnity

MOTOR 1,213,556 1,075,052 12.9%AGROPECUARIA 86,112 74,200 16.1%GENERAL INSURANCE 431,807 385,897 11.9%COMMERCIAL (1) 258,194 145,378 77.6%LIFE (1) 1,192,967 1,041,861 14.5%CAJA SALUD 208,744 180,725 15.5%ASSISTANCE 13,035 9,347 39.5%AMÉRICA 715,111 824,270 -13.2%OTHER COMPANIES 36,632 32,388 13.1%

TOTAL 4,156,158 3,769,118 10.3%

Figures in thousands of Euros

Information relating to direct insurance.(1) including the MUSINI Group in 2003

MAPFRE SEGUROS GENERALES Call Centre


A particularly important contribution to the compliance with these quality and fairness objec-

tives comes from the activity of the Committee for the Defence of the Policyholder, which was

created by MAPFRE in 1984. In 2003, this Committee dealt with and resolved a total of 1,642

complaints free of charge, with complete independence from the governing bodies of SIS-

TEMA MAPFRE. Furthermore, in its activity report for this fiscal year, it made various recom-

mendations, which will lead to improvements in the activity of the companies in SISTEMA

MAPFRE with respect to the following aspects:

› Greater precision in defining cover for theft in Freight insurance, and losses affecting the

accessories of insured vehicles in Motor insurance, as well as the circumstances under

which specific ailments must be considered to be covered by Accident policies, with spe-

cial reference to heart attacks.

› Case documentation which is submitted to the Committee for resolving complaints.

› More precise definition of the scope and limits of cover in certain policies, such as Burial

Insurance policies.

Within this framework of continuing improvement, 2003 saw a complete review and reorgan-

isation of the systems for dealing with complaints made by policyholders and customers, in

order to simplify and facilitate the exercise of their right to complain, ensure the speediest

processing and resolution of complaints and comply with the provisions of the Financial Sys-

tem Reform Law.

To this end, a single Complaints Department was created for the whole of SISTEMA MAPFRE,

which began its activity on 1 November 2003 and which deals with all complaints received by

the competent bodies of each Unit and by the Policyholder’s Defence Committee. The time

limit for resolving complaints has been cut to a maximum of two months compared with six

months previously.

Frontage of a MAPFRE Medical Centre


Strategic alliance with CAJA MADRID

The strategic alliance established with CAJA MADRID in 2002, a model of how two major inde-

pendent financial groups can support each other, the better to compete in the market and offer

a better service to their customers, has continued its consolidation throughout 2003. In this

way, over the course of 2003, mutual co-operation of their respective networks in the distribu-

tion of insurance and banking products has increased significantly, which has been a singularly

positive factor in securing the excellent results of that year.

The volume of insurance premiums contributed by the CAJA MADRID network in 2003 was

¤935.9 million and sales of asset and liability banking products contributed by the MAPFRE

Agents network to CAJA MADRID amounted to ¤896.9 million. These figures demonstrate the

level of co-operation achieved by both groups.


Acquisitions, Projects and Disposals

In accordance with the forecasts included in the Strategic Plan of SISTEMA MAPFRE, over the

course of 2003 a substantial effort has been devoted to the analysis of possible acquisitions in

order to increase the size of SISTEMA MAPFRE. This activity has relied on the work of the Acqui-

sitions Committee set up at the end of 2002, which has examined more than twenty possible trans-

actions, with special attention to those in business or geographical areas defined as strategic pri-

orities: Spain, Europe and America for Direct Insurance; Spain and Europe for Accepted Reinsur-

ance; and countries in which there is no presence for the Assistance business.

As a result of this activity, 2003 saw the completion of the following transactions:

› Acquisition by MAPFRE ASISTENCIA of all the shares in BRICKELL FINANCIAL SERVICES

MOTOR CLUB VAR. the parent of the group of companies operating under the trade name

ROAD AMERICA MOTOR CLUB (United States), marketing roadside assistance plans, involv-

ing an investment of ¤17.1 million.

› Acquisition by MAPFRE ASISTENCIA of all the shares in NUOVI SERVIZI AUTO (Italy) and GEN-

ERAL SERVICE REINSURANCE (Ireland) involving an investment of ¤12.5 million. These com-

panies jointly distribute warranties for used vehicles in Italy, France, Ireland and Luxembourg,

for which NUOVI SERVIZI AUTO has two subsidiaries (JMDS and SDMA) and one branch in

France.

› Acquisition by MAPFRE-CAJA MADRID HOLDING DE ENTIDADES ASEGURADORAS of a

98.07% stake in the share capital of MUSINI Sociedad Anónima de Seguros y Reaseguros,

involving an investment of ¤298.5 million.

MUSINI is a commercial insurance company, which focuses its activities primarily on indus-

trial risks and group term Life insurance. Its subsidiary, MUSINI VIDA, operates in the group

Life savings business. MUSINI also has five subsidiaries: industrial reinsurance company Re

Musini, with its head office in Luxembourg; finance companies Interbolsa and Servifinanzas;

and fund management companies Gesmusini Carteras and Gesmusini S.G.I.I.C.

› Acquisition by MAPFRE USA of all the shares in CANADA LIFE INSURANCE COMPANY OF

PUERTO RICO, which operates in health insurance, involving an investment of ¤5.8 million.

Independently of these acquisitions, new companies were formed over the course of the year:

MAPFRE ASISTENCIA ORO, providing services to the elderly, with an initial share capital of ¤17

million; and MAPFRE AGROPECUARIA, Compañía Internacional de Seguros y Reaseguros S.A.,

which, with effect from 1 January 2004, will handle insurance relating to the farming, livestock,

forestry and fish farming sectors, with a share capital of ¤70 million.

Against these acquisitions and new projects, 2003 saw the sale of 67% of the shares represent-

ing the capital of AFORE TEPEYAC (Mexico) held by MAPFRE AMÉRICA VIDA (51%) and MAPFRE

TEPEYAC (16%) for ¤33.3 million and in the first few days of 2004 the sale of MAPFRE MUTUAL-

IDAD’s 9.47% stake in BODEGA MUGA (Spain).


Human Resources

At the close of 2003, MAPFRE had a total of 18,605 employees, 10,064 of whom were working

in Spanish companies and 8,541 in other countries. Their average age was thirty-six and their

average length of service nine years, in line with previous fiscal years, highlighting the youth

and experience of the workforce and demonstrating the stability and quality of employment in

SISTEMA MAPFRE.

The significant effort devoted once again to training managers and employees deserves to be

mentioned. By way of example, over the course of 2003, 219,000 hours of training have been

given in Spain, with an average of 22 hours per employee. The estimated amount devoted to

this activity was equivalent to 1.08% of company expenses per employee.

The International Management Training Centre organised 48 residential seminars with a total

of 701 teaching hours, attended by 730 management staff of various levels from the Units and

companies in SISTEMA MAPFRE, both from Spain and overseas.

Among the activities of the Centre, it is worth mentioning the ‘proyecto Horizonte’, an ongo-

ing training programme for young employees with development potential, initiated in 2001,

which taught eight modules with a total of 560 teaching hours and 58 course participants over

the course of 2003. It also provided specific residential courses for management secretaries

with a total of 78 teaching hours and 55 participants. A total of 24,000 teaching hours were

provided by the International Management Training Centre in 2003.

The activities of the Department for the Prevention of Occupational Hazards have continued

as usual, with the following aspects being worthy of mention:

› With regard to prevention, assessments and reviews of safety, hygiene and ergonomic

risks have been carried out in accordance with the pertinent preventive planning.

› With regard to Health Monitoring, over 22,500 medical consultations were carried out over

the course of 2003 and the relevant initial or regular medical check-ups carried out.

› Accident frequency and impact indices remained the same as in 2002, while the gravity

index fell by 0.01%. The average duration of disability index fell by two days. Maintaining

these indices is the result of applying all the preventive measures included in the various

action plans of the Prevention Department.

A MAPFRE office


The Integrated Computerised Payroll and Human Resources Management System has been

consolidated, which has encouraged the decentralisation of management operations and, once

the implementation of the Employee Self-Service was consolidated, the Management Self-Ser-

vice was added to it, which facilitates the on-line performance of personnel management

processes by their managers. The Self-Service has also been given an adequate level of com-

munication security through the adoption of the SSL security certificate.

A new tool called ‘Management of the Working Day’ has also been added to Human Resources

Management, which enables attendance control operations to be carried out from the employ-

ee’s computer. Over the course of 2003, this new tool was installed in three sub-centres, in the

central departments of two SISTEMA MAPFRE companies and in the Human Resources Unit,

and is due to be gradually rolled out to all work centres that request it over the course of 2004.

Pursuant to one of the objectives of the Strategic Plan for SISTEMA MAPFRE, a collection of

rules to improve objectivity and efficiency in personnel selection has been prepared and

approved, which must be followed by all companies in SISTEMA MAPFRE, both in Spain and

abroad.

The introduction of the Integrated Management by Competence Plan, developed in the General

Insurance Operating Unit, has continued, and is due to be rolled out to other Units and compa-

nies in SISTEMA MAPFRE over the course of 2004.

Finally, during the year, special attention has been given to the situation of SISTEMA MAPFRE’s

retired personnel, by setting up a number of dedicated support services for them, which will be

supplemented in 2004 by a system of aid for those who have insufficient financial resources, for

which purpose the appropriate provision has been made on the balance sheet.

A MAPFRE office


Territorial Structure

At the end of 2003, the distribution network in Spain consisted of 346 direct offices and 2,222

delegations (215 more than in 2002), plus 157 MAPFRE FINISTERRE offices, which are being

gradually integrated into the SISTEMA MAPFRE network. Over the course of the year, the net-

work configuration has been adapted to the territorial presence requirements of SISTEMA

MAPFRE, which handles the work of a total of 20,362 tied agents and 2,883 brokers. It should

be pointed out that the agency contract has been extended to 81% of the agents who started

working for MAPFRE in 2002.

Over the course of 2003, the work of effectively promoting, extending and consolidating the

Territorial Structure has continued by means of various types of action, among which the fol-

lowing are worthy of special mention:

› The ‘New Delegates’ programme, attended by 253 agents, with a subsidy investment of

¤0.6 million.

› The ‘Sistema Mapfre Integrated Agent’ programme, involving 215 new agents (25% more

than the previous year), to which a financial investment of ¤1.15 million was assigned. As

at 31 December 2003, 1,112 active agents had gone through the SMIA programme.

› As far as the Agents network is concerned, it is worth mentioning: the signing of 8,193

agency agreements by MAPFRE CAJA SALUD; the addition of 12,433 appendices to the con-

tracts of MAPFRE MUTUALIDAD to regulate the activities of the agents with regard to the

financial products and services that MAPFRE distributes over its network; and the produc-

tion of a new version of ‘MEREA’ (Automation of the Agents network) which, among other

benefits, will allow the issuance of contracts in the sub-centres.

› With regard to training, various activities were carried out involving 6,737 agents, the fol-

lowing standing out for their implication for the future:

- the participation of 1,881 ‘delegates’ employees’ who received training from the relevant

departments of MAPFRE.

- the high number of prizes won by the MAPFRE agents who took part in the 3rd Training

Contest run by ICEA/UNESPA which confirms the satisfactory professional standards of

our agents.

- the training received by the professional group of office managers in their respective sub-

centres and in the International Management Training Centre.

- the start of the ‘Programme for developing the delegation as a company’ project for del-

egates, concentrating on company management and office automation, which will con-

tinue in 2004.


› The Customer Care Department: carried out 382 sales campaigns aimed at more than 1.1

million customers; consolidated 7,978,369 contracts corresponding to 5,586,539 cus-

tomers (of which 14.6% are shared); and produced various reports and analyses to facili-

tate the sales initiatives of the network.

In October 2003, the governing bodies of SISTEMA MAPFRE approved a new framework for

the Territorial Structure of SISTEMA MAPFRE, based on differentiating between the manage-

ment of the business, which is the responsibility of each Unit, and distribution which will be

carried out jointly through the Common Network, with the necessary support of each of the

Units. Along this line of thinking, the Plan proposed the following measures:

› Renewal of the sales structures and operation of the network to achieve better dynamism

in distribution.

› Assumption by sub-centre managers of the maximum responsibility for preparing and

complying with the budgets of all MAPFRE Operating Units and in the expansion and

renewal of the network and strengthening of the role of the Branch Managers.

› Expansion of the number of sub-centres to boost market penetration.

› Reaffirmation of the principle of specialisation of the Units in the management of the busi-

ness, to boost current quality levels in management services and results.

› Review of the size and operation of the Territorial Administrative Centres, which in the

future may be shared by several sub-centres.

› Simplification of the distribution structures, seeking greater efficiency, synergies, cost

savings and comprehensive customer service.

› Greater professionalism and substantial expansion of the network.

› Improved service to the public through the direct offices, using adequately trained and

motivated personnel to handle not only customer care, but also the sale of and after-sale

service for all MAPFRE products for individuals.

The plan forecasts that these targets will be achieved over the course of 2004 for which the

new sub-centres of North Andalusia (Cordoba and Jaén), Cantabria-Burgos, Southern Galicia

(Orense and Pontevedra) and East Catalonia (Lleida and Tarragona) have started operating,

while the rest of the Catalan territory was split between the sub-centres of Barcelona (city

and part of the province) and Western Catalonia (rest of the province and Girona).

These new sub-centres, which since inception will operate in accordance with the new frame-

work, will serve as a pilot experience to, depending on their development, extend the plan to

all sub-centres in 2005.


Management Control

The Financial and Management Control Department of SISTEMA MAPFRE, created at the end

of 2002, has carried out an intense activity over the course of 2003 to expand and improve the

financial and management information of SISTEMA MAPFRE as a whole and to achieve an

appropriate level of standardisation of the figures and ratios that are used to evaluate the

results of the various units.

Once again, thanks to the efforts of the Administrative Departments of the various units and

companies, under the co-ordination of the Company Secretary of SISTEMA MAPFRE, the time

required for closing the accounts and preparing the Annual Reports has been reduced, which

has allowed to bring forward by 23 days their approval by the Board of Directors and the hold-

ing of the Annual General Meetings of MAPFRE MUTUALIDAD and CORPORACIÓN MAPFRE.


Internal Auditing

At the close of the year, the internal auditing structure of SISTEMA MAPFRE consisted of eight

Internal Auditing Departments (SAIs) located in the parent companies of the Operating Units

and ten Internal Auditing Units (UAIs) located in the main countries of Latin America, all co-

ordinated by the General Auditing Department, acting under the direct control of the Audit

Committee of SISTEMA MAPFRE.

Over the course of 2003, a total of 568 audits were carried out, with the following breakdown:

131 in Central Services; 157 in the Territorial Structure; and 59 in subsidiaries. Furthermore,

there were 199 involved special audits and 22 system audits.

A satisfactory 75% of the recommendations made were implemented. Both the reports and

recommendations were regularly viewed by the Audit Committee of SISTEMA MAPFRE and,

when appropriate, of CORPORACIÓN MAPFRE.

7,792 hours were devoted to training the internal auditors, both through in-house and exter-

nal courses, equal to a ratio of 94 hours per auditor per annum.

The models and methodology for producing and obtaining the risk profiles of MAPFRE

MUTUALIDAD, MAPFRE VIDA, MAPFRE SEGUROS GENERALES and the GRUPO MAPFRE

VERA CRUZ in Brazil were submitted to the Audit Committees of SISTEMA MAPFRE and COR-

PORACIÓN MAPFRE. In 2004, other operating units in Spain and Latin America will be inclu-

ded in this ambitious project, more extensive information on which is provided in another sec-

tion of this report.

The General Auditing Department has reviewed the individual and consolidated Management

Reports and Annual Accounts of MAPFRE MUTUALIDAD and CORPORACIÓN MAPFRE and

has reported on the said documents to the Audit Committees of SISTEMA MAPFRE and COR-

PORACIÓN MAPFRE, respectively. The quarterly reports that CORPORACIÓN MAPFRE has

submitted to the Spanish National Securities Market Commission (the ‘CNMV’) and the rele-

vant financial information that have been submitted to the senior representative bodies of

SISTEMA MAPFRE have also been reviewed.

> It is also worth mentioning that significant progress has been made with the process of

setting up system audits, for which a working plan has been produced for 2004. The provisions

of the Money Laundering Prevention Regulations have been complied with and the compul-

sory operations corresponding to the period from January to December 2003 have been

reported to the Banco de España.


Information Technologies

During 2003, the development of business in Spain increased substantially the performance

requirements of the various systems. The necessary expansions were carried out, the most

significant being for information storage, mainly for images relating to the handling and

adjustment of claims. The computers dedicated to the common transactional core, policies

and account administration were moderately expanded in 2003 and are due to be replaced,

after they have been fully amortised, in the first quarter of 2004. The equipment mainly dedi-

cated to claims processing has been expanded to nearly double its capacity to deal with the

improvements in these services and the increased number of interventions.

During 2003: the fifteen new direct offices opened in the Territorial Network have been com-

puterised; the automation of twenty delegations has been updated; 112 office servers have

been renewed; and 690 new workstations have been installed (352 in sub-centres and 338 in

sales offices).

Within the framework of business continuity and disaster recovery, the companies have made

progress along three lines: producing business contingency plans; increasing the degree of

exploitation of the IT systems by identifying redundant equipment and communication lines;

and setting up a support centre. These activities will be introduced in stages extending over

the next three years.

As far as applications development is concerned, a number of key decisions were taken in

2003. The decision to adopt the TRONADOR system, consisting of relational databases, that

MAPFRE has developed and previously installed in its Latin American companies, as the core

of the insurance applications for the majority of the Non-life branches in Spain was particu-

larly relevant. This tested, modern software will replace the oldest part of the hierarchical

database systems currently in use, retaining both the peripheral and claims processing appli-

cations which constitute a fundamental differentiating feature of the MAPFRE products.

Another equally significant initiative was the creation of a new system (SIRED), through which

the MAPFRE network can manage customer relations, as well as sales and services. Its aims

include the enhancement of information availability in a homogenous form for the various

products and the creation and updating of the valuable information generated by the man-

agement of the relationship between the network and the customer. This project is also a

multi-annual project, the initial phases being scheduled for 2004.


In 2003, a pilot scheme for implementing the standards defined in 2002 for the Web format

presentation of all the applications used by the network of agents and representatives, which

will serve as the basis for the new platform that is being installed in delegations (PDM), was

designed and completed. The fundamental characteristics of this project are the use of a vir-

tual private network based on an ADSL access, which combines the security and speed asso-

ciated with this type of network with the simplicity and low operating cost of the Web. The

installation plan was started in the last quarter of 2003 and is due to be extended to the all

delegations and a substantial number of the MAPFRE offices in Spain in the first quarter of

2004.

Major improvements have been made to the Corporate Communications Network (RCCM)

which are increasing the reliability and capacity of the links connecting the various sub-cen-

tres. The connection of our systems to the Internet has also been improved in order to guar-

antee this service, which is so important to customers and the general public.

MAPFRE INTERNET has changed its strategic objectives, becoming a service company with-

out any business objectives of its own, and making its technical expertise available to the var-

ious companies. The development cycle of the MAPFRE Portal, which is now considered to be

mature and stable, and was the central activity of MAPFRE INTERNET in 2003, has come to

an end. Its main milestones were the inclusion of Employee Self-Service, which speeds up

and reduces the administrative load of personnel management, and the start-up and devel-

opment of the Internet Office, which makes it easier for customers to communicate with

MAPFRE. It is expected that developments in 2004 will enhance the internal functionalities of

the Portal so that it can be used by the Operating Units and the network of offices.

The Operating Units and internal IT services of SISTEMA MAPFRE have continued rationalis-

ing and improving the technical aspects of its IT equipment and infrastructures:

› MAPFRE MUTUALIDAD, taking advantage of the larger capacity provided by technological

advances in data communications, has centralised the processes for handling Motor

insurance claims, which were previously dealt with on a regional basis, in a single com-

puter, thus optimising the usage of these equipments.

› MAPFRE SEGUROS GENERALES has installed successfully and at a low cost the applica-

tion for selling insurance via the banking channel, using the infrastructure created for this

purpose (SDS) in development work carried out jointly by MAPFRE and CAJA MADRID.

› The policy issuance systems of the Commercial Insurance Unit have been improved sub-

stantially, with specific automation for 95% of the types of products and risks written. Like-

wise, different versions of the information models, geared to various aspects of manage-

ment, have also been defined.


› MAPFRE VIDA, which has its own data processing centre, has completed its Technological

Development Plan (PET), which covers the modernisation work scheduled to be carried out

over the next three years. It has also entered into the necessary contracts and made the

relevant appropriations for its business continuity plans, and has carried out its first sup-

port drill with total success.

› MAPFRE CAJA SALUD has started using its own data processing centre.

› The America Unit has completed the training and analysis cycle of all its foreign sub-

sidiaries, in order to ensure that all of them will use the same version of the TRONADOR

system by 2004, by installing the latest version of TRONWEB. The installation of this latest

version will unify the corporate software of all the Unit’s Life and Non-life companies.

› MAPFRE ASISTENCIA has continued making progress in 2003, with the installation of its

AMA application (Global Assistance Application) in all its subsidiaries and has developed

the use of Business Intelligence solutions (COGNOS) for the use of consolidated account-

ing information under SAP/R3 and the GADOR application as an integrated policy issuance

solution.

The concern for quality in IT services has been included in the plans of the Operating Units

through the creation of Projects Offices to promote the adoption of best practice and a rigor-

ous use of established methodologies. As far as the internal IT services are concerned,

progress has been made by defining agreements and working procedures in order to improve

the quality and reliability of the services provided.


Advertising

Independently of the specific advertising campaigns of the various units and companies, a

new MAPFRE institutional advertising campaign based on the slogan ‘Maybe one day we can

insure everything!’ was carried out at the beginning of 2003 saw, with extensive broadcasting

on national and regional television channels. The effectiveness of this campaign can be seen

in the omnibus survey carried out by ICEA for the insurance sector, according to which:

› MAPFRE is the leading company in the insurance sector in terms of ‘spontaneous aware-

ness’, with 68.6% of those questioned spontaneously mentioning the brand name, more

than thirty percentage points ahead of the next insurance company.

› In terms of ‘suggested awareness’ MAPFRE is known to 97.4% of those questioned.

› During the 2003 advertising campaign, the MAPFRE brand ranked third in terms of public

awareness in the financial institutions and insurance companies sector.

› Brand advertising was boosted in direct offices and delegations with multi-purpose

posters and media, display stands for brochures of all the units in SISTEMA MAPFRE and

a sales brochure of insurance and financial products for individuals.

The advertising year ended with the scheduling of the last advert of the year on TVE (Spanish

State Television), lasting 60 seconds, which opened the new 2004 advertising campaign.

No-one can insure that the water will always be blue

Nor that there is a perfect world

No-one can insure that a wish will come true

Nor happiness or love.

No-one can insure the air

Nor the bottom of the sea

No-one can insure silence

Nor the weather, nor a scent

No-one can insure the rain.

Communication

In 2003, in accordance with the objectives that led to the creation of the Communications

Department of SISTEMA MAPFRE at the end of 2002, special attention was given to develop-

ing and co-ordinating internal and external communications, with the following achievements

being worthy of special mention:

› Relations with the media were improved, with 45 press releases and responses to a total

of 389 requests for information. At the same time, design and operational work began on

a press room for the MAPFRE Portal as an instrument for providing ongoing contact with

the media.

› Meetings were held with the various units and companies in SISTEMA MAPFRE in order to

ascertain their specific problems in terms of communication first hand and establish fluid

channels of co-ordination and collaboration.

› The MUNDO MAPFRE magazine was completely revamped and, with a new editorial line,

has reinforced its role as the principal means of internal communications within SISTEMA

MAPFRE. There were four editions in 2003 plus a separate special edition devoted to pre-

senting the 2002 results and the 2003 General Meetings, which were available in printed

format or over the Intranet to all directors and employees of SISTEMA MAPFRE. The aver-

age print run was 22,000 copies per edition. Lines of communication were also set up with

the various units to co-ordinate and improve their own internal publications.

This communication work has been supplemented by the use of the Internal Portal as a vehi-

cle for distributing important news, with 201 news being distributed in this way.


No-one can insure a dream


Corporate Identity

In 2003, there was an analysis of the corporate identity of SISTEMA MAPFRE, with the assis-

tance of the Alberto Corazón office, to assess the image projected by MAPFRE, to update it as

appropriate, and to establish rules allowing to better co-ordinate the external image of the var-

ious units and companies.

The conclusions of the study carried out confirmed: the extraordinary recognition and fame of

the MAPFRE brand, as well as its remarkable presence and reputation; its consistency and

strong graphic personality; the high level of recognition of the ‘three leaf clover’ as a MAPFRE

identifier; the value of the ‘bridge’ as an instrument of communication of SISTEMA MAPFRE,

the use of which is compatible with the logo and three leaf clover; and the validity of the colour

red (Pantone 485) as an expression of the dynamism of SISTEMA MAPFRE.

In the light of these conclusions, it was agreed to retain MAPFRE’s existing identity symbols

with slight touching up of a functional nature designed to improve the legibility of the logo and

accentuate the symmetry of the ‘three leaf clover’ symbol. At the same time, rules have been

laid down for its consistent use by all companies in SISTEMA MAPFRE, the use of the logo

being combined with the identification of each line of business.


EXTERNAL AUDITING

Ernst & Young audited the annual accounts for fiscal year 2003 of SISTEMA MAPFRE and its

principal constituent companies. Fees accruing to the external auditors in the aforemen-

tioned year in connection with the auditing of the annual accounts, together with other relat-

ed services, amounted to ¤2.9 million, with a further ¤140,000 for additional services, an

amount deemed not to compromise the independence of the auditors. The reports issued by

the external auditors are not qualified in any way.

It is worth noting that, in order to facilitate the monitoring of the external auditing process of

the Annual Accounts, Ernst & Young created a virtual space for the Internal Auditing depart-

ments and units of SISTEMA MAPFRE called “Quick Place MAPFRE”, which has improved the

coordination of such process.


OUTLOOK

Macroeconomic performance in the latter months of 2003 and the early part of 2004 points to

greater dynamism in global economic activity throughout the current year, something that

will have a positive effect on the insurance industry. Furthermore, favourable stock market

trends lead to expect a recovery in the sale of equity-linked savings products, as an alterna-

tive to real estate investments and fixed income instruments. A rise in interest rates should

also have a favourable effect on Life insurance sales, which will be boosted by the Insured

Pension Plans, which in their initial stages have been well received by savers.

Against this backdrop, it is possible to expect a more favourable economic climate for the

business activities of the SISTEMA MAPFRE companies, which could be counterbalanced by

greater price competition, both in the Direct Insurance and the Reinsurance businesses.

Budgets approved in 2003 estimate that SISTEMA MAPFRE will achieve in 2004, assuming its

present consolidated group, consolidated revenues of ¤10,470 million (including those of

equity-accounted companies), a 13% increase, with a gross profit of ¤694 million and a net

profit attributable to the parent company of SISTEMA MAPFRE of ¤290 million, a similar fig-

ure to 2003.


CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2003 AND 2002

ASSETS 2003 2002

A. SHAREHOLDERS, UNCALLED CAPITAL

B. INTANGIBLE ASSETS AND START-UP EXPENSES 561,313 522,443II. Start-up expenses 10,204 10,5151

1. Incorporation expenses 142 882. Start-up expenses 3,839 3,5673. Capital increase expenses 6,223 6,860

II. Intangible fixed assets 543,598 495,6361. Portfolio acquisition expenses 17,980 19,7322. Other intangible fixed assets 156,729 147,8323. Accumulated depreciation (to be deducted) (82,779) (72,247)4. Goodwill

Of companies consolidated by full or proportional integration 438,554 387,434Of companies consolidated by the equity method 13,114 12,885

III. Deferred expenses 7,511 16,2921. Expenses on prepaid commissions and other acquisition expenses 5,809 7,4272. Other expenses 1,702 8,865

C. INVESTMENTS 16,610,985 13,189,980I. Tangible investments 1,068,068 1,034,428

1. Land and buildings 1,224,127 1,164,5442. Other tangible investments 14,345 21,5883. Advances and tangible investments in progress 11,927 20,3474. Accumulated depreciation (to be deducted) (176,250) (165,930)5. Reserves (to be deducted) (6,081) (6,121)

II. Financial investments in Group companies and affiliates 3,207 8,4781. Shares in Group companies - 3,1752. Shares in affiliates 320 1,8513. Uncalled capital (to be deducted) - (9)4. Other financial investments in Group companies 3,203 3,4945. Reserves (to be deducted) (316) (33)

III. Financial investments recorded by equity method 382,905 374,6681. Financial investments in cos. consolidated by equity method

Shares and other interest in cos. consolidated by equity method 408,176 385,263Uncalled capital (to be deducted) (26,966) (12,372)Loans to companies recorded by equity method 1,695 1,796Reserves (to be deducted) - (19)

IV. Other financial investments 15,088,152 11,706,5041 Financial investments in capital 264,698 210,7952. Uncalled capital (to be deducted) (10) (1,048)3. Fixed-income securities 11,978,513 9,539,4794. Index-linked securities 31,416 11,0375. Mortgage loans 11,611 6,8806. Other loans and advances on policies 236,149 262,4127. Investment fund units 965,081 823,0398. Deposits held with credit institutions 823,622 709,5989. Other financial investments 808,431 210,02910.Reserves (to be deducted) (31,359) (65,717)

V. Deposits established for accepted reinsurance 68,653 65,902

D. INVESTMENTS ON ACCOUNT OF LIFE POLICY HOLDERS ASSUMING INVESTMENT RISK 446,101 574,693

D.(bis) PARTICIPATION BY REINSURANCE IN TECHNICAL RESERVES 1,041,430 523,181I. Provisions for unearned premiums 382,069 237,350II. Provision for life insurance 10,191 21,639III. Provision for outstanding claims 649,170 264,192IV. Other technical reserves - -

(Continued on following page)

Balance Sheet |

(Continued from previous page)


2003 2002

E. CREDITS 1,766,031 1,579,957I. Credits on direct insurance operations 1,286,378 1,153,922

1. Insurance policy holders 1,295,869 1,153,4772. Provisions for premiums pending collection (to be deducted) (47,225) (40,626)3. Brokers 44,557 51,4394. Provisions (to be deducted) (6,823) (10,368)

II. Credits on reinsurance operations 169,803 162,737III. Credits on coinsurance operations 51,702 32,962IV. Tax, corporate and other credits 273,691 241,651V. Provisions (to be deducted) (15,543) (11,315)

F. OTHER ASSETS 1,448,682 1,211,719I Tangible fixed assets 129,958 126,413

1. Fixed assets 329,392 312,4452. Accumulated depreciation (to be deducted) (199,408) (186,006)3. Provisions (to be deducted) (26) (26)

II. Cash held with credit institutions, cheques and cash on hand 1,289,810 1,079,576III. Other assets 29,079 5,925IV. Provisions (to be deducted) (165) (195)

G. ACCRUALS 608,923 507,809I. Interest accrued and not yet due 254,140 210,440II. Premiums accrued and not issued 12,876 12,723III. Other accrual accounts 7,493 6,561IV. Commissions and other acquisition expenses 334,414 278,085

TOTAL ASSETS 22,483,465 18,109,782

Figures in EUR 000s


CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2003 AND 2002

LIABILITIES 2003 2002

A. CAPITAL AND RESERVES 1,393,482 1,171,272I Mutual fund 110,000 110,000II Revaluation reserves 4,966 4,966III Reserves 920,993 803,489

1. Legal reserve 818,140 706,4742. Special reserves 9,947 --3. Reserves in consolidated companies

Reserves in companies consolidated by full or proportional integration 300,388 257,623Reserves in companies consolidated by the equity method (6,230) (15,089)

4. Translation differencesOf companies consolidated by full or proportional integration (195,737) (144,192)Of companies consolidated by the equity method (5,515) (1,327)

IV Results from previous years pending application 58,902 46,9461 Brought forward 58,902 46,946

V Results for the year 298,621 205,8711. Consolidated Profit and Loss 446,408 326,9642. Profit and Loss attributable to external shareholders (147,787) (121,093)

A. (bis) MINORITY INTERESTS 1,102,522 1,033,422

A. (ter) DEFERRED INCOME 11,113 16,3101. Positive foreign currency differences 8,470 13,9962. Commissions and other management expenses on ceded reinsurance 888 7013. Negative consolidation difference

Of companies consolidated by full or proportional integration 1,116 971Of companies consolidated by the equity method 639 642

B. TECHNICAL RESERVES 17,248,933 13,525,652I. Reserves for unearned premiums and for risks in progress 2,552,660 2,151,113II. Reserves for life insurance 11,256,264 8,771,577

1. Reserves for unearned premiums and for risks in progress 62,561 45,2322. Mathematical reserves 11,193,703 8,726,345

III. Reserves for outstanding claims 3,008,212 2,309,929IV. Reserves for profit sharing and returns 31,159 15,172V. Stabilisation reserves 216,084 127,345VI. Other technical reserves 184,554 150,516

C. TECHNICAL RESERVES RELATING TO LIFE INSURANCE WHEN INVESTMENT RISKIS ASSUMED BY POLICY HOLDERS 446,101 574,693

D. PROVISIONS FOR RISKS AND EXPENSES 195,490 149,002I. Provision for pensions and similar obligations 5,421 1,778II. Provision for taxes 35,092 25,769III. Provision for payments of liquidation agreements 20,945 20,360IV. Other provisions 134,032 101,095

(Continued on following page)

(Continued from previous page)

2003 2002

E. DEPOSITS RECEIVED ON CEDED REINSURANCE 112,979 95,513

F. DEBT 1,857,952 1,457,856I Due on direct insurance operations 421,167 390,068

1. Due to policy holders 90,164 119,1732. Due to brokers 27,559 25,9283. Conditioned debt 303,444 244,967

II. Due on reinsurance operations 207,683 171,349III. Due on coinsurance operations 21,094 7,970IV. Loans 275,000 275,000V. Due to credit institutions 162,015 23,360

1. Debt on financial leases 2,801 2,9692. Other debt 159,214 20,391

VI. Due on transactions in preparation of insurance contracts 46,002 39,925VII. Due on repos of assets - -VIII. Other debt 724,991 550,184

G. ACCRUALS 114,893 86,062

TOTAL LIABILITIES 22,483,465 18,109,782

Figures in EUR 000s


ANNUAL ACCOUNT · 2003

CONSOLIDATED PROFIT AND LOSS ACCOUNT AS AT 31 DECEMBER 2003 AND 2002

I. TECHNICAL ACCOUNT NON LIFE INSURANCE 2003 2002

I.1 Earned premiums, net of reinsurance 4,791,699 4,424,474a) Premiums written 5,706,979 5,288,487

a.1.) Direct insurance 5,147,966 4,764,848a.2.) Accepted reinsurance 564,503 530,797a.3.) Variation in reserves for outstanding premiums (5,490) (7,158)

b) Premiums from ceded reinsurance (646,046) (583,973)c) Variation in reserves for unearned premiums (297,675) (352,997)

c.1.) Direct insurance (233,490) (294,328)c.2.) Accepted reinsurance (64,185) (58,669)

d) Variation in reserves for unearned premiums, ceded reinsurance 28,441 72,957

I.2 Income from investments 399,260 430,783a) Income from tangible investments 26,463 31,281b) Income from financial investments 282,052 365,791c) Adjustments to the value of investments 23,149 10,222

c.1.) Tangible investments 1,511 9,588c.2.) Financial investments 21,638 634

d) Profits on realised investments 67,596 23,489d.1.) Tangible investments 35,751 5,259d.2.) Financial investments 31,845 18,230

I.3 Other technical income 6,871 7,816

I.4 Claims incurred, net of reinsurance 3,363,609 3,194,665a) a) Claims paid 2,896,820 2,794,674

a.1.) Direct insurance 2,868,733 2,655,831a.2.) Accepted reinsurance 295,428 342,985a.3.) Ceded reinsurance (267,341) (204,142)

b) b) Variation in reserves for claims 241,736 183,738b.1.) Direct insurance 230,841 293,900b.2.) Accepted reinsurance (6,508) (85,890)b.3.) Ceded reinsurance 17,403 (24,272)

c) c) Claims handling expenses 225,053 216,253

I.5 Variation in other technical reserves, net of reinsurance 35,297 26,570

I.6 Sharing in profits and returns 2,505 3,432a) Benefits and expenses on sharing in profits and returns 2,343 512b) Variation in the provision for sharing in profits and returns 162 2,920

I.7 Net operating expenses 940,590 945,189a) Acquisition expenses 854,696 832,155b) Administration expenses 192,032 199,842c) Commissions and participation in ceded and retroceded reinsurance (106,138) (86,808)

I.8 Variation in the stabilisation reserve 85,345 61,114

I.9 Other technical expenses 101,633 92,523a) Variation in reserves for insolvencies 5,273 3,536b) Variation in reserves for depreciation of fixed assets - 347c) Variation in benefits on claim liquidation agreements (15,581) 1,649d) Others 111,941 86,991

I.10 Expenses on investments 107,777 143,723a) Investment management expenses 85,028 105,302

a.1.) Expenses on investments and financial accounts 72,258 91,891a.2.) Expenses on tangible investments 12,770 13,411

b) Adjustments to the value of investments 14,001 33,601b.1.) Depreciation tangible investments 10,638 9,983b.2.) Provisions for tangible investments 878 1,033b.3.) Provisions for financial investments 2,485 22,585

c) Losses from investments 8,748 4,820c.1.) From tangible investments 1,471 2,430c.2.) From financial investments 7,277 2,390

I.11 Sub total (Result of the Non Life technical Account) 561,074 395,857

Figures in EUR 000s

Profit and Loss Account


I. TECHNICAL ACCOUNT LIFE INSURANCE 2003 2002

II.1. Earned premiums, net of reinsurance 1,812,118 2,372,857a) Premiums written 1,876,261 2,446,053

a.1.) Direct insurance 1,843,414 2,421,456a.2.) Accepted reinsurance 33,301 24,099a.3.) Variation in reserves for outstanding premiums (454) 498

b) Premiums from ceded reinsurance (56,882) (64,674)c) Variation in reserves for unearned premiums (1,153) (8,498)

c.1.) Direct insurance 6,530 (4,540)c.2.) Accepted reinsurance (7,683) (3,958)

d) Variation in reserves for unearned premiums, ceded reinsurance (6,108) (24)

II.2 Income from investments 723,898 629,688a) Income from tangible investments 19,414 22,018b) Income from financial investments 641,003 553,734c) Adjustments to the value of investments 21,842 7,133

c.1.) Tangible investments 13 -c.2.) Financial investments 21,829 7,133

d) Profits on realised investments 41,639 46,803d.1.) Tangible investments - 246d.2.) Financial investments 41,639 46,557

II.3. Unrealised gains from investments 24,932 208

II.4. Other technical income 591 2,621

II.5. Claims incurred, net of reinsurance 1,329,099 1,145,870a) Claims paid 1,296,033 1,120,713

a.1.) Direct insurance 1,315,172 1,134,544a.2.) Accepted reinsurance 19,070 16,093a.3.) Ceded reinsurance (38,209) (29,924)

b) Variation in reserves for claims 25,519 18,488b.1.) Direct insurance 24,297 14,206b.2.) Accepted reinsurance (443) 639b.3.) Ceded reinsurance 1,665 3,643

c) Claims handling expenses 7,547 6,669

II.6 Variation in other technical reserves, net of reinsurance 760,567 1,398,884a) a) Reserves for life insurance 889,158 1,563,550

a.1.) Direct insurance 882,952 1,565,337a.2.) Accepted reinsurance (2,290) (1,491)a.3.) Ceded reinsurance 8,496 (296)

d) Reserves for life insurance when investment risk is assumed by holders (128,591) (164,666)

II.7. Sharing in profits and returns 23,672 22,685a) Benefits and expenses on sharing in profits and returns 22,467 20,039b) Variation in the reserve for sharing in profits and returns 1,205 2,646

II.8 Net operating expenses 156,159 153,035a) Acquisition expenses 154,897 144,807b) Variation in the amount of deferred acquisition expenses 396 675c) Administration expenses 30,906 32,952d) Commissions and participation of ceded and retroceded reinsurance (30,040) (25,399)

II.9 Expenses on investments 168,290 157,478a) Management expenses on investments 137,493 124,651

a.1.) Expenses from investments and financial accounts 131,049 116,515a.3.) Expenses from tangible investments 6,444 8,136

b) Adjustments to the value of investments 9,667 26,479b.1.) Depreciation tangible investments 3,417 3,412b.2.) Provisions for tangible investments - 50b.3.) Provisions for financial investments 6,250 23,017

c) Losses from investments 21,130 6,348c.1.) From tangible investments 530 414c.2.) From financial investments 20,600 5,934

II.10. Unrealised losses on investments 50 41,329

II.11. Other technical expenses 14,578 13,348

II.12. Sub total (Result of the Life technical account) 109,124 72,745

Figures in EUR 000s




III. NON TECHNICAL ACCOUNT 2003 2002

III.1. Result of the Non Life technical account 561,074 395,857

III.2. Result of the Life technical account 109,124 72,745

III.3. Income from investments 118,210 98,794a) Income from tangible investments 6,904 6,692b) Income from financial investments 65,603 49,153c) Positive translation results 213 2,082d) Profit sharing of companies consolidated by the equity method 31,888 34,043e) Adjustments to the value of investments 2,948 3,201f) Profits from realised investments 10,654 3,623

III.3.(bis) Reversion of negative consolidation differences - -

III.3.(ter) Monetary correction – positive result 179 18,481

III.4. Expenses from investments 96,624 89,346a) Investment management expenses 46,141 44,866

a.1.) Expenses from investments and financial accounts 44,000 43.765a.3.) Expenses from tangible investments 2,141 1.101

b) Adjustments to the value of investments 10,119 8,755b.1.) Depreciation of tangible investments 3,220 2.163b.2.) To provisions for tangible investments 1,374 241b.3.) To provisions for financial investments 5,525 6.351

c) Expenses from investments in companies recorded by equity method 9,021 5,253d) Negative translation results - 1,344e) Losses from investments 1,850 1,771f) Amortisation of consolidation goodwill 29,493 27,357

III.4.(bis) Monetary correction – negative result 11,953 4,191

III.5. Other income 105,418 99,450

III.6. Other expenses 163,904 157,452

III.7. Extraordinary income 11,929 24,773

III.8. Extraordinary expenses 27,485 19,159

III.9. Tax on profits 159,560 112,988

III.10. Result for the year 446,408 326,964a) Result attributable to minority shareholders 147,787 121,093b) Result of the year attributable to the controlling company 298,621 205,871

Figures in EUR 000s

1. GENERAL OVERVIEW ON THE COMPANY AND ITS ACTIVITY

MAPFRE Mutualidad de Seguros y Reaseguros a Prima Fija (hereinafter the “Entity” or

“MAPFRE MUTUALIDAD) is an insurance Mutual company, specialising in the Motor line, and

parent of a number of controlled companies engaged in insurance, finance, and securities

and real estate investment activities.

The definition of the consolidatable group has been established in accordance with Act

30/1995, of 8 November, on Disposition and Supervision of Private Insurance, and with Royal

Decree 2486/1998, of 20 November. Pursuant to the mentioned act, the company MAPFRE

Agropecuaria, Mutualidad de Seguros y Reaseguros a Prima Fija (hereinafter “MAPFRE

AGROPECUARIA”), is incorporated into the consolidatable group, notwithstanding the fact

that there is no shareholding link with it because of its being a mutual company, but it does

form part of the same decision making unit. This incorporation into the consolidatable group

is made by adding its balance sheet and profit and loss account, having previously eliminat-

ed the balances and results arising from transactions carried out with other consolidatable

group entities.

The scope of activity of the Entity includes the Spanish territory, albeit its controlled compa-

nies also operate in European Union countries and other non EU countries. The Entity’s reg-

istered address is in Madrid, Carretera de Pozuelo a Majadahonda s/n, 28220 Majadahonda.

In Spain, the Group formed by the entity and its subsidiaries (known as SISTEMA MAPFRE) is

structured as follows:

a) Central Services

These concentrate the technical and administrative functions of insurance management, the

creation of new products, the preparation and development of marketing campaigns, as well

as the provision of new commercial distribution networks for territorial offices.

b) Territorial Network

SISTEMA MAPFRE's extensive and growing Territorial Network is divided into 18 geographical

divisions, or Sub-centrals, where marketing activities, as well as operating and administrative

activities, are coordinated and promoted. With effect 1st January, 4 additional Sub-centrals

have been created pursuant to the new territorial network becoming operational in fiscal year

2004. The territorial network is formed by the following elements:

› Direct Offices: these offices are serviced by staff from the Entity and its subsidiaries; they

essentially carry out marketing tasks, issuance of policies, attention to the public, and sup-

port to the agents’ network.

› Delegate Offices: they are SISTEMA MAPFRE offices serviced by a captive agent; their work

concentrates virtually on the sale of the Entity’s and the controlled companies’ products.

› Agents: SISTEMA MAPFRE has a high number of commission agents, who act as brokers

in the writing of transactions by virtue of cooperation agreements.


Consolidated Annual Report 2003 |

Irrespectively of this structure, SISTEMA MAPFRE maintains relationships with a high num-

ber of Insurance Brokers that contribute transactions, and also distributes products through

the branch office network of CAJA MADRID, a major Spanish credit institution, with which it

has a corporate alliance in force.

On the other hand, the controlled companies have adapted their internal structure and distri-

bution systems to the peculiarities of the markets where they operate.

2, SUBSIDIARIES, ASSOCIATED AND MULTI-GROUP COMPANIES

Subsidiaries and associated companies included in the consolidation are identified and their

details given in the table of shareholdings forming an integral part of this Annual Report as

Appendix 1. The said appendix provides a breakdown of the controlled companies included in

the consolidation as fully consolidated and those consolidated by the equity method, indicat-

ing also which affiliates have been consolidated by the equity method.

The equity method procedure has been chosen when subsidiaries companies have activities

sufficiently different so as to consider that their inclusion would prove contrary to the infor-

mation purpose of the consolidated annual accounts, as well as for those controlled compa-

nies excluded from the consolidatable group pursuant to article 20.3 of Act 30/1995, in accor-

dance with the provisions on formulation of accounts by insurance companies consolidated

groups. In order to provide further information and clarify the effect that the chosen option

has on the financial situation of the consolidated group, Appendix 2 is attached, which con-

tains a summary on the networth position and results of MAPFRE INVERSIÓN Sociedad de

Valores and its subsidiaries.

The configuration of companies as subsidiaries or associated is determined, respectively, by

the controlling company holding a majority of voting rights, directly or through subsidiaries,

and by its ownership of at least 20% in the share capital in the case of unlisted companies

(10% for insurance companies), or 3% in listed companies.

The annual accounts of controlled companies used for consolidation purposes correspond to

the 2003 fiscal year, closed on 31 December of the said year.

3. BASES OF PRESENTATION OF THE CONSOLIDATED ANNUAL ACCOUNTS

a) True and fair image

The true and fair image results from the application of the legal provisions on accounting

matters, and the Directors have not considered it necessary to include any supplementary

information.

b) Accounting principles

The consolidated annual accounts have been prepared in accordance with the accounting

principles and policies established in the Accountancy Plan for Insurance Companies (here-

inafter the “Plan”).


The Entity and the companies mentioned below restated all the elements of their tangible

fixed assets and tangible investments, pursuant to Royal Decree-Act 7/1996, of 7 June:

› MAPFRE AGROPECUARIA.

› MAPFRE SEGUROS GENERALES Compañía de Seguros y Reaseguros, S.A (hereinafter

“MAPFRE SEGUROS GENERALES”).

› MAPFRE GUANARTEME Compañía de Seguros Generales y Reaseguros de Canarias, S.A

(hereinafter “MAPFRE GUANARTEME”).

› MUSINI Sociedad Anónima de Seguros y Reaseguros (hereinafter “MUSINI”).

The effect of said restatement is described in notes 6.4, 6.5 and 6.10 of this Report.

c) Comparison of informationThere are no reasons preventing from comparing the year’s annual accounts with those of thepreceding year.

d) Changes in the Consolidation perimeterAppendix 1 identifies the companies which were incorporated into the consolidation perimeterin this fiscal year, showing also information on their networth and results. The following sec-tions detail the changes having taken place in the contents of the said appendix. The overalleffect of these changes on the consolidatable group’s networth, financial situation and resultsin 2003 with respect to the preceding year is described in the relevant notes to this annualreport.

› The following changes have taken place in the corporate name of the entities included in the

said appendix:

Former Name New Name

SEFIN, S.A. SEFIN AGENCIA DE SEGUROS, S.A.

FAZ AGENCIA DE SEGUROS, S.A. FINISTERRE AGENCIA CANARIA DE SEGUROS,SOCIEDAD UNIPERSONAL S.A. SOCIEDAD UNIPERSONAL

MAPFRE ACONCAGUA CIA. DE SEGUROS, S.A. MAPFRE ARGENTINA SEGUROS, S.A.

MAPFRE ACONCAGUA ART, S.A. MAPFRE ARGENTINA ART, S.A.

MAPFRE ACONCAGUA VIDA COMPAÑÍA DE SEGUROS S.A. MAPFRE ARGENTINA SEGUROS DE VIDA, S.A.

VERA CRUZ SEGURADORA, S.A. MAPFRE VERA CRUZ SEGURADORA, S.A.

VERA CRUZ CONSULTORÍA TÉCNICA MAPFRE VERA CRUZ CONSULTORÍA

E ADMINISTRAÇAO DE FONDOS S/C LTDA. ADMINISTRAÇAO DE FONDOS S/C LTDA

VERA CRUZ VIDA E PREVIDENCIA, S.A MAPFRE VERA CRUZ VIDA E PREVIDENCIA, S.A.

SEGUROS LA SEGURIDAD, C.A. MAPFRE LA SEGURIDAD, C.A.


› The following companies, which did not form part of the consolidation perimeter in the pre-

ceding year, were fully consolidated in the present fiscal year:

a) Due to acquisition in the year:

- SERVIMEDIC BALEAR, S.L. (Spain)

- MUSINI (Spain)

- MUSINI VIDA, S.A.DE SEGUROS Y REASEGUROS SOCIEDAD UNIPERSONAL (Spain),

hereinafter “MUSINI VIDA”

- INTERBOLSA, S.A. (Spain)

- SERVIFINANZAS, S.A. (Spain)

- GESMUSINI S.G.I.I.C., S.A. (Spain)

- GESMUSINI CARTERAS, S.A. (Spain)

- INDUSTRIAL RE MUSINI, S.A. (Luxembourg)

- GENERAL SERVICES REINSURANCE LIMITED (Ireland)

- NUOVI SERVIZI AUTO, S.P.A. (Italy)

- CANADA LIFE INSURANCE COMPANY (Puerto Rico)

- BRICKELL FINANCIAL SERVICES INC. (United States), trading under the name

of ROAD AMÉRICA MOTOR CLUB (hereinafter “ROAD AMÉRICA”)

- MM REAL STATE, LLC (United States)

- MAPFRE RE COMPAÑÍA DE SERVICIOS GENERALES, S.A. (Peru)

- MAPFRE MANDATOS Y SERVICIOS (Argentina)

b) Due to incorporation in the year:

- MAPFRE AGROPECUARIA, COMPAÑÍA INTERNACIONAL DE SEGUROS Y REASEGUROS S.A.

(Spain)

c) Due to incorporation in the preceding year, with activities starting in 2003:

- CENTROS MÉDICOS ISLAS CANARIAS, S.A. (Spain)

› The following companies, incorporated in the year, were consolidated by the equity method:

- MAPFRE ASISTENCIA ORO, S.A. (Spain)

- PUERTA DE ALCORCÓN 12, S.L. (Spain)

- MULTISERVICAR CENTRO, S.A. (Spain)

- MULTISERVICAR ASTURIAS, S.A. (Spain)

- MULTISERVICAR ÁVILA, S.A. (Spain)

- MULTISERVICAR M., S.A. (Spain)

› In 2003, the following companies ceased to be Group controlled companies or affiliates, due

to the reasons indicated below:

a) Sale to third parties:

- AFORE TEPEYAC, S.A. (Mexico)

- SERVICIOS INTEGRALES DE AHORRO ENERGÉTICO (Spain)

- SIEFORE TEPEYAC, S.A. (Mexico)

b) Winding-up:

- INMOBILIARIA Y RENTAS ALCÁNTARA 218, S.A. (Chile)

- INVERSIONES ALCÁNTARA 200, S.A. (Chile)


c) Takeover by another Group company, by merger or winding-up with overall assignment

of assets and liabilities:

- MAPFRE AUTOMÓVILES RIESGOS ESPECIALES, COMPAÑÍA DE SEGUROS Y REASEGUROS,

S.A. (Spain), hereinafter “MARES”; taken over by MAPFRE MUTUALIDAD

- MAPFRE INSURANCE COMPANY OF AMERICA INC. (United States), taken over by MAPFRE

COMPANY OF FLORIDA (United States)

The date of inclusion in the consolidation perimeter of MUSINI VIDA and MUSINI and their

controlled companies was 1 October 2003; consequently, the consolidated profit and loss

account only includes the transactions carried out by the said companies only from 1st Octo-

ber until 31st December 2003.

The columns of adjustments to the opening balance appearing in the various tables of this

report include the changes occurred as a result of the inclusion or exclusion of companies in

the consolidated statements, changes in the consolidation method or procedure applied, and

application of a different exchange rate for the translation of figures corresponding to over-

seas subsidiaries.

Variations in the technical reserves recorded on the profit and loss account differ from those

obtained by difference in the balance sheet balances of the present and previous fiscal year,

as a result of changes occurred in the consolidation perimeter and of the application of a dif-

ferent exchange rate for the translation of figures in the case of overseas subsidiaries.

e) Significant transactions between Group companies

Notes 6.18 and 6.19 of this report offer a breakdown of significant transactions between Group com-

panies; information is also given in the specific notes on balance sheet items that may be affected.

f) Criteria for the imputation of revenues and expenses

Financial income and expenses imputable to the life and non life activities are those deriving

from the assets assigned to each activity. The criteria followed for imputation to the different

lines corresponding to the non life activity, of income and expenses the accounting registry of

which does not have a specific line, are as follows:

› Other technical: pro rata to accrued premiums

› Investments: as a function of technical reserves in the different business lines

› Administration: as a function of the number of policies and the collection period for each

one of them

› Claims: as a function of the handling and management of dossiers

› Acquisition: as a function of new production policies.

Income and expenses imputed to the technical account are those arising directly from insur-

ance operations. Those assigned to the non technical account are extraordinary revenues

and expenses and those unrelated to insurance operations, as well as those corresponding to

non insurance companies.


4. DISTRIBUTION OF RESULTS

The Company Board of Directors has submitted to the Ordinary General Shareholders Meet-

ing, for its approval, the following distribution of the said company’s unconsolidated results:

5. VALUATION RULES

The accounting principles applied to the specific items are indicated herebelow:

a) Consolidation goodwill

The consolidation goodwill corresponds to the positive difference between the book value of

the investment and the proportion of the networth of the subsidiary or affiliate at the date of

acquisition of the shareholding interest or that of its initial consolidation, provided that said

difference is not fully or partially attributable to asset elements. It is depreciated by the

straight-line method over a term of twenty years, since the shares acquired will contribute

towards obtaining future profits for the Group, in a period equal to or longer than that indi-

cated. When events occur reasonably leading to question the continuance at year end of the

initial expectations, the depreciation period previously considered is adjusted or the goodwill

amount is fully written down.

Consolidation goodwill arising from purchases on the Stock Exchange of shares in CORPO-

RACIÓN MAPFRE, S.A. (hereinafter “CORPORACIÓN MAPFRE”) is depreciated in full in the

year.

b) Negative difference from consolidation

The negative difference from consolidation corresponds to the negative difference between

the book value of the investment and the proportion of the networth of the subsidiary at the

date of acquisition of the stake, provided that said difference is not fully or partially attribut-

able to asset elements.

Generally, these differences correspond to capital gains to be realised when the interest in

the controlled company’s capital is disposed of, fully or partly. In other cases they are based,

in relation to the date of acquisition of the relevant stake, on the unfavourable evolution of

results or on the reasonable estimate of the involved company's expenses. They will be

imputed to the consolidated profit and loss account to the extent that the estimates materi-

alise.


Distribution Bases Amounts

Result for the year 200,827,898.06Reserve for the overall assignment of MARES 17,255,486.27

TOTAL 218,083,384.33

Distribution Amounts

Legal reserves 201,203,384,33Donations to MAPFRE Foundations 16,880,000.00

TOTAL 218,083,384.33

Figures in EUR

c) Transactions and balances between companies included within the consolidation

All transactions and profit and loss not made externally, and all reciprocal credit and debit

items between fully consolidated companies, as well as results not obtained externally by

companies consolidated by the equity method, have been eliminated in the consolidation

process.

d) Standardisation of items

The accounting principles and policies used in the consolidated annual accounts are those of

the Entity, as established in the Plan, all standardisation adjustments required for this pur-

pose having been made.

As established in the Plan, criteria have not been standardised in relation to the technical

reserves of companies not belonging to the European Economic Area (except in the cases

detailed below) where the use of local criteria would have distorted the true and fair image

that these financial statements must show, and in that case the Entity’s criteria have been

adopted.

› MAPFRE TEPEYAC has reverted the allowance for catastrophic reserves and benefits, and

MAPFRE SEGUROS GENERALES DE COLOMBIA has reverted the catastrophic reserve,

since said risks are covered with reinsurance contracts by both companies.

› CAJA REASEGURADORA DE CHILE and MAPFRE PERÚ VIDA have calculated life insuran-

ce reserves using the interest rate established in its technical bases, instead of the techni-

cal interest published by the Chilean and Peruvian insurance supervisory authorities, on the

basis of the existence of matched flows and duration of investments with the obligations

arising from contracts.

e) Translation of annual accounts of overseas companies included in the consolidated finan-

cial statements

The closing exchange rate method has been used to translate these accounts. Pursuant to

this method, the different items on the balance sheets of the overseas companies included in

the consolidation are translated at the exchange rate in force on the closing date of the

accounts, except for the shareholders' equity, which is translated at the historical exchange

rate, and the items on the profit and loss account, which are translated using a weighted

average exchange rate. Positive or negative differences arising from the translation are

included under shareholders' equity in the consolidated balance sheet, under the item

"Exchange gain/loss", after deducting the proportion of said difference corresponding to

minority interests.

The accounts of companies domiciled in countries having a high inflation rate are adjusted by

the effects of changes in prices prior to their conversion into EUR. Inflation adjustments are

carried out following the rules in force in the country where the said companies are located.

f) Start-up expenses

These expenses are fully capitalised when accrued and are depreciated by the straight-line

method over a maximum term of five years, pursuant to the applicable legal provisions.


g) Intangible fixed assets

g.1. Portfolio acquisition expenses

They are capitalised when accrued and for the amount paid on acquisition. They are depre-

ciated depending upon the continuance of the said contracts in the portfolio and their actual

results, within a maximum term of ten years. This ten year period is consistent with the

expectations of maintaining the said contracts and obtaining profits during a period equal to

or longer than the one mentioned.

g.2. Computer applications

They are valued at acquisition and production cost and depreciated as a function of their use-

ful life, with a maximum period of four years.

g.3. Rights on assets held under financial leasing

When there are no reasonable doubts on the exercise of the purchase option, rights on assets

under lease are accounted for as intangible assets for the asset cash value, showing on the

liabilities side the total debt for lease payments plus the purchase option. The difference

between both amounts, represented by the financial costs of the transaction, is recorded as

deferred expenses, and imputed to results according to a financial criterion. Rights record-

ed as intangible assets are depreciated, when applicable, according to the useful life of the

asset under the lease agreement. When the purchase option is exercised, the value of the

recorded rights and their corresponding accumulated depreciation are cancelled in both

accounts, becoming part of the acquired asset.

g.4. Rights of use of administrative concessions

They are valued at cost. Depreciation is carried out by the straight-line method as a function

of the number of years envisaged for their enjoyment.

g.5. Other intangible fixed assets

Goodwill included under “Other intangible fixed assets” is valued at cost and depreciated over

a maximum period of twenty years. Other intangible fixed assets are valued at cost and

depreciated depending upon their useful life, in a maximum period of three years.

g.6. Advances on intangible fixed assets

These are valued at the advanced amount.

h) Tangible fixed assets and tangible investments

h.1. Tangible fixed assets

Tangible fixed assets are valued at acquisition price except in the companies mentioned in

note 3.b) of this report, where tangible assets incorporated prior to 31 December 1996 are val-

ued at their restated acquisition price, pursuant to the provisions of Royal Decree-Act 7/1996,

of June 7. Depreciation is calculated on a straight-line basis according to the estimate use-

ful life of the different assets.

h.2. Tangible investments

Tangible investments are valued at their acquisition price or production cost, as well as hav-

ing regard to the expenses and taxes relating to the purchase, not directly recoverable from

the Public Treasury, and the works and improvements incorporated for their use, with the

exception of the Spanish companies mentioned in note 3.b) of this report, where tangible


assets incorporated prior to 31 December 1996 are valued at their restated acquisition price,

pursuant to the provisions of Royal Decree-Act 7/1996, of June 7, and of the foreign compa-

nies where restatements were made pursuant to the legal provisions in force in the relevant

countries.

Depreciation is calculated on a straight-line basis according to the estimate useful life of the

different assets, pursuant to the applicable legal provisions. The depreciation coefficient is

applied to the total value of each property, deducting the estimate amount of the plot of land.

For tangible investments whose estimate market price at year end, verified by appraisals

from the Directorate General of Insurance and Pension Funds or authorised independent

appraisers in the relevant country, shows a non final lasting depreciation, the corresponding

valuation adjustment has been made by allocating a reversible provision, provided that their

book value may not be recovered from the generation of sufficient income to cover all their

costs and expenses, including depreciation.

Tangible investments affected by rights of use of government concessions will revert to the

public entity having granted them upon the expiry of the concession, to which effect a “Rever-

sion Fund” is established and allocations are made over the term of the concession, by cred-

iting the account "Other Provisions" under the heading "Provisions for liabilities and expens-

es" in the liabilities side of the balance sheet.

i) Prepaid commissions and other capitalised acquisition expenses:

Commissions and acquisition costs are expensed in the fiscal year when they are incurred.

As an exception, the companies PRAICO LIFE (Puerto Rico) and MAPFRE VERACRIZ VIDA E

PREVIDENCIA (Brazil), capitalise and depreciate certain acquisition expenses depending upon

the useful life of the policies, complying with the relevant national regulations.

j) Financial investments

j.1. Equity securities

These are valued at the lower of acquisition price or market price. The acquisition price

includes expenses inherent in the transaction, as well as preferential subscription rights, and

excludes dividends accrued and not yet due at the time of purchase. For listed securities, the

market value is the lower of the average official market price of the last quarter of the year

or the official market price on the closing date of the balance sheet.

In the case of securities complying with the homogeneity requirements in relation to repre-

sentativeness of their price as established by the Plan, positive differences between the mar-

ket price and the book value are taken into account to the effect of quantifying valuation

adjustments. The positive amount between positive differences less negative differences is

not recognised in any case.

For unlisted securities and securities without a representative market price, as well as for

shareholdings in group companies and affiliates, market value is understood as being their

book value adjusted by the amount of tacit capital gains existing at the time of the acquisition

and continuing at the end of the fiscal year. When facts arise reasonably leading to question

the subsistence at the end of the fiscal year of the tacit capital gain considered, totally or par-

tially, the relevant provision for depreciation is allocated.


Valuation adjustments resulting from the application of the valuation criteria mentioned in the

preceding paragraphs are carried out against results.

j.2. Fixed income securities

ORDINARY INVESTMENT PORTFOLIO

Fixed income securities included in the ordinary investment portfolio are shown at their

acquisition price, including the expenses inherent in the transaction and deducting accrued

and not yet due interest, as well as bonuses and commissions obtained upon subscription,

unless the said bonuses have the character of prepaid coupons, in which case they are

accrued as financial income during the interest grace period. The difference between the

acquisition price and the redemption value is accrued by debiting or crediting results, accord-

ing to a financial criterion, throughout the remaining life of the security.

At the end of the fiscal year, the necessary valuation adjustments are made when the market

value is lower than the acquisition price, imputing to the year's results the net amount deriv-

ing from compensating the negative and positive differences between the said values, with the

limit of the amount of negative differences.

In the case of securities listed on a regulated market, market value is understood to be the

lower of the last price or the average price of the last month of the fiscal year.

The market value of securities that are traded on a regulated market, or if their market price

is not adequately representative and, in any case, that of unlisted securities, is determined by

restating their future financial flows, including the redemption values, at rates equivalent to

the average of the last month resulting from the market for fixed income securities issued by

the Government and standardised according to the issuer's quality.

PORTFOLIO OF INVESTMENTS HELD TO MATURITY

Fixed income securities included in the portfolio of investments held to maturity are shown at

their acquisition price, including expenses inherent in the transaction and deducting accrued

and not yet due interest, as well as bonuses and commissions obtained upon subscription,

unless the said bonuses have the character of prepaid coupons, in which case they are

accrued as financial income during the interest grace period. The difference between the

acquisition price and the redemption value is accrued by debiting or crediting results, accord-

ing to a financial criterion, throughout the remaining life of the security.

Positive results arising from the disposal of these securities prior to their maturity are

accrued until the maturity date initially established. Negative differences are imputed to

results for the year when the sale takes place, offsetting, if applicable, positive amounts

pending imputation, with the limit of the negative results.

The relevant valuation adjustments deriving from the risk of collection of the securities have

been made, imputing them to the year's results. Likewise, the doubtful debt amount includes

accrued and not yet due interest.


j.3. Units held in investment funds

Units held in securities investment funds (FIM) are valued at their acquisition price or at their

net asset value at the fiscal year's end, should the latter be lower. In the case of units com-

plying with the standardisation requirements established by the Plan, the calculation of valu-

ation adjustments takes into accounts capital gains and capital losses of different funds, but

under no circumstance is the positive amount corresponding to positive less negative differ-

ences taken into account.

Units in funds investing in money market assets (FIAMM) are valued at their acquisition price,

increased by the positive returns arising from their net asset value at the end of the year.

Units in guaranteed investment funds are valued at their acquisition price increased by the

return guaranteed and confirmed at the end of the year, or at their net asset value should this

be lower.

j.4. Assignments of credit and commercial paper

They are booked at the amount paid plus accrued interest accumulated at the end of each fis-

cal year.

j.5. Investments on account of life policy holders assuming the investment risk

Investments on account of policy holders assuming the investment risk are made in both

securities investment funds (FIM) and money market investment funds (F.I.A.M.M.) and val-

ued at cost or at subscription or purchase price. The said acquisition cost is adjusted as

greater or lower value of the investment, as applicable, depending upon the net asset value

at the closing of the fiscal year. Revaluations and depreciations of these assets are booked

as a credit or debit to the technical account of the Life business.

j.6. Securities in foreign currencies

Translation of equity securities into Euros is made by applying to the acquisition price the

exchange rate in force on the transaction date. The valuation thus obtained does not exceed

the one resulting from applying the closing exchange rate in force to the market value, car-

rying out if applicable the relevant valuation adjustment.

Translation of fixed income securities into Euros is made by applying the exchange rate in

force on the transaction date. At year end, they are valued at the exchange rate then in force,

on the market value of the securities. In the cases of hedged securities, only the portion of

uncovered risk is taken into account.

j.7. Derivatives

Controlled companies use these products basically for hedging purposes for their Life insur-

ance transactions, with the purpose of eliminating or reducing interest rate risks or market

risks existing in proprietary positions and including both swaps and purchase options.


As regards hedging transactions, the amount of the premium paid is recognised as an asset.

Trading differences, in both options and futures, are imputed to results as they arise, as they

relate to investment transactions.

In the case of swaps for hedging purposes, the amounts paid for the underlying transaction

are recorded as “Fixed-income securities”, and financial revenues are recorded as a function

of the yield implicit in the deal. Differences corresponding to the recovery in different peri-

ods, of the amounts paid, are booked under the heading “Tax, corporate and other debts” in

the liabilities side of the balance sheet.

In the case of financial swaps on exchange of flows, the amounts accrued by the underlying

transactions are recognised, with the amount of the credit to be collected being recorded

under “Tax, corporate and other credits”, with credit to “income from investments” of the Life

Insurance technical account, and showing the financial expenditure for the amount to be paid,

crediting “Tax, corporate and other debts”.

k) Trade credits

Credits are valued at their nominal amount, including, at the end of the year, interest accrued

as of this date and lessened, if applicable, by th

The provision for premiums pending collection is calculated for each line. It is formed by the

portion of the tariff premiums accrued in the fiscal year that, according to the entity's experi-

ence, are likely not to be collected, taking into account the incidence of reinsurance. Its allo-

cation is made according to the age of the premium receipts pending collection or individual-

ly when the circumstances and the situation of receipts thus require.

Credits for recollection of claims the realisation of which is considered as guaranteed have

been capitalised.

l) Non trade credits

Non trade credits are valued at their nominal amount, including, at the end of the fiscal year,

the interest accrued as of that date, lessened by the corresponding provisions that might be

necessary to cover the debtor's total or partial insolvency situations.

Credits for sales of tangible assets and investments are valued at the sale price, excluding the

interest element incorporated into the nominal of the credit, which is included as a function

of its accrual.

m) Technical reserves

m.1. Direct insurance of companies belonging to the European Economic Area

RESERVE FOR UNEARNED PREMIUMS

The provision for unearned premiums is calculated on an individual policy basis and includes

the tariff premium accrued in the fiscal year, having deducted the security surcharge

imputable to future years. The time imputation of the premium is made pursuant to article

30 of the Regulations of Disposition and Supervision of Private Insurance (hereinafter the

“Regulations”).


On the other hand, commissions and other acquisition expenses corresponding to the

accrued premiums that are imputable to the period between the closing date and the expiry

of coverage of the contracts, are booked under the heading “Accruals” of the balance sheet

assets, such expenses corresponding to those actually borne in the period, with the limit

established in the technical bases.

RESERVE FOR RISKS IN PROGRESS

The reserve for risks in progress is calculated on an individual business line basis and sup-

plements the reserve for non consumed premiums for the amount not showing the valuation

of risks and expenses to be covered corresponding to the coverage period not elapsed at the

closing date. Its calculation has been effected pursuant to the provisions of article 31 of the

Regulations.

For the Motor line, the calculation of this reserve has been made considering all the guaran-

tees covered with the products marketed by the different companies.

RESERVE FOR LIFE INSURANCE

In life insurance policies with a coverage period equal to or shorter than one year, the reserve

for non consumed premiums is calculated on a policy by policy basis and reflects the tariff

premium accrued in the year, imputable to future fiscal years.

When this reserve is not sufficient, the reserve for risks in progress is calculated also in order

to cover the valuation of risks and expenses to be covered, corresponding to the coverage

period not elapsed at the year’s closing date. It has not been necessary to establish this

reserve.

In life insurance policies with a coverage period exceeding one year, the mathematical

reserve has been calculated on a policy by policy basis as the difference between the present

actuarial value of the future obligations of the companies operating in this line, and those of

the policy holder or insured party. The calculation basis is the inventory premium accrued in

the year, represented by the pure premium plus the surcharge for administration expenses,

according to technical bases. The mortality tables used are those usual in the sector and the

technical interest rate ranges, basically, between 2.5% and 6%, although there are types

linked to simultaneous investments, where the technical interest depends upon their expect-

ed performance.

Controlled companies operating in the life line are carrying out the adjustment of tables as

established in the Second Transitional Provision of the Regulations, within the periods estab-

lished by the rules in force.

Technical reserves relating to life insurance when the investment risk is assumed by policy

holders

The reserves for life insurance where it has been contractually agreed that the investment

risk will be fully supported by policy holders, have been calculated on a policy by policy basis

and are valued as a function of the assets specifically earmarked to determine the value of

the rights.


RESERVE FOR PROFIT SHARING AND RETURNS

This reserve includes the amount of profits accrued in favour of policy holders, insured par-

ties or beneficiaries and that of the premiums that must be returned to policy holders or

insured parties according to the performance of the insured risk and provided they have not

been imputed on an individual basis. In the Spanish companies, its calculation is made pur-

suant to the provisions of article 38 of the Regulations. In turn, this reserve includes the

amount of profits earned in favour of policy holders, insured parties or beneficiaries of life

policies with profit sharing clause of the business of the Portuguese Agency of MAPFRE VIDA

Sociedad Anónima de Seguros y Reaseguros sobre la Vida Humana (hereinafter “MAPFRE

VIDA”).

RESERVE FOR OUTSTANDING CLAIMS

It represents the estimate valuation of outstanding claims deriving from occurrences prior to

the closing of the fiscal year, deducting interim payments effected. It includes the valuations

of claims pending settlement or payment and pending declaration, as well as the internal and

external expenses relating to the liquidation of losses; in the Life Insurance business, it also

includes maturities and redemptions pending payment. In the Spanish companies, its calcu-

lation is made pursuant to the provisions of the Regulations, including, if applicable, addi-

tional reserves for the deviation in the valuation of claims subject to long handling periods.

STABILISATION RESERVE

This is a cumulative reserve, being allocated each fiscal year for the amount of the security

surcharge, with the limit established in the technical bases, in the following lines: risks of

Combined Agricultural Insurance plans, Credit Insurance, Third Party Liability in motor insur-

ance, professional, product, construction damages, assembly, business insurance, industrial

multi-risk and guarantee insurance. Allocations and applications are made pursuant to arti-

cle 45 of the Regulations.

RESERVE FOR DEATH INSURANCE

The reserve for death insurance, included under the heading “Other technical reserves”, is

calculated on a policy by policy basis, as the difference between the present actuarial value

of future obligations of the controlled companies operating in this line and those of the poli-

cy holder or insured party. The GKM-95 mortality tables are used and the technical interest

rate applied ranges basically between 3% and 5.5%.

m.2. Direct insurance of companies not belonging to the European Economic Area

Technical reserves are calculated pursuant to the local criteria in force in each country,

except in the cases when their application could distort the true and fair image that must be

shown by the annual accounts, and in this case the Spanish criteria applying to insurance

companies have been adopted (see note 5.d).

Life insurance reserves have been calculated using the mortality tables and technical inter-

est rate usual in the sector in the respective countries.

m.3. Ceded reinsurance

Technical reserves for cessions to reinsurers are shown in the balance sheet assets and are

calculated according to the reinsurance agreements entered into and under the same crite-

ria as used for direct insurance.


m.4. Accepted reinsurance

RESERVE FOR UNEARNED PREMIUMS

Accepted reinsurance operations are accounted for on the basis of the accounts received

from ceding companies. If, upon closing the accounts, the ceding company’s latest accounts

are not available, the balance of other received accounts is considered as reserves for non

consumed premiums of non closed accounts, in order not to recognise results in the booking

of such accounts. Exceptionally, if these reserves of non closed accounts were negatively

affected by the booking of major claim payments, because of their being an actual loss not

subject to being offset by movements of non closed accounts, the reserve is adjusted for the

relevant amount.

When the latest account and report on pending claims are available, the cancellation is made

of reserves of non closed accounts, allocating the corresponding reserves for non consumed

premiums as a function of the information provided by the ceding company, and accruing

them on a policy by policy basis. Failing this, the amount recorded for non consumed premi-

ums is the amount of the deposit of premiums withheld on this concept and, lastly, an over-

all method for the accrual of premiums may be used.

Acquisition expenses, as notified by ceding companies, are accrued under the heading of

accruals on the balance sheet assets, with these expenses corresponding to those actually

borne in the period.

RESERVE FOR RISKS IN PROGRESS

This is calculated on an individual business line basis and supplements the reserve for non

consumed premiums for the amount not showing the valuation of risks and expenses to be

covered, corresponding to the coverage period not elapsed at the closing date. Its calculation

has been effected pursuant as provided for in the Regulations.

RESERVE FOR OUTSTANDING CLAIMS

Reserves for benefits are allocated for the amounts notified by the ceding company or, failing

this, for withheld deposits, and include complementary reserves for claims existing and not

notified, as well as for deviations in existing ones, in accordance with the company’s own

experience.

STABILISATION RESERVE FOR CATASTROPHIC RISKS

In business lines affected by catastrophic risks, the relevant reserves are made for this type

of risk, pursuant to the company’s own experience or as per article 45 of the Regulations in

the case of MAPFRE RE.

m.5. Retroceded reinsurance

Retroceded reinsurance operations and their corresponding technical reserves are recorded

following the same criteria as for accepted reinsurance and according to the retrocession

agreements entered into.


n) Agricultural coinsurance

Transactions corresponding to SISTEMA MAPFRE entities’ participation in the Combined

Agricultural Insurance Pool (Agricultural Coinsurance) are recorded according to the infor-

mation contained in accounts received from Agroseguro. The criteria applied for recording

and presenting these transactions are as follows:

› Written premiums

They are recorded net of annulations, for the portion corresponding to SISTEMA MAPFRE

entities’ participation in the pool.

› Reserve for unearned premiums

The portion corresponding to the various SISTEMA MAPFRE entities is recorded pro rata

to their participation in the pool.

› Claims

They are recorded for the portion corresponding to the entities’ participation in the pool,

net of the portion imputable to the Consorcio de Compensación de Seguros for excess loss.

› Reserve for claims

The reserve for benefits corresponding to the entities is recorded pro rata to their partici-

pation in the pool.

› Stabilisation reserve

Its allocation and application are carried out pursuant to the provisions of article 45 of the

Regulations.

This reserve is of a cumulative nature, being allocated depending upon the entities’ par-

ticipation in the pool, and it includes a complementary, voluntary and cumulative reserve,

calculated on the basis of multiplying the risk premiums of the year by factor 3 and by the

typical deviation over the past ten years of the quotient between loss ratio and risk premi-

ums, net of reinsurance, being assigned in the years when the loss ratio is lower than the

risk premiums, with the annual limit of the difference between risk premiums and loss

ratio. If the said difference is negative, such corresponding part of the allocation reserve

is applied as may be required to achieve technical stability, with the cumulative limit being

35% of the own risk premiums for the group of feasible lines, and, for the group of exper-

imental lines, the entities’ direct and indirect participation in the pool for the amount not

compensated by the Consorcio de Compensación de Seguros for excess loss, pursuant to

the conditions applicable and the entities’ experience.

To the effects of the limit established in article 42 of the Regulations of the Combined Agri-

cultural Insurance Act, the fact that both reserves are cumulative is taken into account.

› Commissions

Commissions corresponding to the entities for their participation in the pool are shown

under the heading “Acquisition Expenses” of the Technical Account of Non Life Insurance

in the P&L Account, having deducted the amount accrued at the end of the year.


As part of the Technical Account of Non Life Insurance in the P&L Account, the heading

“Other Revenues” includes commissions accrued on the production contributed by the

entities to the pool, having deducted Agents’ commissions. The heading “Other Expenses”

of this Non Technical account includes other production related expenses.

o) Reserves for pensions and similar obligations

In order to meet these commitments, the companies MAPFRE RE Compañía de Reaseguros

Sociedad Anónima (hereinafter “MAPFRE RE”), for its Manila and Lisbon offices, VENEASIS-

TENCIA and EUROSOS, in accordance with actuarial studies carried out, have funded a provi-

sion to cover the current value of the future obligations accrued for these concepts at the end

of each year. The risks covered are retirement benefits and retirement and widowhood pen-

sion supplements, and the provisions have been estimated by making a projection of salaries

to retirement and calculating the current value of the portion already accrued for services

rendered, using the individual capitalisation system.

The remaining Spanish Group companies have instrumented their commitments contracted

to present staff and to their pensioners in relation to pension supplement and retirement pre-

mium, with a collective insurance policy that covers the retirement indemnity and retirement

and widowhood complements. Furthermore, the companies MUSINI and MUSINI VIDA have

also instrumented the said commitments with defined contribution pension plans, with

amounts of EUR 9,928,999 and EUR 80,265,000, respectively, assigned as at 31 December

2003.

In addition, pursuant to the legislation in force in the countries of certain subsidiaries not

belonging to the European Economic Area, reserves have been allocated corresponding to the

coverage of liabilities to present staff and pensioners.

p) Other reserves for risks and expenses

Reserves have been allocated to cover future liabilities, calculated pursuant to the present

evaluation of risk.

q) Reserves for payments under liquidation agreements

A reserve has been recorded for liquidation agreement payments, representing the estimate

valuations pending payment to insured parties in the fulfilment of claim liquidation agree-

ments.

r) Debt

Debts are recorded on the balance sheet at their redemption value. The difference between

the said value and the amount received, if any, is shown separately in the balance sheet,

under “Deferred expenses”, and is imputed annually to results pursuant to a financial crite-

rion.

s) Corporation tax

The tax charge on profits imputable to the fiscal year has been booked, after considering the

effect of the fiscal regulations applicable as a consequence of taxation by several Group com-

panies under the consolidated regime.


t) Transactions and balances in foreign currencies

Transactions in foreign currencies, except reinsurance transactions, are recorded at the

exchange rate in force at the date of the relevant transaction.

Reinsurance transactions in foreign currencies are recorded at the exchange rate established

at the beginning of each one of the year’s quarters. Subsequently, on the closing date of each

quarter, all of them are dealt with as a single transaction, translated at the exchange rate in

force on that date and taking any difference that may arise to the profit and loss account.

At the end of the fiscal year, the following criteria are applied to existing balances:

› Fixed assets and tangible investments

They are valued at the exchange rate in force on the date when the said elements were

incorporated into the Company’s assets. Depreciation and provisions for depreciation are

calculated on the amount resulting from applying the criterion mentioned in the preceding

paragraph.

› Cash

It is valued at the exchange rate in force at the end of the year, taking the positive or neg-

ative difference, as the case may be, to the profit and loss account.

› Fixed income securities, credits and debits

They are valued at the exchange rate in force at year end, with negative differences being

recorded on the profit and loss account and positive differences being recorded as

deferred income to the extent that they cannot be offset against negative differences. This

offsetting is made by homogeneous groups according to the year when securities expire

and to their currency.

› Equity securities

They are valued at the exchange rate in force at the end of the year, effecting, if applicable,

the required valuation adjustment, provided that the resulting figure is lower than the

acquisition price translated into Euros at the exchange rate in force on the date when the

securities become part of the Group’s assets.

› Assets earmarked to covering technical reserves denominated in foreign currencies

These are valued at the exchange rate in force on the acquisition date. At year end, the

exchange rate in force on that date is applied, with the potential loss or potential gain being

incorporated as higher or lower value of the assets, in line with the change experienced by

the corresponding technical reserves.

› Translation criteria for branches located outside Spain

Branches’ balance sheet and profit and loss account items are translated into Euros by

applying the monetary-non monetary method.

› Policy holders’ share in the returns on investments earmarked to mathematical reserves

Policies in the Life business written by MAPFRE VIDA and certain subsidiaries not belong-

ing to the European Economic Area, with a profit sharing clause in force at the end of each

year, have a share, pro rata to their mathematical reserves, and as specifically established


in each contract, in the net returns obtained by investments earmarked to the coverage of

the said reserves. The amount of this sharing is recorded as higher amount of mathemat-

ical reserves, except in the business of MAPFRE VIDA’s Portuguese Agency, where they

are recorded under "Fund for revaluation of policyholders" up to their incorporation into

the mathematical reserves, and are shown on the liabilities account "Provisions for profit

sharing and returns". In fiscal year 2003, allocations to reserves for the returns obtained

from investments amounted to EUR 11,704,000.

Policyholders' future right on differences due to legal restatements effected by MAPFRE

VIDA is accrued, funding a specific technical reserve according to the useful life of restat-

ed properties.

v) Capital subsidies

Capital subsidies are booked when they are officially granted, being imputed on a straight line

basis to the year’s results, over a ten year period.

w) Revenues and expenses

Revenues and expenses are valued as established in the Plan. The criteria followed for the

reclassification of expenses by destiny are based, mainly, on the function fulfilled by each

employee, with their direct and indirect cost being apportioned according to the said function.

For expenses not directly or indirectly related to staff, individualised studies have been car-

ried out, and expenses have been imputed to destiny according to their function.

6. INFORMATION ON CERTAIN BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ITEMS

6.1 Start-up expenses

The following table details the movement of this heading in 2003:


Concept Opening balance Adjusts.to Additions Depreciation Write-off Closingopening balance in the year balance

GIncorporation expenses 88 (3) 92 (35) -- 142Start-up expenses 3,567 (426) 2,110 (1,369) (43) 3,839Capital increase expenses 6,860 -- 2,118 (2,560) (195) 6,223

TOTAL 10,515 (429) 4,320 (3,964) (238) 10,204

Figures in EUR 000s

6.2. Intangible fixed assets

The following table details the movement of these items in 2003:

› Portfolio acquisition expenses

The amount of the portfolio acquisition rights has been obtained through actuarial studies

carried out by independent experts. Reductions in the item “Portfolio acquisition expenses”

relate to depreciation in the period.

› Rights on assets under financial lease

Information on assets owned under financial lease is included in the following table:


Adjusts. to Disposals, Opening opening Additions or cancellations Closing

Concept balance balance appropriat. or reductions balance

1- Portfolio acquisition expenses 19,732 (40) 1,770 (3,482) 17,9802- Other intangible fixed assets 147,832 (2,030) 23,308 (12,381) 156,729Computer applications 81,019 (2,168) 16,060 (6,788) 88,123Rights over assets under lease 4,573 51 430 (1,159) 3,895Advances for intangible fixed assets 3,019 -- 3,127 (608) 5,538Other intangible fixed assets 59,221 87 3,691 (3,826) 59,1733- Goodwill 400,319 1,829 72,779 (23,259) 451,668Of fully consolidated companies 387,434 847 71,828 (21,555) 438,554Of cos. consol. by the equity method 12,885 982 951 (1,704) 13,114Total cost 567,883 (241) 97,857 (39,122) 626,377

Accumulated depreciation1- Computer applications (52,385) 1,493 (11,065) 1,848 (60,109)2- Rights over assets under lease (1,728) (6) (524) 1,115 (1,143)3- Other intangible fixed assets (18,134) 45 (4,490) 1,052 (21,527)Total accumulated depreciation (72,247) 1,532 (16,079) 4,015 (82,779)

Net Total 495,636 1,291 81,778 (35,107) 543,598

Figures in EUR 000s

Elements Cost Duration Years Payments made Outstanding Option

(excl. of contract elapsed FY 03 Previous years payments value

purchase option) (years)

Buildings 1,934 20 6 164 670 225 11Data Processing Equipment 1,757 1 to 5 1 to 3 265 112 257 193

TOTAL 3,691 429 782 482 204

Figures in EUR 000s

› Other intangible fixed assets

The most significant concepts included in the balance of this account as at 31 December 2003

are those corresponding to goodwill on the acquisition and subsequent take over by MAPFRE

CAJA SALUD DE SEGUROS Y REASEGUROS S.A. (hereinafter, “MAPFRE CAJA SALUD”) of

IMECO, S.A., PLANAS SALUD COMPAÑÍA DE SEGUROS DE ASISTENCIA SANITARIA S.A.,

IGUALATORIO MÉDICO QUIRÚRGICO DE HUESCA S.A. and ASEGURADORA ISLAS CANARIAS

S.A. DE SEGUROS SOCIEDAD UNIPERSONAL (hereinafter, “ASEICA”) for a total amount of

EUR 43,077,000; as well as on the dissolution of CAJA DE MADRID SEGUROS GENERALES,

S.A. (hereinafter CAJA MADRID SEGUROS GENERALES) with the overall assignment of assets

and liabilities to MAPFRE SEGUROS GENERALES, amounting to EUR 5,136,000.

› Goodwill

Additions in the item of consolidation goodwill of the fully consolidated companies originate

mainly from the acquisition of shares in the companies MUSINI, ROAD AMÉRICA and NUOVI

SERVIZI AUTO, amounting to EUR 40,887,000, EUR 17,552,000 and EUR 11,443,000, respectively.

Reductions in this item are due basically to the amortisation of goodwill.

The closing balance of goodwill is broken down herebelow:


Of fully consolidated companies Closing balance

MAPFRE TEPEYAC 26,698MAPFRE AMÉRICA 11,907MAPFRE VIDA 212,078MAPFRE FINISTERRE 87,577MUSINI 40,307ROAD AMERICA 16,674NUOVI SERVIZI AUTO 11,157OTHERS (with non significant individual values) 32,156

TOTAL 438,554

Figures in EUR 000s

Of companies consolidated Closing balanceby the equity method

MAPFRE INVERSIÓN SDAD. DE VALORES 4,390QUAVITAE, S.A. 1,942VIAJES TÍVOLI 2,051OTRAS 4,731

TOTAL 13,114

Figures in EUR 000s

6.3 Prepaid commissions and other prepaid acquisition expenses

The following table details the movement of these items in 2003:

6.4 Tangible fixed assets

The following table details the movement of this heading in year 2003:

With respect to MAPFRE MUTUALIDAD, MAPFRE AGROPECUARIA, MAPFRE SEGUROS GEN-

ERALES, MAPFRE GUANARTEME and MUSINI, the elements incorporated prior to 31 Decem-

ber 1996 were restated pursuant to Royal Decree-Act 7/1996 of 7 June. The net effect of the

said restatement was zero as the value resulting from restatement exceeded each element’s

market value in all cases.

Tangible fixed asset elements, fully depreciated, amount to EUR 70,055,000.

The annual depreciation rates are as follows:


Adjusts. toConcept Opening opening Incorporation Depreciation Closing

balance balance to Assets balance

Prepaid commisions and other capitalised acquisition expenses 7,427 (1,233) 1,701 (2,086) 5,809

Figures in EUR 000s

Adjusts. to Disposals,Concept Opening opening Additions or cancel. or Closing

balance balance approprs. reductions balance

Transport equipment 12,921 (1,306) 2,046 (3,463) 10,198Information processing equipment 182,736 (7,295) 22,994 (3,265) 195,170Furniture and fittings 103,692 (5,770) 18,276 (4,553) 111,645Other tangible fixed assets 8,590 24 2,645 (618) 10,641Prepayments and fixed assets in progress 4,506 (58) 702 (3,412) 1,738

Total cost tangible fixed assets 312,445 (14,405) 46,663 (15,311) 329,392Total accumulated depreciation (186,006) 7,813 (27,407) 6,192 (199,408)Provisions (to be deducted) (26) - - - (26)

TOTALS 126,413 (6,592) 19,256 (9,119) 129,958

Figures in EUR 000s

Groups of elements % depreciation

Installations 6 - 10Transport elements 16Furniture 10 - 15Data processing equipment 25Machinery 10 - 15

The following table shows the value, as at 31 December 2003, of tangible fixed assets located

outside the Spanish territory:

6.5 Tangible investments

The following table shows the movement of this item during 2003:


Concept Book value

Transport elements 7,109Data processing equipment 44,107Furniture and fittings 39,012Other tangible fixed assets 4,818Advances and fixed assets in progress 1,738

Total Cost 96,784

Accumulated depreciation (64,448)Provision for depreciation (26)

Net Total 32,310

Figures in EUR 000s

Disposals,Opening Adjusts. to Additions or cancel. Closing Market

Concept balance opening balance appropriat. or reductions balance value

CostLand and natural resources 88,256 (3,314) 29,441 (3,496) 110,887 132,751Buildings and other structures 1,076,288 (12,359) 83,853 (34,542) 1,113,240 1,489,776

Sub-total 1,164,544 (15,673) 113,294 (38,038) 1,224,127 1,622,527

Other tangible investments 21,588 (5,883) -- (1,360) 14,345 20,392Advances and tang. inv. in progress 20,347 (191) 11,990 (20,219) 11,927 11,927

Total cost 1,206,479 (21,747) 125,284 (59,617) 1,250,399 1,654,846

Accumulated depreciationBuildings and other structures (165,930) 981 (17,146) 5,845 (176,250) --

Total accumulated depreciation (165,930) 981 (17,146) 5,845 (176,250) --Total Provisions (6,121) 411 (1,557) 1,186 (6,081) --

Net Total 1,034,428 (20,355) 106,581 (52,586) 1,068,068 1,654,846

Figures in EUR 000s

In the column “Additions”, under “Buildings and other structures” and “Accumulated Depre-

ciation”, the amounts of EUR 15,715,000 and EUR 1,464,000 relate, respectively, to the incor-

poration of MUSINI into the consolidation perimeter.

The column “Cancellations”, under “Buildings and other structures” and “Accumulated Depre-

ciation”, includes the sale of the building located in Vía Diagonal no. 587/589 in Barcelona,

carried out by the Entity on 8 January 2003, for EUR 45,076,000, which generated a gain of

EUR 34,262,000.

The value of land included in the closing balance of the item "Buildings and other structures"

amounts to EUR 327,616,000.

The market value of tangible investments earmarked to the coverage of technical reserves

corresponds to the appraisal value as determined by the Directorate General of Insurance

and Pension Funds or by an authorised appraisal firm, pursuant to valuation rules to the

effects of coverage of technical reserves. The market value of tangible investments not ear-

marked to the coverage of technical reserves has been considered to be the appraisal value,

if this was available or, failing it, the net book value. In the case of foreign companies,

appraisals were made by independent appraisal firms, pursuant to the rules in force in each

country.

In MAPFRE MUTUALIDAD, MAPFRE AGROPECUARIA, MAPFRE SEGUROS GENERALES,

MAPFRE GUANARTEME and MUSINI, tangible investments incorporated prior to 31 Decem-

ber 1996 were restated pursuant to the provisions of Royal Decree - Act 7/1996, of 7 June. The

net accumulated amount was EUR 59,804,000, with the effect on the acquisition cost and on

accumulated depreciation being EUR 63,610,000 and EUR 3,806,000, respectively. The net

accumulated amount at year end was EUR 46,570,000. The effect of the said restatement on

the allowance for depreciation in the present fiscal year and the next amounts to EUR

942,0000 and EUR 941,000, respectively.

The annual depreciation rate applied to new buildings is 2% and, for second-hand buildings

acquired, it ranges between 2.64% and 4%, after deducting the estimate value of land. The

amount corresponding to the restatement effected in accordance with Royal Decree-Act

7/1996 is depreciated by the straight-line method throughout the remaining useful life of

restated assets.

The provision of EUR 6,081,000 corresponds to the reversible depreciation of certain premis-

es and plots of land arising as a consequence of the restatement of the valuation carried out

by the technical services of the Directorate General of Insurance and Pension Funds or by

independent appraisers. As at 31 December 2003 there were assets subject to reversion

amounting to EUR 5,385,000. As at said date, the Reversion Fund established for said assets

amounted to EUR 2,309,000.


The following table shows the value of tangible investments located outside the Spanish ter-

ritory as at 31 December 2003:

These amounts include the restatements made pursuant to the local regulations in each

country, as specified in note 5 to this annual report. The book value of buildings includes the

value of land, amounting to EUR 36,751,000.

Tangible investments used for own purposes represent approximately 60% of the total.

In the consolidation process, the amount of EUR 53,778,000, corresponding to the effect of

purchase and sale deals of tangible investments among Group companies carried out in pre-

vious years and to the contribution of premises made by CORPORACIÓN MAPFRE in the year

by way of payment of a capital increase in MAPFRE RE, has been eliminated against reserves.

6.6 Financial investments

The following table details the movement of investments in marketable securities and other

similar financial investments during 2003:


Concept Book Accumulated Provision for value acumulada depreciation

Land and natural resources 22,913 -- (578)Buildings and other structures 183,044 (28,260) (4,470)Other tangible investments 14,345 -- --Advances and tangible invest. in progress 726 -- --

Total 221,028 (28,260) (5,048)

Figures in EUR 000s


Concept Opening Adjusts. to Additions or Disposals, cancel. Closing Marketbalance opening balance appropriat. or reductions balance value

Financial investments in Group subsidiaries and associated 8,478 -- 37 (5,308) 3,207 3,207

Shares in subsidiaries 3,175 -- -- (3,175) -- --Shares in associated 1,851 -- 320 (1,851) 320 320Pending payments (to be deducted) (9) -- -- 9 -- --Other financial investments in Group companies 3,494 -- -- (291) 3,203 2,887Provisions (to be deducted) (33) -- (283) -- (316) --

Financial investments consolidated by equity method 374,668 (101) 49,209 (40,871) 382,905 382,905

Shares in companies recorded by the equity method

Subsidiaries 193,465 -- 64,006 (25,197) 232,274 205,308Associated 191,798 -- -- (15,896) 175,902 175,902

Pending payments (to be deducted) (12,372) -- (15,439) 845 (26,966) --Credits against companies cons. by the equity method

Group companies 1,796 (101) 642 (642) 1,695 1,695Provisions (to be deducted) (19) -- -- 19 -- --

Other financial investments 11,706,504 (182,362) 27,969,174 (24,405,164) 15,088,152 15,943,496

Financial investments in capital 210,795 (2,059) 189,919 (133,957) 264,698 350,817Pending payments (to be deducted) (1,048) -- (9) 1,047 (10) --Fixed-income securities 9,539,479 (168,928) 16,409,278 (13,801,716) 11,978,513 12,623,793Index-linked securities 11,037 -- 21,766 (1,387) 31,416 33,328Mortgage loans 6,880 (830) 7,222 (1,661) 11,611 10,686Other loans and advances on policies 262,412 (1,546) 158,193 (182,910) 236,149 234,086Units in investment funds 823,039 814 915,865 (774,637) 965,081 1,049,505Deposits with credit institutions 709,598 (2,243) 4,998,570 (4,882,303) 823,622 823,622Other financial investments 210,029 (9,827) 5,329,146 (4,720,917) 808,431 817,659Provisions (to be deducted) (65,717) 1,857 (60,776) 93,277 (31,359) --

Figures in EUR 000s

The following table shows the detail of maturities of fixed income securities and other finan-

cial investments held by fully consolidated companies as at 31 December 2003.

The breakdown of the most significant amounts and maturities of the fixed-income securities

included under “Beyond” is as follows:

The fixed-income portfolio of companies domiciled in the European Economic Area is shown

herebelow, differentiating the ordinary portfolio from that held to maturity, where capital

losses have been calculated on an individual basis:


Concept Maturity in year TOTAL2004 2005 2006 2007 2008 Beyond

Financial investments in Group subsidiaries and associatedOther financ. invests. in Group companies 1,302 1,219 -- -- -- 682 3,203

Other financial investmentsFixed income securities 1,306,509 503,047 460,908 577,675 563,861 8,566,513 11,978,513Index-linked securities 2,997 1,000 4,083 13,015 -- 10,321 31,416Mortgage loans 1,838 1,302 1,116 1,180 1,893 4,782 11,611Other loans and advances on policies 14,121 1,919 3,033 665 1,109 215,302 236,149Deposits with credit institutions 714,028 8,122 29,776 26,584 13,834 31,278 823,622Other financial investments 157,183 50,043 57,771 64,502 51,759 427,173 808,431

Figures in EUR 000s

Years Amount

2009 785,0212010 621,4442011 591,0232012 538,4552013 762,3842014 452,9332015-2019 1,339,4632020-2024 693,3142025-2029 1,173,4752030-2034 1,549,131Posterior al 2034 59,870

TOTAL 8,566,513

Figures in EUR 000s

The investment portfolio held to maturity includes fixed-income securities owned until their

maturity date. The ordinary investment portfolio includes the remaining fixed-income secu-

rities not included under the investment portfolio held to maturity.

The breakdown of other financial investments, by concepts, is as follows:

As at 31 December 2003, the balance of “Other financial investments” includes premiums for

options acquired by MAPFRE VIDA outside regulated markets, amounting to EUR 1,806,000,

used by the company to cover its obligation to beneficiaries under insurance policies, in rela-

tion to the payment of a benefit linked to the average revaluation of a stock market index, and

with zero market value. The capital loss was recorded in previous years. The main charac-

teristics of these derivatives are specified herebelow:


Item Acquisition Market Capital losscost value

Ordinary investment portfolio 4,792,134 5,164,730 (2,417)Investment portfolio held to maturity 6,382,223 6,696,623 ---

TOTAL 11,174,357 11,861,353 (2,417)

Figures in EUR 000s

Other financial investments Group Othercompanies Affiliates companies

Deposits and indemnities provided as collateral 2,679 -- 703,698Loans -- -- --Promissory notes -- -- 1,547Credits on disposal of fixed assets and investments 4 -- 50,496Other non significant (total amount lower than 2% of assets) 520 -- 52,690

Total 3,203 -- 808,431

Figures in EUR 000s

Instrument Underlying Asset/Liability Year of Initial Marketmaturity premium value

Call Option Average revaluation of the de inversión Eurostoxx 50 – Nikkei 225 index 2004 1,806 -

Figures in EUR 000s

On the other hand, consolidated companies hold swap agreements through which they guar-

antee the payment of benefits deriving from insurance contracts. The following table details

both the policies and the liabilities covered, as well as the book value of the associated swap:

The book value of the swap is recorded under the headings “Other financial investments” and

“Corporate, tax and other debts”.

The following tables shows a breakdown of the average rate of return of fixed-income secu-

rities and other financial investments representing the portfolio as at 31 December 2003

A breakdown of marketable securities and similar financial investments, according to the

currency in which they are denominated, is given herebelow:


Policies subject to contract Guaranteed obligations Value of swap

› Regular premium collective insurance with Profit Sharing Payment of capital (2)

› Regular premium collective insurance without Profit Sharing Payment of capital 1,955

› Single premium collective insurance with Profit Sharing Payment of capital 33,375

› Single premium collective insurance without Profit Sharing Payment of capital (274)

› Single premium individual insurance without Profit Sharing Payment of capital 22,610

› Single premium collective insurance without Profit Sharing Payment of annuities (136,591)

› Single premium collective Payment of annuitiesinsurance without Profit Sharing and capital 31,839

Total (47,088)

Figures in EUR 000s

Concept Yield

Fixed-income securities 5.23%Other financial investments 2.11%Index-linked securities 4.12%Deposits with credit institutions 3.60%Other loans 5.72%Mortgage loans 5.49%

No hedging has been made for the exchange differences among Group companies, except for

a swap entered into by MAPFRE Re, amounting to USD 112.3 million, maturing on 27 Decem-

ber 2007, for the cover of the exchange rate risk in the investment in MAPFRE RE HOLDINGS

INC.

The amount of interest accrued and not yet due is EUR 254,140,000, and is recorded under the

heading “Accruals” of the balance sheet assets.

As at 31 December 2003, MAPFRE VIDA holds mortgage guarantees on extended loans, linked

in most cases to life insurance policies, amounting to EUR 807,000.

The heading “Other loans and advances on policies” includes, inter alia, funding plans for pre-

miums on collective insurance contracts implementing pension related commitments,

amounting to EUR 176,508,000. On the other hand, to the effect of coverage of the technical

reserves deriving from these policies, the present values of the unmatured funding plan items

pending payment have been considered as a qualifying asset, being thus included in the cov-

erage statements shown in note 14 to this report.

Complying with article 86 of the compiled Corporations Act, the relevant notices have been

given, as applicable, to investee companies.

In the consolidation process, EUR 18,454,000 have been eliminated against reserves, corre-

sponding to purchase and sale deals of financial investments among Group companies car-

ried out in previous years.

6.7 Investments on account of policyholders assuming the investment risk

The securities portfolio as at 31 December 2003 includes EUR 446,101,000 corresponding to

units held in Securities Investment Funds (F.I.M.), which relate to investments on account of

policyholders that assume the investment risk.

The movement of this item during 2003 is as follows:


Currency Financial investments Financial investments Other Totalin Group companies the equity method financial investments

and affiliates

Euro 3,207 354,631 13,534,549 13,892,387US Dollar -- 1,990 812,844 814,834New Mexican Peso -- 1,542 241,971 243,513Brazilian Real -- 9,131 180,160 189,291Chilean Peso -- 9,326 107,285 116,611Argentinean Peso -- 411 66,839 67,250Venezuelan Bolivar -- 6 45,017 45,023Other currencies -- 5,868 99,487 105,355

Total 3,207 382,905 15,088,152 15,474,264

Figures in EUR 000s

6.8 Investments earmarked to transactions in preparation of insurance contracts

The securities portfolio as at 31 December 2003 detailed in note 6.6 includes EUR 45,116,000

corresponding to financial assets acquired by MAPFRE VIDA, MUSINI and MUSINI VIDA as

part of the investments of the pension funds they administer. The following table shows the

movements of these items during 2003:

Fixed-income securities and deposits held with credit institutions will mature in years 2004

(EUR 12,982,000), 2005 (EUR 289,000), 2006 (EUR 1,251,000), 2008 (EUR 900,000), 2009 (EUR

1,297,000), 2010 (EUR 2,186,000), 2011 (EUR 10,037,000) and 2013 (EUR 6,097,000). The principle

followed in order to determine the market value of these investments is the same as that

applied to the assets held by Group companies in their ordinary investment portfolio. The

average rate of return of the fixed-income portion of this type of investments in 2003 was

4.47%.

6.9 Other assets

The breakdown of the item “Cash on credit institutions, cheques and on hand” is as follows:


Items Opening balance Additions Cancels. Closing Market balance value

Investment on account of policy holdersassuming the investment risk 574,693 134,503 (263,095) 446,101 446,101

Total 574,693 134,503 (263,095) 446,101 446,101

Figures in EUR 000s

Items Opening balance Additions Cancels. Closing Market balance value

Fixed-income securities 28,605 16,177 (14,376) 30,406 31,842Financial investments in capital 10,740 26 (689) 10,077 18,520Deposits held with credit institutions - 3,133 - 3,133 3,133Cash in banks - 1,500 - 1,500 1,500

Total 39,345 20,836 (15,065) 45,116 54,995

Figures in EUR 000s

Concept Closing balance

Banks and credit institutions 1,265,059Cheques for collection 6,649Cash on hand 2,843Others 15,259

TOTAL 1,289,810

Figures in EUR 000s

6.10 Equity

The following table shows the movement of accounts representing equity during 2003:

Increases and decreases in equity basically originate from the distribution of results from the

previous fiscal year, from the results obtained by consolidated companies in the present fis-

cal year, and from the adjustments and eliminations corresponding to the consolidation, hav-

ing taken into account the share apportionable to minority shareholders.

› Mutual Fund

The mutual Fund is that corresponding to MAPFRE MUTUALIDAD, amounting to EUR 100 mil-

lion, and to MAPFRE AGROPECUARIA, amounting to EUR 10 million, and has been established

in accordance with the regulations in force. It has been allocated in previous years against

profits, as well as partially applying the restatement reserve, as per Royal Decree Act 7/1996,

and by applying legal reserves.

› Restatement reserves

The balance of the account “Restatement reserve Royal Decree-Act 7/1996” corresponds to

the restatement carried out by MAPFRE MUTUALIDAD and MAPFRE AGROPECUARIA pur-

suant to the provisions of Royal Decree-Act 7/1996. The amount corresponding to “Restate-

ment reserve Royal Decree-Act 7/1996” of the subsidiaries has an impact on the reserves of

fully consolidated companies and on minority interests, for amounts of EUR 3,430,000 and

EUR 8,777,000, respectively.


Concept Opening balance Adjusts. to Increases Decreases Closing opening balance balance

Mutual Fund 110,000 -- -- -- 110,000Restatement reserves 4,966 -- -- -- 4,966Share premiumReserves- Legal reserves 706,474 -- 111,666 -- 818,140- Special reserves -- -- 9,947 -- 9,947- Reserves in consolidated companies:

› Reserves in companies cons. by full or proport. integration 257,623 -- 50,073 (7,308) 300,388› Reserves in companies cons. by the equity method (15,089) -- 11,863 (3,004) (6,230)

- Translation differences:› In companies consolidated by full or proport. integration (144,192) -- 144,192 (195,737) (195,737)› In companies consolidated by the equity method (1,327) -- 1,327 (5,515) (5,515)

Results from previous years pending application- Brought forward 46,946 -- 11,956 -- 58,902

Profit and loss attributable to controlling company

- Consolidated profit and loss 326,964 -- 446,408 (326,964) 446,408

- Profit and loss attributable to external shareholders (121,093) -- 121,093 (147,787) (147,787)

Total 1,171,272 -- 908,525 (686,315) 1,393,482

Figures in EUR 000s

The period for the Fiscal Inspection Authorities to carry out the verification of the said balance

is three years to be counted from 31 December 1996. Once the balance of the restatement

account is checked and accepted, or once the mentioned three year period elapses, the said

balance may be used to offset losses or for capital increases. After ten years, the balance may

be allocated to freely distributable reserves.

The balance of the account “Restatement reserve Royal Decree-Act 7/1996” of MAPFRE

MUTUALIDAD has been verified by the Fiscal Inspection Authorities, having been approved by

them. In addition, the three year period established in Royal Decree-Act 7/1996 for the verifi-

cation of the balance of the mentioned account has expired in relation to MAPFRE

AGROPECUARIA, MAPFRE SEGUROS GENERALES, MAPFRE GUANARTEME and MUSINI,

with no verification having been made. Consequently, MAPFRE MUTUALIDAD, MAPFRE

AGROPECUARIA, MAPFRE SEGUROS GENERALES, MAPFRE GUANARTEME and MUSINI may

use the balances of the mentioned account to increase the mutual Fund or their respective

share capitals; from 31 December 2006, the balance of the said accounts in the mentioned

entities may be allocated to freely available reserves.

› Legal reserves

The legal reserves represent a corporate fund the availability of which is subject to the provi-

sions of MAPFRE MUTUALIDAD’s and MAPFRE AGROPECUARIA’s by-laws. The net increase

in these reserves is due to the profit distribution corresponding to 2002.

› Special reserves

This MAPFRE MUTUALIDAD reserve arises from the overall assignment of MARES’s assets

and liabilities to the Entity, and it is a freely available reserve.

› Other information

- The following table shows the detail of partners alien to the Group or linked to it and

holding 10% or more in the capital of a Group company:


STAKES OF COMPANIES ALIEN TO THE GROUP IN THE CAPITAL OF GROUP COMPANIES

Company Non-Group Shareholder % Capital

MAPFRE CAJA MADRID HOLDING CORPORACIÓN FINANCIERA CAJA DE MADRID 49.0000ADS MAPFRE CAJA MADRID A.I.E. CAJA DE MADRID PENSIONES 15.0000COMPAÑÍA DE SEGUROS DE CRÉDITOS COMERCIALES SURAMERICANA 35.0000MAPFRE AMÉRICA CAUCIÓN Y CRÉDITO S.A. CREDIT GUARANTEE 25.0000MAPFRE AMÉRICA CORPORACIÓN FINANCIERA CAJA DE MADRID 10.0000MAPFRE ARGENTINA SEGUROS DE VIDA S.A. CORPORACIÓN FINANCIERA CAJA DE MADRID 25.0000MAPFRE COLOMBIA VIDA S.A. CORPORACIÓN FINANCIERA CAJA DE MADRID 25.0000MAPFRE CHILE VIDA S.A. CORPORACIÓN FINANCIERA CAJA DE MADRID 25.0000TEPEYAC ASESORES S.A. DE C.V. CORPORACIÓN FINANCIERA CAJA DE MADRID 33.0000INVERSIONES PERUANAS S.A. CORPORACIÓN FINANCIERA CAJA DE MADRID 20.0000MAPFRE PERÚ VIDA S.A. GRUPO CALDA-VERME (PERÚ) 34.0275PUERTO RICAN AMERICAN LIFE CO. CORPORACIÓN FINANCIERA CAJA DE MADRID 25.0000INTERBOLSA S.A. ENDESA S.A. 20.0000BENELUX ASSIST. S.A. FORTIS BANK INSURANCE, NV-SA 30.0000

- All the shares representing the share capital of CORPORACIÓN MAPFRE are listed on the

Madrid and Barcelona Stock Exchanges.

- The Extraordinary General Shareholders Meeting of the controlled company MAPFRE RE

adopted the resolution to increase its share capital by EUR 64,032,738, by issuing

20,655,722 new shares with a nominal value of EUR 3.1 each, with a share premium of

EUR 4.16 per share. The said increase shall be carried out through a cash payment dur-

ing the subscription period, scheduled to take place between 15 March and 30 April 2004.

- On 17 December 2003, the General Meeting of the controlled company MUSINI approved

a capital decrease of up to EUR 12,020,000. The offering period will be three months

counted from the date of publication of the last advertisement notifying the offering car-

ried out by the said company.

- As at 31 December 2002, all the shares representing the share capital of MAPFRE VIDA

were listed on the Madrid and Barcelona Stock Exchanges, and traded on the electronic

market (Sistema de Interconexión Bursátil). The Extraordinary General Meeting of

MAPFRE VIDA, held on 23 October 2001, agreed to apply for delisting on the Madrid and

Barcelona Stock Exchanges of all the shares representing the share capital, as well as

to authorise the Board of Directors to issue a Public Takeover Bid on the mentioned

shares. The takeover bid was approved by the Comisión Nacional del Mercado de Val-

ores on 19 December 2002, and fully settled on 30 January 2003. Therefore, with effect 3

February 2003, the MAPFRE Vida shares discontinued their listing on the official markets.

6.11 Minority interests

The following table details the movement of the stakes held by external shareholders in year

2003, as well as the composition of the closing balance, by concept:


Company Movement Closing balanceOpening Adjust to Incrs. Descreases Closing Capital Reserves Results Interim Totalbalance opening balance dividend

balance

CORPORACIÓN MAPFRE 393,254 - 21,786 - 415,040 40,154 320,236 63,484 (8,834) 415,040

MAPFRE CAJA MADRID HOLDING 468,173 - 121,780 (58,773) 531,180 158,749 341,338 72,780 (41,687) 531,180

MAPFRE RE 44,489 - 6,384 - 50,873 21,722 26,593 4,521 (1,963) 50,873

MAPFRE AMÉRICA 77,154 - 8,520 (10,900) 74,774 60,932 8,175 5,667 - 74,774

MAPFRE AMÉRICA CAUCIÓN 5,947 - 488 (758) 5,677 4,514 675 488 - 5,677

MUSINI - - 5,017 - 5,017 579 4,396 42 - 5,017

OTHERS 44,405 264 8,112 (32,820) 19,961 35,214 (15,832) 805 (226) 19,961

TOTAL 1,033,422 264 172,087 (103,251) 1,102,522 321,864 685,581 147,787 (52,710) 1,102,522

Figures in EUR 000s

Increases and decreases correspond mainly to these companies’ external shareholders’

sharing in the results of 2003 and the previous year, which have not become part of these

companies’ reserves, as well as to their sharing in the change on the translation difference

after effecting consolidation adjustments. Increases in MAPFRE CAJA MADRID HOLDING are

also due to external shareholders’ stake in the capital increases made in this company dur-

ing the year, and those of MUSINI to its incorporation into the consolidation perimeter. Of the

total amount of decreases, EUR 13,359,000 relate to the increased ownership by MAPFRE

Seguros Generales in MAPFRE GUANARTEME.

6.12 Negative consolidation difference

The following table shows the movement of this item during 2003:

The most significant negative consolidation differences arise from MAPFRE GUANARTEME

and MESEVAL AGENCIA DE SEGUROS, amounting to EUR 710,000 and EUR 268,000, respec-

tively.

6.13 Technical reserves

The following table shows the movement of this heading in 2003:


Concept Opening balance Adjusts. to Increases Decreases Closing balanceopening balance

Fully consolidated companies 971 -- 231 (86) 1,116Companies consol. by equity method 642 (3) -- -- 639

TOTAL 1,613 (3) 231 (86) 1,755

Figures in EUR 000s

DIRECT INSURANCE AND ACCEPTED REINSURANCE

Item Opening balance Adjusts. to Approprs. Applications Closing balanceopening balance

Reserve for unearned premiums and forrisks in progress

› Direct insurance 1,944,898 89,469 2,267,857 (2,034,367) 2,267,857› Accepted reinsurance 206,215 14,403 284,803 (220,618) 284,803

Reserve for life insurance-Reserve for unearned premiums andfor risks in progress› Direct insurance 25,430 16,110 35,010 (41,540) 35,010› Accepted reinsurance 19,802 66 27,551 (19,868) 27,551

-Mathematical reserves› Direct insurance 8,683,564 1,586,130 11,152,646 (10,269,694) 11,152,646› Accepted reinsurance 42,781 566 41,057 (43,347) 41,057

› Reserve for risks in progress

The allocation of the reserve for risks in progress has been effected by the consolidatable Group’s insurance companies

according to the principles stated in note 5.m) of this annual report.

› Reserve for life insurance

The allocation of an additional reserve for life insurance due to inadequacy of returns was not required.

› Reserve for outstanding claims

No detail is provided on the development of the reserve for benefits in accepted reinsurance, in particular at MAPFRE RE,

as the ceding companies’ reinsurance accounts do not provide information on the adequacy or non adequacy of technical

reserves as a consequence of the application, on ceding companies’ part, of accounting methods different from the

method of year of imputation (year of occurrence or accounting year), and therefore it is not possible to supply informa-

tion on the evolution of the reserve for claims.


DIRECT INSURANCE AND ACCEPTED REINSURANCE (Cont.)


Reserve for claims› Direct insurance 2,010,205 435,720 2,701,063 (2,445,925) 2,701,063› Accepted reinsurance 299,724 14,376 307,149 (314,100) 307,149

Reserve for profit sharing and returns 15,172 10,421 31,169 (25,603) 31,159Stabilisation reserves 127,345 16 113,774 (25,051) 216,084Other technical reserves

› Direct insurance 150,467 (1,210) 184,554 (149,257) 184,554› Accepted reinsurance 49 (49) -- -- --

TOTAL 13,525,652 2,166,018 17,146,633 (15,589,370) 17,248,933

Figures in EUR 000s

CEDED INSURANCE


Reserve for unearned premiums and for risks in progress 237,350 129,502 382,069 (366,852) 382,069

Reserve for life insurance› Reserve for unearned premiums and

for risks in progress 4,980 5,085 4,036 (10,065) 4,036› Mathematical reserves 16,659 (13,340) 6,155 (3,319) 6,155

Reserve for claims 264,192 368,435 649,170 (632,627) 649,170

TOTAL 523,181 489,682 1,041,430 (1,012,863) 1,041,430

Figures in EUR 000s

The following table highlights the adequacy of the reserve for benefits established at the

beginning of the year, of the sub groups of companies domiciled in the European Economic

Area.

› Other technical reserves

The heading “Other technical reserves” includes the reserve for death insurance. The princi-

ples followed in the allocation of this reserve are stated in note 5.m) of this annual report.

6.14 Reserves for pensions and similar liabilities



Company Reserve at the Payments and T.P. Adequacybegining of the year claims 2003

MAPFRE MUTUALIDAD 779,292 (738,324) 40,968MAPFRE AGROPECUARIA 47,972 (46,373) 1,599MAPFRE CAJA MADRID HOLDING 701,140 (691,120) 10,020MAPFRE ASISTENCIA 3,674 (3,160) 514

TOTAL 1,532,078 (1,478,977) 53,101

Figures in EUR 000s

Reserves for pensions Pensions Pensions to active staff to retired staff

Year’s opening balance 1,778 -Adjustments to opening balance (83)Increases› Allocations to own or internal pension funds 939 4,024Decreases› Payments effected against the pension fund (1,138) (3)› Excess reserve (96) -

Year’s closing balance 1,400 4,021

Figures in EUR 000s

6.15 Other reserves for risks and expenses


The item “provision for taxes” includes provisions for tax debts, these corresponding almost

entirely - EUR 22,161,000 - to the MAPFRE AMÉRICA sub-group.

The most significant components of “Other provisions” as at 31 December 2003 are as follows:

› Provisions at the Entity and other controlled companies for the adequate cover of the

restructuring of corporate means, totalling EUR 55,442,000.

› Cover of certain risks deriving from the current economic situation in Argentina and

Venezuela, amounting to EUR 13,974,000 and EUR 1,151,000, respectively.

› Commitments arising from the sale of Progress Assicurazioni, amounting to EUR

10,121,000.

› Provision for incentives to staff, amounting to EUR 22,392,000.

› Provision for the liabilities that might derive from the settlement of certain appeals,

amounting to EUR 8,063,000.

› Provisions for third party liabilities, amounting to EUR 3,768,000.

6.15 Loans

As at 31 December 2003, the balance of this account includes the nominal amount of deben-

tures issued by the Controlling Company, their most significant terms and conditions being as

follows:

› Nature of the issue: simple debentures represented by book entries.

› Total amount: EUR 275 million

› No. of securities: 2,750

› Nominal per security: EUR 100,000.—


Concept Opening balance Adjusts. to Approprs. Applications Closing balanceopening balance

Provision for taxes 25,769 (1,151) 13,352 (2,878) 35,092Provision for payment of liquidation agreements 20,360 -- 19,895 (19,310) 20,945Other provisions 101,095 (2,560) 96,525 (61,028) 134,032

Total 147,224 (3,711) 129,772 (83,216) 190,069

Figures in EUR 000s

› Issuance date: 12 July 2001

› Term: 10 years.

› Maturity: 12 July 2011

› Repayment: In a lump sum at maturity, at par, free of expenses for holders.

› Listing: AIAF Fixed income market

› Coupon: 6.02% per annum, payable on the anniversaries of the issuance date until the final

maturity date, inclusive.

› Rating of issue: AA- (Standard & Poor’s).

The amount received by CORPORACIÓN MAPFRE upon the issuance was lessened by 0.375%

on its nominal figure, in the concept of managers’ and underwriters’ fees. This fee, together

with other issuance expenses, is imputed annually to results following a financial criterion. As

at 31 December 2003, the amount pending to be expensed under these concepts is EUR 926,000

and is shown under the heading of deferred expenses.

As at 31 December 2003, interest accrued by outstanding debentures amounted to EUR 7,801,000,

and is shown under the heading “Accruals” on the liabilities side.

On 28 February 2002, an interest rate swap was agreed on the total amount of the issue,

whereby CORPORACIÓN MAPFRE receives on an annual basis an amount equivalent to 6.02%

up to the final maturity of the issue, and undertakes to pay 2.35% up to 12 July 2004 and the

USD 6-month Libor plus 1.62% from that date until the final maturity date, with the maximum

limit of 6.02% per annum.

6.17 Debts

The following table details the balance of debt outstanding to credit institutions and other

debts in year 2003:


Amounts due to credit institutions break down as follows:

As at 31 December 2003, the balance of debt arising from transactions in preparation of insur-

ance contracts has long term maturities and is not subject to the provisions of Act 8/1987 of

8 June.


Type Amount Average Interest Rate

Credit facilities 110,327 3.04%Loans 45,851 2.21%Others 5,837 7.36%

Total 162,015

Figures in EUR 000s

Concept Secured Others Total Denominated in Euros

Due to credit institutionsDue on lease agreementsOthers - 2,801 2,801 545Other debtOthers 3,231 155,983 159,214 146,809

Total 3,231 158,784 162,015 147,354

Due on transactions in preparation of insurance contractsOthers - 46,002 46,002 46,002

Total - 46,002 46,002 46,002

Other debtsDue to subsidiaries and associated

Subsidiaries 863 15,721 16,584 3,756Associated - 248 248 -

Fiscal, corporate and other debt 38,759 669,400 708,159 590,002Total 42,853 844,153 887,006 741,112

Figures in EUR 000s

6.18 Transactions with subsidiaries and associated companies

The transactions carried out between Group companies, having no effect on results as they

were eliminated in the consolidation process, are as follows:

The amounts included in the profit and loss account as a result of the transactions carried out

during the fiscal year with Group companies not having been fully consolidated and with affil-

iates are detailed herebelow:

6.19 Reinsurance and coinsurance operations

Detailed herebelow are reinsurance and joint insurance operations effected between compa-

nies in the consolidatable Group, eliminated in the consolidation process:


Concept Expenses Revenues

Services received / rendered 102,051 22,861Expenses/revenues from tangible investments 888 18,657Expenses/revenues from investments and bank accts. 4,186 6,820Other non technical expenses/revenues 1,273 80,566Dividends distributed -- 223,449Commissions from direct insurance 19,768 --Others 2,441 2,441

Total 130,607 354,794

Figures in EUR 000s

Concept Amount

Premiums ceded/accepted 429,249Benefits 226,797Change in technical reserves 67,584Commissions 126,967Interest on deposits 3,139

Figures in EUR 000s

Concept Expenses Revenues

Expenses and revenues from tangible investments -- 969Expenses and revenues from financial invest. and accts. -- 345Other external services 10,834 --Other non technical revenues 92 462

Total 10,926 1,776

Figures in EUR 000s

The following tables detail the balances with reinsurers, ceding companies, deposits placed

and technical reserves for reinsurance operations with consolidatable Group companies that

were eliminated in the consolidation process, as well as with Group companies not fully con-

solidated:

6.20 Other details

› Extraordinary expenses and revenues

Extraordinary losses amounted to EUR 27,485,000, of which EUR 1,245,000 correspond to pre-

vious years and EUR 26,240,000 to the present year. The most significant items of extraordi-

nary expenses correspond to the allowance allocated to cover certain risks arising from the

present financial situation in Argentina, detailed in note 6.15, amounting to EUR 7,144,000, and

to the regularisation of debtor balances on premiums to be collected at MAPFRE U.S.A. for

EUR 9,654,000.

Extraordinary profits amounted to EUR 11,929,000, of which EUR 2,830,000 correspond to pre-

vious years and EUR 9,099,000 to the present year.

› Advanced revenues and expenses

Detail is given herebelow of the revenues and expenses that, having been accounted for in the

year, correspond to a subsequent one:

› Monetary adjustment

The accounts “Monetary adjustment positive result” and “Monetary adjustment negative

result” include adjustments arising from the effect of exchange rates on the prices of the

companies domiciled in countries having high inflation rates.


ELIMINATED BALANCES

Concept Accepted Ceded reinsurance reinsurance

Credits facilities (50,247) 35,120Deposits 114,666 (114,666)Technical reserves (256,536) 273,619

TOTAL (192,117) 194,073

Figures in EUR 000s

NON-ELIMINATED BALANCES

Concept Accepted Ceded reinsurance reinsurance

Credits facilities (388) -Deposits 450 -Technical reserves (1,354) -

TOTAL (1,292) -

Figures in EUR 000s

Concept Assets Liabilities

Prepaid expenses 7,493 -Commissions and other acquisition expenses - 102,425Others - 12,468

TOTAL 7,493 114,893

Figures in EUR 000s

› Labour-related corporate expenses

The following table shows a breakdown of the item “Labour-related corporate expenses” of

the consolidatable Group’s Spanish companies:

The amount of “Contributions and allocations to pension plans” includes EUR 21,350,000 cor-

responding to premiums accrued by MAPFRE VIDA to cover commitments outstanding to

active staff and to pensioners for pension supplements and retirement premiums.

6.21 Reclassifications in the consolidated profit and loss account

The necessary reclassifications of revenues and expenses have been made in fully consoli-

dated instrumental companies to the effect of presentation of the consolidated profit and loss

account. Reclassification principles relate to the nature and contents of headings, their

amount not being significant.

7. INFORMATION ON LIFE INSURANCE

7.1 Composition of life business and premium income

The following table shows the Life Insurance business portfolio, by premium income net of

cancellations, in year 2003:


Concept Amount

Seguridad Social 65.923Aportaciones y dotaciones a planes de pensiones 37.279Otras cargas sociales 31.930

TOTAL 135.132

Datos en miles de euros

Type Concept Direct Insurance

APremiums on individual contracts 1,368,033Premiums on collective insurance contracts 475,381Total 1,843,414

BRegular premiums 717,958Single premiums 1,125,457Total 1,843,414

CPremiums from contracts without profit sharing 1,313,455Premiums from contracts with profit sharing 481,380Premiums from contracts where the investment risk is assumed by policy holders 48,579Total 1,843,414

Figures in EUR 000s

7.2 Technical conditions of the main life insurance types

The technical conditions of the main life insurance types are shown herebelow:

Technical conditions at MAPFRE VIDA

a) Agents Channel

(1) In case of life, an amount of capital at maturity is guaranteed, as well as appreciation of capital allo-cated by profit sharing. In case of death, a capital is guaranteed consisting of the sum of the net pre-miums paid until the insured person's death, capitalised at the technical interest (according to pro-ducts) per full elapsed years, plus the net premiums forecast from the date of death until maturity ofthe contract. In addition, the mathematical reserve of the "bonuses" assigned in profit sharing is gua-ranteed.

(2) In case of life, an amount of capital at maturity is guaranteed, as well as appreciation of capital allo-cated by profit sharing. In case of death, a capital is guaranteed consisting of the sum of the net pre-miums paid until the insured person's death, capitalised at the technical interest (according to pro-ducts) per full elapsed years. In addition, the mathematical reserve of the "bonuses" assigned in pro-fit sharing is guaranteed.

(3) In case of life, an amount of capital at maturity is guaranteed. In case of death, the capital guarante-ed is the mount of the net premiums paid capitalised at the technical interest rate, during the timeelapsed between the effective date and the date of death, considering the fraction of the current yearas a full year.

(4) Temporary and for life annuities, in case of survival.(5) Floating interest rates are applied according to the Technical Note, abiding by the provisions of Royal

Decree 2486/1998, approving the Regulations, and of Ministerial Order dated 23 December 1998.(6) The distribution of profit sharing is instrumented in deferred capital insurance policies with reimbur-

sement of single premium reserves.(7) As per resolution dated 3 October 2000 of the Directorate General of Insurance and Pension Funds,

generational tables PERM/F 2000 C are applied to portfolio contracts and PERM/F 2000 P for new pro-duction from that date.

(8) Temporary insurance policies renewable on an annual basis, where, in case of death, payment of anamount of capital is guaranteed.


Types Coverage Tables Technical Profit sharinginterest rate Amount Way of distribut.

› Individual contracts, with regularpremium, and with or without profit sharing:› Combined insurance (1) GKM80/95 5.58% 1,831 (6)› Insurance with counter-insurance (2) GKM-95 5.29% 1,557 (6)

› Individual contracts with single premiumwithout profit sharing:› Insurance with counter-insurance (3) GKM-95 4.90% (5) - -› Survival (4) GRM/F-95 4.49% (5) - -

› Collective contracts with single premiumwithout profit sharing: PERM/F 2000› Survival (4) P/C (7) 4.94% (5) - -› Death (8) GKM-95 3.77% - -

Figures in EUR 000s

b) Bank Channel

(1) If the insured person lives at the end of the established period, payment of the insured capital is gua-ranteed. In case of the insured person’s death during the validity of the insurance policy, an amountof capital is guaranteed, calculated as the addition of all premiums paid plus the profit sharing allo-cated until that person’s death, plus capitalisation of both figures at the technical interest rate fromthe date when they were paid or allocated, until the last annual maturity date of the insurance policyprior to the insured person’s death.

(2) The insurance policy guarantees payment of a constant annuity while the insured person lives and,should he/she die during the first year of validity of the insurance policy, the return of the premiumpaid. If death occurs after the first year, the return of the premium is guaranteed plus the lower of 3%of the premium or EUR 6,010.

(3) Whole-life insurance of the Unit Linked type. In case of the insured person’s death, it guarantees pay-ment of a capital amount consisting of the value of the investment fund units (Fund value) allocated tothe policy, plus the capital at risk in force at the time of death. This capital at risk figure is determi-ned as 10% of the value of the Fund at the beginning of each month, with maximum and minimumlimits being determined depending upon the insured person’s age and state of health.

(4) This insurance policy guarantees payment of temporary annuities, reversible for widowhood/orphan-hood; plus a deferred annuity for life, from the time of retirement, reversible for widowhood/orphan-hood.

(5) The stated technical interest rate applies during the first 28 or 29 years of validity of the insurancepolicy (depending upon the contracting date). The rate of 2.50% applies beyond that period.

(6) This being a Unit Linked insurance, no technical interest rate is applicable.(7) The stated technical interest rate applies during the first 30 years of validity of the insurance policy.

The rate of 2.50% is applied beyond that period.(8) Profit sharing is allocated as at 31 December or upon maturity of the insurance policy, if earlier, and

is integrated into the policy as an additional premium, this entailing an increase in the guaranteedcapital and values.



› Individual contracts, with single premiumand with profit sharing:› Combined insurance (1) GRM/F 95 3.00% 740 (8)

› Individual contracts, with single premiumand without profit sharing:› Combined insurance (2) GRM/F 95 (5) 4.65% -- --› Unit linked (3) GKM/F 95 (6) -- -- --

› Collective contracts, with single premiumand without profit sharing:› Survival (4) GRM/F 95 (7) 5.92% -- --

Figures in EUR 000s

Technical conditions at MUSINI

The technical interest rates used in the various single premium life insurance policies are

specific to each transaction or groups of transactions carried out, and they range between

1.69% and 5.12%, with the weighted average rate for the entire portfolio being 5.29%.

Technical conditions at MUSINI VIDA

(1) Temporary and for life annuities, in case of survival.

(2) Tables PERM/F 2000 C apply to portfolio contracts existing prior to the enforcement of Royal Decree2486/1988. For new production from the enforcement of the said rule until 3 October 2000, the GRM/Ftables apply; then, the PERM/F 2000 P tables apply to new production from that date.

(3) Floating interest rates are applied according to the Technical Note, abiding by the provisions of RoyalDecree 2486/1998, approving the Regulations, and of Ministerial Order dated 23 December 1998.



› Individual contracts Death GK 80 2% 16 As a claim› Collective contracts Death / Survival GK 80/PERM-F 2000 2%-5.29% 5,689 As a claim

› Regular premium contracts Death / Survival PERM-F 200 2%-5.29% 5,705 As a claim› Single premium contracts Survival GK 80/PERM-F 2000 5.29% -- --

› Contracts without profit sharing Death / Survival GK 80/PERM-F 2000 2%-5.29% -- --› Contracts with profit sharing Death / Survival GK 80/PERM-F 2000 2%-5.29% 5,705 As a claim

Figures in EUR 000s


› Single premium collective contracts, without profit sharing PERM/F

2000 P/CGRM/F 95 4.35%-5.03% (3) - -

› Survival (1) (2)

Figures in EUR 000s

Technical conditions at MAPFRE FINISTERRE


Types Coverage Tables Technical Profit sharing

interest rate Amount Way of distribution

› Individual contracts

Risk GKM-70/80 3.5-5% - -

Savings GRM-70/80-2/95

GRF95 4%-6% - 90%* (Actual Return-

Technical Return) and

90%* Actual Return-

Technical Return

Combined GRM-70/80-2/95

GRF95 3%-3.5%-4%-6% 14 90%* (Actual Return-

Technical Return)

› Collective insurance contracts

Risk GKM-70/80 3.5%-5% - -

Saving - - - -

Combined - - - -

› Regular premium contracts

Risk GKM-70/80 3.5%5% - -

Saving GRM-70/80-2/95 4%-6% -

GRF95 90%* (Actual Return-


90%* Actual Return-

Technical Return

Combined GRM-70/80-2/95

GRF95 3%-3.5%-4%-6% 5 90%* (Actual Return-

Technical Return)

› Single premium conracts

Risk - - - -

Saving - - - 90%* (Actual Return-


90%* Actual Return-

Technical Return

Combined - - 9 90%* (Actual Return-

Technical Return)

› Contracts without profit sharing

Risk - - - -

Saving - - - -

Combined P.M. 60-40 3.5% - -

› Contracts with profit sharing

Risk - - - -

Saving GRM-70/80-2/95 4%-6% - 90%* (Actual Return-

GRF95 Technical Return) and

90%* Actual Return-

Technical Return

Combined GRM-70/80-2/95 3%-3.5%-4%-6% 14

GRF95 90%* (Actual Return-

Technical Return)

Figures in EUR 000s

Technical conditions at MAPFRE AMÉRICA VIDA


Types Coverage Tables Tecnical interest Profit Sharingrate Importe Forma de distr.

› Individual contracts- Combined (death and survival) CSO-80 MASC 4% 532 -- Capital on survival AT49/AT83 6% 2,566 (2)- Life Insurance M95 (1) - -- Retirement annuities for life RV85H, RV85M (1) - -- Combined (death and survival) COLOM.84/98 8% 3,604 (3)- Death COLOM.84/98 8% 446 -- Retirement Annuities TIT.RV-85-H/M - - -- Death and Burial CSO - 80 8% - -- Individual with Profit Sharing GKM - 80 - M 5% 2,719 -- Individual without Profit Sharing GKM - 80 - M 5% - -- “Certivida” and “Certirenta” GKM - 80 - M - - -- Ordinary Individual Insurance 1958 CSO 3.5% 4,380 -

› Collective insurance contracts- Capital on survival AT49/AT83 6% 9,319 (2)- Death and disability AT-83 - - -- Life Collective Insurance &Others M95 (1) 202 -- Death COLOM.84/98 8% - -- Professional Accidents B-85 H / M 3% - -- Life Workers Act / Mortgage Allowance CSO - 80 - - -- Group Life / Accid. and Health Several - - -- Group Life Insurance 1958 CSO 3% 1,824 -- Credit Insurance 1958 CET 5% 3,437 -

› Regular premium contracts- Capital on survival AT49/AT83 6% 7,778 (2)- Death and disability AT83 - - -- Life Insurance M95 (1) - -- Life Collective Insurance & Others M95 (1) 202 -- Combined (death and survival) CSO80 MASC 4.0% 532 -- Combined (death and survival) COLOM.84/98 8% 3,604 (3)- Death COLOM.84/98 8% - -- Professional Accidents B-85 H / M 3% - -- Life Workers Act / Mortgage Allowance CSO - 80 - - -- Death and Burial CSO - 80 8% - -- Individual with Profit Sharing GKM - 80 - M 5% 2,719 -- Individual without Profit Sharing GKM - 80 - M 5% - -- Group Life / Accid. and Health Several - - -- Ordinary Individual Insurance 1958 CSO 3.5% 4,380 -- Group Life Insurance 1958 CSO 3% 1,824 -

› Single premium contracts- Credit Insurance 1958 CET 5% 3.437 -- Retirement Annuities TIT.RV-85-H/M - - -- “Certivida” and “Certirenta” GKM - 80 - M - - -- Capital on survival AT49/AT83 6% 4.107 (2)- Retirement annuities for life RV85H, RV85M (1) - -- Death COLOM.84/98 8% 446 (3)

Technical conditions at MAPFRE AMÉRICA VIDA (cont.)

(1) The companies MAPFRE CHILE VIDA and MAPFRE PERU VIDA sell for life annuities at a technicalinterest rate that is variable depending upon market conditions, although calculated by financial flowsmatching techniques ensuring the long term yield of the transaction.

(2) The Brazilian company VERA CRUZ VIDA E PREVIDENCIA has in place, for certain so called “full” con-tracts, a “Financial Surplus” clause, whereby the distribution is calculated of a part of the yields obtai-ned by assets earmarked to contracts, and a technical reserve is established with the said name.

(3) The distribution of profit sharing is implemented by single premium deferred capital insurance poli-cies with redemption of reserves.


Types Coverage Tables Tecnical interest Profit Sharingrate Importe Forma de distr.

› Contracts without profit sharing- Life Insurance M95 (1) - -- Retirement annuities for life RV85H, RV85M (1) - -- Retirement annuities TIT.RV-85-H/M - - -- Death and Burial CSO - 80 8% - -- Individual without Profit Sharing GKM - 80 - M 5% - -- “Certivida” and “Certirenta” GKM - 80 - M - - -- Death and disability AT-83 - - -- Death COLOM.84/98 8% - -- Professional Accidents B-85 H / M 3% - -- Life Workers Act / Mortgage Allowance CSO - 80 - - -- Group Life / Accid. and Health Several - - -

Contracts with profit sharing- Combined (death and survival) CSO-80 MASC 4% 532 -- Capital on survival AT49/AT83 6% 2,566 (2)- Combined (death and survival) COLOM.84/98 8% 3,604 (3)- Death COLOM.84/98 8% 446 -- Individual with Profit Sharing GKM - 80 - M 5% 2.719 -- Individual Ordinary Insurance 1958 CSO 3.5% 4.380 -- Capital on survival AT49/AT83 6% 9.319 (2)- Collective Life Insurance & Others M95 (1) 202 -- Group Life Insurance 1958 CSO 3% 1,824 -- Credit Insurance 1958 CET 5% 3,437 -

Figures in EUR 000s

8. GEOGRAPHICAL DISTRIBUTION OF BUSINESS

Premium income and technical reserves for direct insurance and accepted reinsurance oper-

ations declared by the Group in Spain, the European Union and other countries are detailed

herebelow:

9. FISCAL SITUATION

Tax consolidation regime

From the 1985 fiscal year onwards, part of the consolidated companies are included under

Fiscal Group 9/85 to the effects of the Corporations Tax, the said group being formed by COR-

PORACIÓN MAPFRE and its subsidiaries meeting the requirements to be subject to the said

tax regime. In 2003, the said Fiscal Group was formed by the following companies:

CORPORACION MAPFRE, MAPFRE RE, MAPFRE INMUEBLES, DESARROLLOS URBANOS

CIC, SERVICIOS INMOBILIARIOS MAPFRE, MAPFRE ASISTENCIA, IBEROASISTENCIA, VIAJES

MAPFRE, IBEROASISTENCIA SERVICIOS DE TELEMARKETING, MAPFRE SOFT, CONSULTING

DE SOLUCIONES Y TECNOLOGIAS SIAM, MAPFRE AMERICA, MAPFRE ASISTENCIA ORO and

VIAJES CITEREA.

Likewise, from 2002, some other consolidated companies are included under Fiscal Group

95/02 to the effects of the Corporations Tax, the said group being formed by MAPFRE CAJA

MADRID HOLDING de Entidades Aseguradoras, S.A. (hereinafter “MAPFRE CAJA MADRID

HOLDING”) and its subsidiaries meeting the requirements to be subject to the said tax

regime. In 2003, Fiscal Group 95/02 was formed by the following companies:

MAPFRE CAJA MADRID HOLDING, MAPFRE VIDA, MAPFRE INVERSION, MAPFRE INVERSION

DOS, MAPFRE VIDA PENSIONES, CONSULTORA ACTUARIAL Y DE PENSIONES MAPFRE

VIDA, GESTION MODA SHOPPING, MIRACETI, MAPFRE SEGUROS GENERALES, MAPFRE

INDUSTRIAL, GESTORA DE ACTIVOS FUNERARIOS, MULTISERVICIOS MAPFRE, MAPFRE


Business Line Spain European Union Other CountriesPremiums Reserves Premiums Reserves Premiums Reserves

LifeDirect insurance 1,616,338 11,506,918 38,224 142,006 188,852 208,199Accepted reinsurance 6,580 4,295 2,483 3,270 24,238 65,316Subtotal Life 1,622,918 11,511,213 40,707 145,276 213,090 273,515

Non LifeDirect insurance 3,841,980 4,213,093 91,817 111,038 1,214,169 800,053Accepted reinsurance 52,707 130,058 232,832 267,693 278,964 243,095Subtotal Non Life 3,894,687 4,343,151 324,649 378,731 1,493,133 1,043,148

TOTAL 5,517,605 15,854,364 365,356 524,007 1,706,223 1,316,663

Figures in EUR 000s

FINISTERRE, ORIENTE, SEPROVAL, MESEVAL, FINISTERRE AGENCIA CANARIA DE

SEGUROS, COSEBAL, HEJEAN, AGEPAL, LISS ASSURANCE, SEGURLIS, SEGESYMED,

SEPENVAL, SEFIN, MAPFRE CAUCION Y CREDITO, MAPFRE SERVICIOS DE CAUCION Y

CREDITO, MAPFRE CAJA SALUD, CENTRO MEDICO DE CHEQUEOS MAPFRE VIDA,

IGUALSERVICIOS DE HUESCA, CENTROS MÉDICOS ISLAS CANARIAS, MAPFRE GUA-

NARTEME and PROYECTOS Y SERVICIOS MAPFRE.

Reconciliation of accounting result with the tax base

The following table sets out the reconciliation between the consolidated profit after tax and

minority interests with the aggregate tax base for the year’s Corporations Tax, for 2003, of all

the fully consolidated companies, excluding foreign companies:

Increases in sole permanent differences in the year correspond, basically, to non deductible

expenses related to employee’s Life insurance policies, taxes borne on foreign dividends and

income received from abroad, to the non deductibility of the goodwill arising from the merg-

er of ASEICA and MAPFRE CAJA SALUD, and to provisions for risks and expenses.

Decreases in sole permanent differences in the year arise, mainly, from the exemption on for-

eign subsidiaries’ revenues, from the allocation of the Reserve for Investments in the Canary

Islands, from the monetary adjustment of gains generated in the sale of assets, from the

recovery of adjustments previously made by the Fiscal Authorities Inspection at MAPFRE

MUTUALIDAD on excess depreciation of fixed asset elements with respect to the maximum

tax allowance, as well as from the regularisation of the Corporation Tax for year 2002.


Reconciliation of accounting results with the tax base for the Corporations Tax

Accounting result for the fiscal year 298,621Increases Decreases

Corporation Tax 159,560 -- 159,560

Permanent differences:› Of individual Companies 15,655 (18,188) (2,533)› Of consolidation adjustments 237,272 (90,067) 147,205

Temporary differences:› Of individual Companies:

Arising in the year 208,634 (1,200) 207,434Arising in previous years 4,446 (101,332) (96,886)

› Of consolidation adjustments:Arising in the year 30,340 (504,367) (474,027)Arising in previous years 449,011 (3,371) 445,640

Set-off negative tax bases (15,115)

Tax Base (tax result) 669,899

Figures in EUR 000s

Increases in permanent consolidation differences are due, mainly, to the elimination of intra-

group dividends, eliminated in the accounting consolidation process, to external shareholders’

profit sharing, to the imputation of losses of companies consolidating by the equity method,

and to the elimination of losses from foreign companies excluded in the reconciliation.

Decreases in permanent consolidation differences relate, mainly, to the elimination of profits

of companies consolidating by the equity method, to minority shareholders’ interests, and to

the elimination of foreign companies’ results, which are not included in this reconciliation.

Increases in sole temporary differences originating in the year correspond, mainly, to non

deductible expenses on pension related commitments, to the allocation of provisions for lia-

bilities, insolvencies, mathematical reserves, depreciation of the securities portfolio, and pre-

miums pending collection, to complementary reserves for benefits, exceeding the tax

deductible amounts, and to the depreciation of the financial goodwill.

Increases in sole temporary differences originating in previous years correspond to the rever-

sion of the accelerated depreciation of assets as established in Royal Decrees 3/1993, 7/1994

and 2/1995, and to the reversion of profits deriving from the reinvestment deferral tax benefit.

Decreases in sole temporary differences originating in previous years relate mainly to the

recovery of provisions that were considered as non deductible in previous years, to the tax

bases already imputed by companies operating under the fiscal transparency regime, to the

partial reversion of insurance premiums covering pension related commitments to pension-

ers, to the reversion of capital gains from disposal of securities that were subject to swap in

previous years, to the reversion of premiums pending collection, to the additional provision

for benefits made in the previous year, and to the reversion for liabilities and expenses allo-

cated in year 2002.

The amount of increases in temporary consolidation differences originating in the year

relates, basically, to depreciation of goodwill on consolidation and portfolio acquisition

expenses.

The amount of decreases in temporary consolidation differences originating in the year

corresponds mainly to the elimination of the accounting consolidation adjustment made in

the concept of allocation to the provision for depreciation of investments in consolidated

companies.

The amount of increases in temporary consolidation differences originating in previous years

relates, basically, to the elimination of the accounting consolidation adjustment made for the

reversion of the provision for depreciation of subsidiaries established at the end of the pre-

ceding fiscal year.

The amount of decreases in temporary consolidation differences originating in previous years

corresponds to the elimination of results from other fiscal years.

Of the amount of setoff of negative tax bases, EUR 14,625,388 correspond to Fiscal Group no.

9/85 and EUR 490,000 to Fiscal Group no. 95/02.


During 2003, consolidated companies obtained profits in several foreign countries, with the

expense accrued on the various foreign taxes charged on the said profits amounting to EUR

3,890,000.

Prepaid and deferred taxes

Sole prepaid taxes of fully consolidated companies as at 31 December 2003, as a consequence

of the positive temporary differences accumulated as at the said date, amount to EUR

111,373,000. Of this figure, EUR 49,393,000 have been included in the consolidated companies’

Balance Sheet and Profit and Loss Account, pursuant to the criteria established to that effect

by the I.C.A.C. resolution of 9 October 1997 and its amendment of 15 March 2002. Of the said

figure, EUR 16,967,000 originate in the present year and EUR 32,426,000 come from previous

years.

The remaining sole prepaid taxes of consolidated companies accumulated as at 31 December

2003, which amount to EUR 61,980,000, have not been accounted for pursuant to the criteria

established in the said I.C.A.C. resolution of 9 October 1997 and its amendment of 15 March

2002.

Sole deferred taxes as at 31 December 2003 of fully consolidated companies amount to EUR

8,035,000, having been included in the respective Balance Sheets and Profit and Loss

Accounts.

Negative tax bases

Negative tax bases from previous years pending set-off in fully consolidated companies

amount to EUR 193,298,000 in aggregate, broken down as follows:

Tax credits relating to negative tax bases pending set-off by some of the consolidated com-

panies have not been booked, pursuant to the principles established by the ICAC resolution of

9 October 1997, and its amendment dated 15 March 2002.

Imputation of transparent companies

As shareholders in entities declaring under the fiscal transparency system, consolidated

companies received the following imputations in the year:


From fiscal year Amount Deadline for set-off in fiscal year

1996 97 20111998 26,768 20131999 41,688 20142000 13,369 20152001 41,507 20162002 69,869 2017

Figures in EUR 000s

Tax incentives

The detail of tax incentives in fully consolidated companies is as follows:

As at 31 December 2003, consolidated companies had booked tax credits for deductions pend-

ing application amounting to EUR 28,828,000.

In fiscal year 2002, consolidated companies assigned income amounting to EUR 222,911,000 to

the transitional regime of reinvestment of extraordinary profits established in the third tran-

sitional provision of Act 24/2001, on Fiscal, Administrative and Labour Related Measures, giv-

ing rise to a deduction in the amount to be paid under the Corporations Tax in 2001 of EUR

29,022,000. The assets where the reinvestment was carried out must remain in the compa-

ny’s ownership until fiscal year 2007.

Likewise, in years 2002 and 2003, consolidated companies assigned income amounting to

EUR 5,624,000 and EUR 45,353,000, respectively, to the deduction on reinvestment of extraor-

dinary profits established in article 36 ter. of Act 43/1995.

In previous years, consolidated companies assigned positive income of EUR 9,234,000 to the

tax benefit of reinvestment deferral pursuant to the repealed article 21 of Act 43/1995, on the

Corporations Tax, having reinvested EUR 18,263,000 as at year end, namely, the whole amount

corresponding to the reinvestment commitment, according to the following breakdown:


BREAKDOWN OF TAX INCENTIVES

Type Amount applied Amount pendingin the year application

Deduction on double taxation - internal 23,237 39,455Deduction on double taxation - international 1,284 --Deduction on reinvestment of extraordinary profits 4,399 --Bonuses and others 5,356 16Staff training and contribution to pension plans 817 58Creation of employment 16 -

Figures in EUR 000s

Concept Amount

Tax base 784Allowances 8Withholdings 490

Figures in EUR 000s

Positive income subject to the tax benefit of deferral on reinvestment is integrated into the

consolidated companies’ tax base in the tax periods when the assets in which the reinvest-

ment was carried out are depreciated. Of the total amount of this positive income, consoli-

dated companies have already integrated into their tax base the amount of EUR 640,000, as

per the following detail:

The amount of EUR 8,594,000 is pending integration into consolidated companies’ tax base

during fiscal years 2004 to 2052.

Verification by the tax authorities

Pursuant to the legislation in force, the tax returns filed for the different taxes may not be

considered as definitive until they have been inspected by the tax authorities or until the pre-

scription period of four years has elapsed. As a result of the inspection activities completed

in 1997 in some of the consolidated companies, in relation to the Corporation Tax for fiscal

years 1989 to 1993, as well as to the remaining taxes of fiscal years 1991 to 1994, tax assess-

ments were raised, signed in disagreement, for the Corporation Tax of years 1991, 1992 and

1993, due to disagreement on the qualification of certain assets acquired upon the merger by

takeover of several subsidiary companies, carried out on 31 December 1992, for the material-

isation of reinvestment to which the exemption of certain positive income generated in years

1990 and 1993 was subject, as well as disagreement on the deductibility of the allocation to the

provision for claims pending declaration, and on withholdings on account of the Personal

Income Tax, due to disagreement on the determination of the applicable withholding per-

centages. At year-end, MAPFRE INDUSTRIAL has made a provision for the amount of the tax

assessment raised for the non deductibility of the provision for claims pending declaration.


Fiscal Year Amount of Reinvestment Assigned income

1996 491 2991998 355 1681999 4,015 2,7032000 12,468 5,8472001 934 217

TOTAL 18,263 9,234

Figures in EUR 000s

Fiscal Year Amount

1999 622000 972001 982002 1912003 192

TOTAL 640

Figures in EUR 000s

Tax liquidations deriving from the said assessments were appealed against and are pending

resolution at present, except for those relating to the personal income tax, which have been

admitted.

As a consequence of inspection activities relating to fiscal years running from 1 January 1987

to 31 December 1991, regarding the companies MAPFRE FINISTERRE and its subsidiary ORI-

ENTE, certain tax assessments were raised that were appealed against, with said appeals

having been partly successful. For the portion not accepted, new tax liquidations were raised,

which were again appealed against.

In 2001, inspection activities were completed in relation to Group 9/85, formed by CORPO-

RACIÓN MAPFRE and its tax-controlled companies, for all taxes relating to fiscal years 1996

and 1997, as well as for the Corporation Tax of years 1994 and 1995. As a result of said inspec-

tion, tax assessments were raised, signed in disagreement, for the Corporation Tax of the

years under review, due basically to disagreement on the deductibility of technical reserves,

provision for depreciation of fixed assets, Tax on Insurance Premiums, discrepancy in the

incorporation to the taxable base of the said tax of certain surcharges collected from insured

persons, and on withholdings on account of the Personal Income Tax, due to disagreement

on whether certain amounts paid in the concept of transport expenses should be subject to

withholding. The said tax assessments have been appealed against, and the appeal was

pending resolution at year end.

In 2001, inspection activities were completed at CAJA MADRID VIDA, a company taken over by

MAPFRE VIDA pursuant to the general assignment of assets and liabilities that took place on

31 December 2001, relating to all the taxes to which said companies are subject for years 1996

and 1997, as well as to withholdings on account of returns on capital of fiscal year 1998. As a

result, tax assessments were signed in disagreement in relation to withholdings on account

of returns on capital of fiscal years 1996 to 1998 deriving from deposit administration agree-

ments; these tax assessments were appealed against and are pending resolution, as well as

the appeal brought against the tax assessment raised for the same concept and relating to

fiscal years 1992 to 1995.

There are inspection assessments for years 1995, 1996 and 1997 on MUSINI, corresponding to

withholdings on account of the personal income tax, signed in disagreement, as there are

major discrepancies with the criteria held up by the tax inspectors. Against the mentioned

assessments, an appeal was filed with the Tribunal Económico Administrativo Central, which

was pending resolution at year end. As at 31 December 2003, there is a provision assigned to

meet any liabilities that may arise from the settlement of the said appeal.

In 2003, a tax inspection took place at CAJA MADRID VIDA, a company taken over by MAPFRE

VIDA, with assessments having been signed in agreement for insignificant amounts, in the

concept of withholdings on account of the personal income tax and Value Added Tax of years

1998 to 2000, as well as for the 2000 Corporations Tax; the relevant tax settlements had been

honoured at year end.


Likewise, an assessment has been signed in disagreement for the Corporations Tax of year

2000, due to discrepancies on the fiscal allowability of the default interest from tax assess-

ments raised in previous years, with the liquidation deriving from the said assessment having

been appealed against.

In addition, and as regards the Corporations Tax for years 1998 and 1999, when CAJA MADRID

VIDA formed part of the Tax Group fiscally controlled by CAJA MADRID, the relevant pro-

ceedings have been signed containing hardly significant regularisations, which will give rise

to the corresponding assessments upon completion of the tax inspection at CAJA MADRID

VIDA’s controlling company in the mentioned years.

Consequently, and excluding the above mentioned exceptions, consolidated companies have

open to inspection all the taxes to which they are subject for the past four fiscal years. In the

opinion of the consolidated companies’ advisers, the likelihood of fiscal liabilities affecting

significantly consolidated companies’ financial position as at 31 December 2003 is remote.

On 9 January 2004, inspection actions have been initiated at MAPFRE AGROPECUARIA Mutu-

alidad de Seguros y Reaseguros a Prima Fija, in relation to all non prescribed taxes corre-

sponding to the period 1999 to 2002.

Transactions subject to the special Regime of Chapter VIII, Title VIII of Act 43/1995

Fiscal year 2003

On 1 December 2003, an overall assignment of assets and liabilities of MAPFRE AUTOMÓ-

VILES RIESGOS ESPECIALES, S.A. took place in favour of its sole shareholder, MAPFRE

MUTUALIDAD, the said transaction being subject to the tax regime established in Chapter VIII,

Title VIII of Act 43/1995, on the Corporation Tax.

On 31 January 2003, a capital increase took place at MAPFRE RE where CORPORACIÓN MAPFRE

contributed the premises located at Paseo de Recoletos no. 25, in Madrid, which, in turn, had been

transferred to it under Incalbarsa’s overall transfer of assets and liabilities, which was formalised

on 27 December 2000. Both transactions are subject to the special tax Regime contemplated in

Chapter VIII, Title VIII of Act 43/1995 on the Corporations Tax. The said premises had a book value

of EUR 11,868,822.10 on the date of its contribution and an accumulated depreciation of EUR

1,567,104.37. As a result of the non cash contribution made in the mentioned capital increase,

CORPORACIÓN MAPFRE has received MAPFRE RE shares for an amount of EUR 30,000,000.

On 1 December 2003, a capital increase was carried out at CENTRO MÉDICO DE CHEQUEOS

MAPFRE VIDA, S.A., where MAPFRE CAJA SALUD contributed the premises envisaged for

parking places on the first basement and the offices of the first floor of the building owned by

it, located at Llodio street w/n of Madrid, which, in turn, had been transferred to it by MAPFRE

VIDA in a capital increase whereby the latter Company contributed all the assets assigned to

the health business. Both transactions are subject to the special fiscal regime provided for

in Chapter VIII, Title VIII of Act 43/1995, on the Corporations Tax. The premises contributed to

CENTRO MÉDICO DE CHEQUEOS MAPFRE VIDA had a book value of EUR 2,492,000 on the

date of the contribution, and an accumulated depreciation of EUR 412,000. As a result of the

non cash contribution made in the mentioned capital increase, MAPFRE CAJA SALUD has

received shares in CENTRO MÉDICO DE CHEQUEOS MAPFRE VIDA for an amount of EUR

1,309,000 of nominal value and EUR 785,000 of paid-in premium.


Fiscal year 2002

Merger by takeover of ASEICA on the part of MAPFRE CAJA SALUD.

Fiscal year 2001

› CORPORACIÓN MAPFRE exchanged shares in MAPFRE SEGUROS GENERALES for shares

in MAPFRE CAJA MADRID HOLDING.

› Overall assignment of assets and liabilities of IGUALATORIO MÉDICO QUIRÚRGICO DE

HUESCA in favour of its sole shareholder, MAPFRE CAJA SALUD.

› Assignment of the health business of MAPFRE VIDA to MAPFRE CAJA SALUD by a capital

increase with non cash contribution of the assets assigned to the said business.

› Overall assignment of assets and liabilities of CAJA MADRID VIDA in favour of its sole

shareholder, MAPFRE VIDA.

Fiscal year 2000

› CORPORACIÓN MAPFRE carried out exchanges of securities, consisting of contributing

shares in MAPFRE VIDA, MAPFRE CAUCIÓN Y CRÉDITO and MAPFRE SEGUROS GEN-

ERALES.

› Incalbarsa’s overall assignment of assets and liabilities in favour of its sole shareholder,

CORPORACIÓN MAPFRE.

› MAPFRE CAJA MADRID HOLDING approved a capital increase by non cash distribution of

shares in MAPFRE SEGUROS GENERALES, MAPFRE VIDA and MAPFRE CAUCIÓN Y

CRÉDITO (shares contributed by CORPORACIÓN MAPFRE) and of shares in CAJA MADRID

VIDA, CAJA MADRID SEGUROS GENERALES and CAJA SALUD DE SEGUROS Y REASE-

GUROS, S.A. (shares contributed by CORPORACIÓN FINANCIERA CAJA DE MADRID, S.A.).

› MAPFRE CAJA MADRID HOLDING contributed shares in CAJA MADRID VIDA and CAJA

MADRID SEGUROS GENERALES in the respective capital increases that were respectively

approved by MAPFRE VIDA and MAPFRE SEGUROS GENERALES.

› Overall assignment of assets and liabilities by CAJA MADRID SEGUROS GENERALES in

favour of its sole shareholder, MAPFRE SEGUROS GENERALES.

› Overall assignment of assets and liabilities of PLANAS SALUD, COMPAÑÍA DE SEGUROS

DE ASISTENCIA SANITARIA, S.A. in favour of its sole shareholder, CAJA SALUD (now called

MAPFRE CAJA SALUD).

Fiscal year 1997

› Merger by takeover of IMECO S.A. on the part of CAJA SALUD (now called MAPFRE CAJA

SALUD).


10. INFORMATION ON NON LIFE INSURANCE

Pursuant to the authorisation granted by the Directorate General of Insurance, the informa-

tion required in this section relating to “Technical income and expenses by lines” and “Tech-

nical results per year of occurrence” of non life insurance is not given for the following rea-

sons:

› Its scant relevance for the true image of MAPFRE MUTUALIDAD’s consolidated accounts,

considering the heterogeneity of the markets where its subsidiaries operate and the fac-

tors that in each one of them condition the evolution of the various business lines.

› The difficulty of obtaining information relating to claims per year from subsidiaries not

belonging to the European Economic Area; furthermore, the existence of reinsurance enti-

ties within the consolidatable group, and the fact that ceding companies follow recording

methods different from that of year of imputation, make it virtually impossible to gather the

required data.

› In relation to the consolidated statement of technical income and expenses by lines, it is

difficult to establish the procedure of elimination by lines in the process of consolidation of

reinsurance transactions between companies in the consolidatable group.

11. OTHER INFORMATION

11.1 Contributions to foundations

MAPFRE MUTUALIDAD and some of its consolidated companies make economic contribu-

tions to finance the scientific and educational activities of the Foundations set up by SISTEMA

MAPFRE. These contributions are made through the distribution of profits. Aggregate con-

tributions for an overall amount of EUR 20,730,000 are contemplated in the proposals for dis-

tribution of profits corresponding to 2003.

11.2 Remuneration of the controlling Companies’ Board of Directors

Details on the remuneration and other compensation received by the administrators of the

Controlling Company in 2003 are given herebelow, irrespectively of the Group company hav-

ing paid them, broken down by concept:


External directors’ basic remuneration consists of an allowance for their attendance to meet-

ings, which amounted to EUR 2,090 in 2003. In addition, they benefit from a life insurance pol-

icy, with an insured capital of EUR 150,253.03 and enjoy some of the benefits extended to staff,

such as medical insurance. External directors belonging to Commissions or Delegate Com-

mittees receive also a fixed annual allowance in that concept, which in 2003 amounted to EUR

13,225 for the Management Commission and EUR 9,940 for the Delegate Committees.

Executive directors receive the remuneration established in their contracts, including fixed

salary, bonuses with varying amounts linked to results, life and disability insurance, and other

benefits generally established for the Group companies’ staff; in addition, certain pension

complements have been acknowledged to them for the event of retirement, through a life

insurance policy, it all according to the remuneration policy established by SISTEMA MAPFRE

for its senior managerial staff, whether or not they are directors. Executive directors, how-

ever, are not entitled to the remuneration established for external directors, except for the

fixed allowance relating to their membership of SISTEMA MAPFRE’s Management Commis-

sion.

11.3 Advances and credit facilities to the Board of Directors

At year end no company within the consolidatable Group had advances or credit facilities

extended to the members of the Controlling Company’s Board of Directors, nor had any

extended guarantees on their behalf.

11.4 Obligations to MAPFRE MUTUALIDAD’s Board of Directors

Commitments in respect of pensions and retirement premium to former and present mem-

bers of the Controlling Company’s board of directors, undertaken by the controlled compa-

nies that have externalised their pension related commitments, are covered by the collective

life insurance policy taken for said risks as detailed in notes 5.ñ and 6.20 of the Annual Report.

The premium accrued for these concepts in relation to the mentioned Board members

amounts to EUR 5,393,730.


Concept Amount

External DirectorsAttendance fees 571Fixed allowances 779Other concepts 261

Executive DirectorsSalaries 3,105Fixed allowances 186Life insurance policies 135Other concepts 215

Total 5,252

Figures in EUR 000s

11.5 OTHER DETAILS RELATING TO THE Board of Directors

The Controlling Company’s directors do not hold stakes in the capital of companies having the

same, similar or complementary nature of activity to that of the Controlling Company, nor carry

out, either on their own account or on behalf of third parties, the same, similar or complemen-

tary activity to that of the group companies’ corporate object, with the following exceptions:

The situations of this company’s directors having stakes or fulfilling activities in other SIS-

TEMA MAPFRE companies have not been taken into account, as they are not considered to

have any impact on the duty of loyalty, nor to generate any conflict of interests.

11.6 Staff

During 2003, Group companies employed the following average staff, detailed by profession-

al category:


Director Company Number of Office/shares/stocks Position

D. Juan Fernández- Layos Rubio Aegón 9,800 --Münchener 3,000 --

D. Pedro Guillén García Clinica Cemtro, S.A. 254,715 --

D. Filomeno Mira Candel Münchener Ruck 204 --Aegón Nv 600 --Allianz Ag 142 --

D. Domingo Sugranyes Bickel Münchener Ruck 27 --

D. Francisco Vallejo Vallejo BancSabadell Vida -- DirectorBancSabadell Pensiones -- Director

Categories Spain Rest EEA Other countries Total

Managers 2,254 51 432 2,737Clerical staff 4,656 217 2,541 7,414Marketing staff 855 85 1,756 2,696IT experts and others 1,533 83 3,261 4,877

TOTAL 9,298 436 7,990 17,724

11.7 Commitments to third parties

› By virtue of the participation of the MAPFRE VIDA policyholders in the returns on invest-

ment of their mathematical reserves, when the property elements restated in accordance

with Budget Acts 1/1979, 74/1980 and 9/1983 are sold, 90% of the difference between the

purchase values and the restated values will be attributed to the said policies in the fiscal

year when the disposal takes place. As at 31 December 2003, the future right of these poli-

cies over the amounts of such restatements is estimated at EUR 1,711,000, for which pro-

visions have been made as at the said date.

› MAPFRE RE and MAPFRE Reinsurance Corporation have granted guarantees to third par-

ties, materialised in letters of credit, amounting to EUR 22,631,000.

› At year end, Caja Madrid had indemnities granted in favour of the Entity and other consol-

idated companies amounting to EUR 35,265,000.

› MAPFRE CAJA MADRID HOLDING is joint and several guarantor of MAPFRE SEGUROS

GENERALES in connection with debt arising from the acquisition of MAPFRE FINISTERRE.

› As at 31 December 2003, MAPFRE INMUEBLES, a company recorded by the equity method,

had indemnities in place in favour of third parties for an overall amount of EUR 1,214,000,

mostly deriving from public tenders of land related to the said company’s real estate activ-

ities.

› By virtue of court judgements and/or operational agreements, the Entity has EUR 8,313,000

invested in commercial paper, the interest therefrom being used to pay for life annuities

determined in favour of beneficiaries in the case of claims with personal injuries.

11.8 External auditors’ fees

The fees accrued in favour of External Auditors in the 2003 fiscal year for their account audit-

ing services, as well as for services related to them, amount to EUR 2,880,000, there being

also an additional amount of EUR 140,000 accrued for other complementary services provid-

ed by them.

11.9 Environmental issues

The Group companies do not have any environment related item that might be significant or

specifically included in the present consolidated report.


12. EVENTS SUBSEQUENT TO CLOSING

After obtaining the required authorisations, the takeover of MAPFRE AGROPECUARIA by

MAPFRE MUTUALIDAD has taken place on 1 January 1994.

13. CONSOLIDATED CASH FLOW STATEMENT


Amount

1. Cas flow variations during the yearFrom trade activities

Increase 2,036,375From other operating activities

Decrease (50,769)From fixed assets and investments

Decrease (1,281,132)From other transactions

Decrease (158,472)From other extraordinary transactions

Increase 207,672From transactions with the Public Administration

Decrease (543,440)

Total 210,234

2. Evolution of cash flow during the year1. Cash at beginning of year 1,079,5762. Cash at year end 1,289,8103. Variation in cash during the year

Increase 210,234

Figures in EUR 000s

14. STATEMENT OF COVERAGE OF TECHNICAL RESERVES

The following table shows the technical reserves and assets qualifying as coverage as at 31

December 2003 and 2002, resulting from the aggregation of the sole statements of the con-

solidatable group’s insurance companies:

The valuation criteria for technical reserves are those shown in note 5m) of this annual report.

Assets qualifying as coverage of technical reserves have been valued pursuant to the provi-

sions of article 52 of the Regulations, except in companies not belonging to the European Eco-

nomic Area, where they have been valued pursuant to the regulations applicable in each

country. Likewise, the Spanish companies have applied the diversification and spreading lim-

its established in article 53 of the said Regulations.


Company Technical reserves to be covered Qualifying assets Surplus / (Deficit)Non Life Life Non Life Life Non Life Life

31 December 2003MAPFRE MUTUALIDAD 1,738,472 65 2,356,737 2,505 618,265 2,440MAPFRE AGROPECUARIA 99,956 -- 147,083 -- 47,127 --MAPFRE CAJA MADRID HOLDING 1,904,127 11,403,114 2,107,103 12,304,634 202,976 901,520MAPFRE AMÉRICA 758,223 93,385 833,865 109,236 75,642 15,851MAPFRE AMÉRICA VIDA 3,569 157,581 5,659 182,285 2,090 24,704MAPFRE RE 498,077 31,300 795,866 34,911 297,789 3,611MAPFRE SEGUROS GERAIS 68,438 -- 101,522 -- 33,084 --MAPFRE ASISTENCIA 25,536 -- 27,261 -- 1,725 --

TOTAL 5,096,398 11,685,445 6,375,096 12,633,571 1,278,698 948,126

31 December 2002MAPFRE MUTUALIDAD 1,479,735 75 1,970,825 2,515 491,090 2,440MAPFRE AGROPECUARIA 89,163 -- 128,013 -- 38,850 --MAPFRE CAJA MADRID HOLDING 1,086,340 9,039,148 1,385,080 9,863,121 298,740 823,973MAPFRE AMÉRICA 870,765 40,301 937,835 44,255 67,070 3,954MAPFRE AMÉRICA VIDA 4,559 129,963 5,473 145,584 914 15,621MAPFRE RE 445,604 66,753 751,603 71,690 305,999 4,937MAPFRE SEGUROS GERAIS 61,312 -- 90,463 -- 29,151 --MAPFRE ASISTENCIA 21,345 -- 24,556 -- 3,211 --MARES 69,194 -- 85,610 -- 16,416 --

TOTAL 4,128,017 9,276,240 5,379,458 10,127,165 1,251,441 850,925

Figures in EUR 000s

15. STATEMENT OF CONSOLIDATED SOLVENCY MARGIN

The following table details the situation of the solvency margin as at 31 December 2003 and

2002:

The following table details the minimum amount of the solvency margin broken down by sub

groups and calculated, for subsidiaries operating in countries not belonging to the European

Union, pursuant to the rules in force in each country, except in the case of countries where

this requirement does not exist or where solvency requirements are not equivalent to those

established in the European Union, where it has been calculated pursuant to criteria similar

to the Spanish regulations.


Concept 2003 2002

Mutual Fund 110,000 110,000Consolidated Group’s reserves 958,413 842,063Creditor balance in consolidated profit and loss account 263,298 165,690Negative difference on consolidation 1,116 971Minority interests 1,102,522 1,033,39650% addition of future profits 193,712 173,743Gains in:Tangible investments 357,076 243,258Financial investments 232,202 132,338Others 1,938 2,246Commissions technically discounted pending depreciation, net 254,283 274,158Total positive items 3,474,560 2,977,863

Start-up, incorporation and capital increase expenses (10,204) (10,515)Losses in:Tangible investments (2,093) (1,033)Financial investments (1,918) (2,892)Others (6,653) (898)Total negative items (20,868) (15,338)

Solvency margin 3,453,692 2,962,525Minimum amount of solvency margin 1,446,690 1,235,053Result of the solvency margin 2,007,002 1,727,472

Figures in EUR 000s

For the determination of the consolidatable Group’s uncommitted assets, Mutualidad’s

shareholders’ funds have been considered, together with those contributed by the companies

forming part of said Group. The valuation criteria used are those stemming from the legisla-

tion in force as at 31 December 2003. The effect of the corporation tax and profit sharing on

capital gains and losses and, to the extent applicable, policyholders’ profit sharing in the Life

business, has been deducted from them.

MAPFRE MUTUALIDAD, as controlling company of the insurance entities’ consolidatable

Group, calculates the said Group’s consolidated solvency margin.


Minimum amount of solvency marginSubgroup Non Life Life Total

2003 2002 2003 2002 2003 2002

MAPFRE MUTUALIDAD 301,560 282,331 2 3 301,562 282,334MAPFRE CAJA MADRID HOLDING 261,920 190,761 518,865 403,690 780,785 594,451MAPFRE AMÉRICA 190,794 200,136 1,689 1,727 192,483 201,863MAPFRE RE 51,565 47,191 40,577 39,414 92,142 86,605MAPFRE ASISTENCIA 8,937 9,498 - - 8,937 9,498MAPFRE AMÉRICA VIDA 2,472 1,225 25,400 19,093 27,872 20,318MAPFRE AGROPECUARIA 21,418 19,119 - - 21,418 19,119MARES - 13,166 - - - 13,166MAPFRE SEGUROS GERAIS 21,491 7,699 - - 21,491 7,699

Total 860,157 771,126 586,533 463,927 1,446,690 1,235,053

Figures in EUR 000s


CONTROLLED COMPANIES AND AFFILIATES (APPENDIX 1)

HoldingName Adress Activity Holder

CORPORACIÓN MAPFRE S.A.CORPORACIÓN MAPFRE S.A. Ctra. Pozuelo-Majadahonda, 52 Holding MAPFRE MUTUALIDAD

(Majadahonda) MAPFRE AGROPECUARIA

MAPFRE CAJA MADRID HOLDINGMAPFRE CAJA MADRID HOLDING DE Paseo de Recoletos,25ENTIDADES ASEGURADORAS S.A. (Madrid) Holding CORPORACIÓN MAPFRE

LIFEMAPFRE VIDA S.A. DE SEGUROS Y Avda.General Perón,40 Insurance and MAPFRE CAJA MADRID REASEGUROS SOBRE LA VIDA HUMANA (Madrid) Reinsurance HOLDING

CONSULTORA ACTUARIAL Y Avda.General Perón,40 Consultancy MAPFRE VIDADE PENSIONES MAPFRE VIDA S.A. (Madrid) CORPORACIÓN MAPFRE

GESTION MODA SHOPPING S.A. Avda.General Perón,40 Commercial Centre MAPFRE VIDA(Madrid) Management CORPORACIÓN MAPFRE

MAPFRE INVERSIÓN, SOCIEDAD Avda.General Perón, 40DE VALORES S.A. (Madrid) Securities Broker-Dealer Firm MAPFRE VIDA

MAPFRE INVERSIÓN DOS, SOC.GESTORA DE Avda.General Perón, 40 UCITS ManagementINSTITUCIONES DE INVERSIÓN COLECTIVA S.A. (Madrid) Firm MAPFRE INVERSIÓN

MAPFRE VIDA PENSIONES, ENTIDAD Avda.General Perón, 40 Pension Fund MAPFRE INVERSIÓNGESTORA DE FONDOS DE PENSIONES S.A. (Madrid) Admnistration CORPORACIÓN MAPFRE

MAPFRE VIDEO Y COMUNICACIÓN S.A. C/ Sor Angela de la Cruz, 6 Advertising Agency MAPFRE VIDA(Madrid) MAPFRE SEG.GENERALES

CORPORACIÓN MAPFREMAPFRE MUTUALIDAD

MIRACETI S.A. Avda.General Perón,40 Real Estate MAPFRE VIDA(Madrid) CORPORACIÓN MAPFRE

ADS MAPFRE CAJA MADRID A.I.E. Pº de Recoletos, 29 Provision of Services MAPFRE VIDA(Madrid) MAPFRE CAJA SALUD

MAPFRE SEG. GENERALESMAPFRE CAUCIÓNMAPFRE INDUSTRIALMAPFRE GUANARTEMECORPORACIÓN MAPFREMAPFRE MUTUALIDADMAPFRE AGROPECUARIAMAPFRE ASISTENCIAMAPFRE CAJA MADRID HOLDING

MUSINI VIDA, S.A. DE SEGUROS Y C/Manuel Cortina, 2REASEGUROS SOCIEDAD UNIPERSONAL (Madrid) Insurance MAPFRE VIDA

GENERAL INSURANCEMAPFRE SEGUROS GENERALES, CÍA. Paseo de Recoletos,23DE SEGUROS Y REASEGUROS S.A. (Madrid) Insurance and Reinsurance MAPFRE CAJA MADRID HOLDING

MAPFRE GUANARTEME CÍA. DE SEGUROS Y C/ Poeta Agustín Millares Sall, 3 REASEGUROS DE CANARIAS S.A. (Las Palmas de G.C.) Insurance and Reinsurance MAPFRE SEGUROS GENERALES

MAPFRE INDUSTRIAL S.A. DE SEGUROS C/ General Perón, 40 Insurance and Reinsurance MAPFRE SEG. GENERALES(Madrid) CORPORACIÓN MAPFRE

MAPFRE SEGUROS GERAIS S.A. Avda. Liberdade, 40 Insurance and Reinsurance MAPFRE SEG.GENERALESLisbon (Portugal) MAPFRE MUTUALIDAD

RELECMAP A.I.E.. C/ Manuel Silvela, 15 Research, Training and MAPFRE SEG.GENERALES(Madrid) Advisory Serviceds MAPFRE INDUSTRIAL

MAPFRE GUANARTEMEMAPFRE AGROPECUARIA

Holding Figures year ended 31-12-2003 Method or AuditAmount (*) % Capital Reserves Result Interim Dividend procedure Firm Review

391,916 55.21807,872 0.5506 90,782 505,036 47,732 (19,972) (A) E.Y. C

181,181 51.0000 323,977 623,905 98,756 (85,075) (A) E.Y. C

556,734 99.8096 53,646 250,413 72,065 (40,557) (A) E.Y. C

389 99.9339- 0.0661 390 440 58 - (A) E.Y. L

77 99.8215- 0.1785 168 89 (15) - (A) E.Y. L

42,744 99.9991 33,055 41,129 10,048 (8,800) (B) E.Y. C

- 99.9853 2,043 13,061 1,550 - (B) E.Y. C

- 99.9971- 0.0029 10,518 5,883 5,056 - (B) E.Y. C

26 43.00004 10.00007 15.0000

14 32.0000 60 (19) 1 - (D) E.Y. L

36,000 99.9991- 0.0009 33,975 4,394 647 - (A) E.Y. C

- 37.9999- 7,0000- 20.0000- 2.0000- 2.0000- 2.0000- 0.0001- 10.0000- 2,0000- 1.9999- 0.0001 300 (270) (30) - (A) - -

100,194 100.0000 22,538 63,584 4,057 - (A) E.Y. C

216,881 100.0000 121,806 63,363 49,657 (31,669) (A) E.Y. C

39,858 100.0000 9,018 29,718 14,162 (11,312) (A) E.Y. C

30,030 99.9986- 0.0014 30,000 11,679 17,786 (8,196) (A) E.Y. C

9,666 25.000028,036 75.0000 33,110 7,165 3,166 - (A) E.Y. C

217 60.0000162 30.000022 4.0000

- 6.0000 360 164 18 - (A) E.Y. C





GENERAL INSURANCE (continued)MAPFRE CONSULTORES DE Paseo de Recoletos,23 Advisory and MAPFRE SEG.GENERALESSEGUROS Y REASEGUROS S.A. (Madrid) Mangement Services CORPORACIÓN MAPFRE

SEGESYMED S.L. SOCIEDAD UNIPERSONAL C/Játiva,23(Valencia) Computer related Services MAPFRE SEG.GENERALES

MAPFRE SERVICIOS MARÍTIMOS, COMISARIADO Avda.Sabino Arana,4 Loss Adjusters MAPFRE SEG.GENERALESY LIQUIDACIÓN DE AVERÍAS S.A. (Bilbao) CORPORACIÓN MAPFRE

MAPFRE FINISTERRE S.A. COMPAÑÍA C/Játiva,23 Insurance and Reinsurance MAPFRE SEG.GENERALESDE SEGUROS Y REASEGUROS (Valencia) MAPFRE INDUSTRIAL

PROYECTOS Y SERVICIOS MAPFRE S.A. C/ Poeta Agustín Miralles Real Estate Services MAPFRE GUANARTEMESall, 3(Las Palmas de G.C.) CORPORACIÓN MAPFRE

MESEVAL C/Játiva, 23Valencia Insurance Agents MAPFRE SEG.GENERALES

MULTISERVICIOS MAPFRE MULTIMAP S.A. C/ Manuel Silvela, 15 Real Estate Services MAPFRE SEG.GRALES.(Madrid) MAPFRE INDUSTRIAL

GESTORA DE ACTIVOS FUNERARIOS GESMAP S.A. Paseo de Recoletos ,23 Burial Services MAPFRE SEG.GRALES.(Madrid) MAPFRE INDUSTRIAL

MAPFRE FINISTERRE

BIOINGENIERÍA ARAGONESA S.L. Matías Pastor Sancho, 9(Zaragoza) Technology for the elder MAPFRE SEG.GRALES.

COMPAÑÍA CANARIA DE CEMENTERIOS S.A. C/ Poeta Agustín Miralles Sall, 3 Sale of cemetery plots (Las Palmas de G.C.) MAPFRE GUANARTEME

TINERFEÑA DE SERVICIOS DE TECNOLOGÍA Subida de MayorazgoE INNOVACIÓN PARA EL AUTOMÓVIL (Santa Cruz de Tenerife) Car related Services MAPFRE GUANARTEME

ORIENTE S.A. COMPAÑÍA DE SEGUROS C/Játiva, 23SOCIEDAD UNIPERSONAL Valencia Insurance and Reinsurance MAPFRE FINISTERRE

SEPENVAL S.L.SOCIEDAD UNIPERSONAL C/Játiva, 23Valencia Insurance Agents MAPFRE SEG.GENERALES

ITSEMAP SERVICIOS TECNOLÓGICOS MAPFRE S.A. Paseo de Recoletos, 25 Consultancy MAPFRE INDUSTRIAL(Madrid) MAPFRE RE

CORPORACIÓN MAPFRE

GRUPO ALISIO CANARIAS INVERSIONES S.A. C/Valentín Sanz,39(Santa Cruz de Tenerife) Creation y Formation MAPFRE GUANARTEME

CLÍNICA SANTA CATALINA S.A. C/León y Castillo, 292(Las Palmas de G. C.) Medial Assistance MAPFRE GUANARTEME

INVERSIONES GESTISAN S.L. C/La Rosa,2(Santa Cruz de Tenerife) Hospital Management MAPFRE GUANARTEME

CLÍNICA SANTA CRUZ S.A. C/Enrique Wolfson, 8(Sta. Cruz de Tenerife) Medical Assistance MAPFRE GUANARTEME

LIMPIEZAS Y MANTENIMIENTO HOSPITALARIO S.L. Avda.Juan Dominguez Pérez,42(Las Palmas de G. C.) Hospital Cleaning Services MAPFRE GUANARTEME

FINISTERRE AGENCIA CANARIA C/ Bravo MurilloDE SEGUROS,S.A. SOCIEDAD UNIPERSONAL. (Las Palmas de G.C.) Insurance Agents MAPFRE GUANARTEME

SEFIN AGENCIA DE SEGUROS S.A. C/Játiva, 23(Valencia) Insurance Agents MAPFRE FINISTERRE

COSEBAL AGENCIA DE SEGUROS S.L. C/Játiva, 23(Valencia) Insurance Agents MAPFRE FINISTERRE

LISS ASSURANCE AGENCIA C/Játiva, 23DE SEGUROS S.L. SOCIEDAD UNIPERSONAL (Valencia) Insurance Agents MAPFRE FINISTERRE



60 50.000061 50.0000 120 673 229 - (B) E.Y. L

16 100.0000 3 11 10 - (B) E.Y. L

793 99.96000.0400 540 855 389 - (A) E.Y. L

136,198 99.6514476 0.3486 20,000 21,019 5,295 - (A) E.Y. C

192 99.8520- 0.1480 150 232 201 (60) (A) E.Y. C

36 100.0000 7 23 4 - (B) E.Y. C

225 75.000075 24.9970 300 166 130 - (B) - -

9 1.0000264 25.0000780 74.0000 1,200 (132) (47) - (B) E.Y. L

270 40.0000 143 730 304 - (D) E.Y. L

100 33.3300 301 287 223 - (D) E.Y. L.

1,888 33.3333 6,000 (184) (162) - (D) E.Y. L.

4,549 100.0000 9,024 3,603 2,832 - (A) E.Y. C

20 100.0000 7 11 (27) - (B) E.Y. C

1,966 60.0000596 39.9752

- 0.0248 1,502 156 56 - (C) E.Y. L

1,484 25.0000 6,000 (213) (49) - (D) E.Y. L

2,372 25.0000 1,322 3,848 899 - (D) E.Y. L

94 25.0000 6 255 (7) - (D) E.Y. L

274 39.3850 1,323 (65) (155) - (D) E.Y. L

23 25.0000 3 46 (2) - (D) E.Y. L

60 100.0000 60 (5) 6 - (B) E.Y. L

1,154 100.0000 60 470 7 - (B) E.Y. L

7,210 100.0000 7 932 3 - (B) E.Y. C

37 100.0000 12 5 3 - (B) E.Y. L




GENERAL INSURANCE (continued)HEJEAN, AGENCIA DE SEGUROS S.L.SOCIEDAD UNIPERSONAL C/Játiva, 23 (Valencia) Insurance Agents MAPFRE FINISTERRE

AGEPAL, AGENCIA DE SEGUROS S.L.SOCIEDAD UNIPERSONAL C/Játiva, 23 (Valencia) Insurance Agents MAPFRE FINISTERRE

SEPROVAL, AGENCIA DE SEGUROS S.L.SOCIEDAD UNIPERSONAL C/Játiva, 23 (Valencia) Insurance Agents MAPFRE FINISTERRE

SEGURLIS, AGENCIA DE SEGUROS S.L.SOCIEDAD UNIPERSONAL C/Játiva, 23 (Valencia) Insurance Agents MAPFRE FINISTERRE

QUAVITAE S.A. C/Fuencarral, 123 (Madrid) Assistance Services MAPFRE SEGUROS GENERALESCORPORACIÓN MAPFRE

GUARANTEE AND CREDITMAPFRE CAUCIÓN Y CRÉDITO CÍA. Avda,. General Perón, 40 Insurance and Reinsurance MAPFRE CAJA MADRID HOLDINGINTERNACIONAL DE SEGUROS Y REASEGUROS S.A. (Madrid) MAPFRE INDUSTRIAL

MAPFRE AMÉRICA CAUCIÓN Y CRÉDITO S.A. Avda,. General Perón, 40(Madrid) Holding MAPFRE CAUCIÓN Y CRÉDITO

MAPFRE SERVICIOS DE CAUCIÓN S.A. Avda,. General Perón, 40 Services MAPFRE CAUCIÓN Y CRÉDITO(Madrid) CORPORACIÓN MAPFRE

MAPFRE GARANTÍAS Y CRÉDITO S.A. Teatinos, 280Santiago de Chile (Chile) Insurance MAPFRE AMÉRICA CAUCIÓN Y CRÉDITO

MAPFRE SEGURADORA DE Avda.Mª Coelho Aguiar 215 Insurance MAPFRE AMÉRICA CAUCIÓN Y CRÉDITOGARANTÍA E CRÉDITO S.A. São Paulo (Brasil) MAPFRE VERA CRUZ SEGURADORA

COMPAÑÍA DE SEGUROS DE Carrera 64 nº149 A-30 Medellín Insurance MAPFRE AMÉRICA CAUCIÓN Y CRÉDITOCRÉDITOS COMERCIALES S.A. (Colombia) MAPFRE COLOMBIA

MAPFRE SEGUROS DE CRÉDITO S.A. Avd. Magnocentro, Insurance MAPFRE AMÉRICA CAUCIÓN Y CRÉDITO5 Mexico D.F. (Mexico) SEGUROS TEPEYAC

HEALTHMAPFRE CAJA SALUD DE SEGUROS Pº de Recoletos, 29 Insurance and Reinsurance. MAPFRE CAJA MADRID HOLDINGY REASEGUROS S.A. (Madrid) MAPFRE VIDA

IGUALSERVICIOS C/Tarbes,3 (Huesca) Medical Services MAPFRE CAJA SALUD

CENTRO MÉDICO DE CHEQUEOS MAPFRE VIDA Avda.General Perón, 40 Medical Services MAPFRE CAJA SALUD(Madrid) CORPORACIÓN MAPFRE

CENTROS MÉDICOS ISLAS CANARIAS S.A. Rafael Cabrera, 22(Las Palmas de G.C.) Medical Services MAPFRE CAJA SALUD

SERVIMEDIC BALEAR S.L. C/Carlos I, 4 Bajo (Palma de Mallorca) Medical Services MAPFRE CAJA SALUD

MUSINIMUSINI, S.A. DE SEGUROS Y REASEGUROS S.A. C/Manuel Cortina, 2 (Madrid) Insurance MAPFRE CAJA MADRID HOLDING

INTERBOLSA, S.A. C/Manuel Cortina, 2 (Madrid) Financial MUSINI, S.A.

SERVIFINANZAS, S.A. SOCIEDAD UNIPERSONAL C/Manuel Cortina, 2 (Madrid) Financial MUSINI, S.A.

GESMUSINI S.G.I.I.C., S.A. SOCIEDAD UNIPERSONAL C/Padilla, 26 (Madrid) Financial MUSINI, S.A.

GESMUSINI CARTERAS S.G.C., S.A. SOCIEDAD UNIPERSONAL C/Padilla, 26 (Madrid) Financial MUSINI, S.A.

INDUSTRIAL RE MUSINI, S.A. 6B Route de Trèves, Senningerberg (Luxembourg) Reinsurance MUSINI, S.A.



528 100.0000 6 18 (3) - (B) E.Y. L

4,273 100.0000 7 479 15 - (B) E.Y. L

2,375 100.0000 15 646 4 - (B) E.Y. L

848 100.0000 6 269 (3) - (B) E.Y. L

2,342 10.00003,139 10.0000 12,621 4,699 (1,323) - (D) E.Y. L

14,247 99.99337 0.0067 9,030 6,745 5,317 (2,307) (A) E.Y. C

7,222 75.0000 18,055 (2,416) 874 - (A) E.Y. C

210 99.6800- 0.3200 210 (52) 1 - (A) E.Y. L

4,321 100.0000 4,514 (345) 612 (105) (A) E.Y. C

2,699 90.0000269 10.0000 4,688 (1,613) 269 - (A) E.Y. L

1,482 48.7500- 5.0000 3,605 (689) 471 (160) (A) E.Y. C

12,615 99.9667- 0.0333 4,496 (1,030) (55) - (A) E.Y. L.

56,113 74.988818,526 25.0000 70,275 13,062 7,780 - (A) E.Y. C

442 100.0000 756 (173) (134) - (A) - -

2,257 99.9860- 0.0140 2,145 523 (378) - (A) E.Y. L

3,000 100.000 3,000 7 (2) - (A) (F) - -

- 100.0000 3 1 (62) - (A) (F) - -

199,402 98.0724 30,050 145,815 (986) - (A) (F) E.Y. C

10 80.0000 60 535 5 - (A) (F) E.Y. C

677 100.0000 216 13,854 238 - (A) (F) E.Y. C

662 100.0000 691 1,032 124 - (A) (F) E.Y. C

296 100.0000 322 475 14 - (A) (F) E.Y. C

1,174 99.8000 1,540 - - - (A) (F) E.Y. C




BANKING AND FINANCEBANCO DE SERVICIOS FINANCIEROS Ctra.Pozuelo-Majadahonda, 52 CAJA MADRID-MAPFRE S.A. (Madrid) Banking MAPFRE MUTUALIDAD

MAPFRE GESTIÓN DOS S.A. Ctra.Pozuelo a Majadahonda, 52(Majadahonda) Financial MAPFRE MUTUALIDAD

MAPFRE RENTING DE VEHICULOS S.A. Ctra.Pozuelo a Majadahonda, 52 Financial MAPFRE MUTUALIDAD(Majadahonda) CORPORACIÓN MAPFRE

REINSURANCEMAPFRE RE CÍA. DE REASEGUROS S.A. Paseo de Recoletos,25 (Madrid) Reinsurance CORPORACIÓN MAPFRE

MAPFRE MUTUALIDAD

COMPAGNIE INTERNATIONAL D’ASSURANCES 45, Rue de Treves Insurance and Reinsurance MAPFRE REET REASSURANCES (C.I.A.R.) Bruselas (Belgium) MAPLUX REINSURANCE

INVERSIONES MAPFRE CHILE RE Avda. Apoquindo, 4499Santiago (Chile) Financial MAPFRE RE

INVERSIONES IBÉRICAS S.A. Avda. Apoquindo, 4499Santiago (Chile) Financial MAPFRE RE

CAJA REASEGURADORA DE CHILE S.A. Avda.Apoquindo, 4499Santiago (Chile) Reinsurance INVERSIONES MAPFRE CHILE RE

INMOBILIARIA COSTA DE MONTEMAR S.A. Moneda, 920, Dpto. 602Santiago (Chile) Real Estate INVERSIONES IBÉRICAS

INMOBILIARIA CONDOMINIO PARQUE Avda.Apoquindo, 4499 Real Estate INVERSIONES IBÉRICASZAPALLAR S.A. Santiago (Chile) CIA NACIONAL DE RENTAS

COMPAÑÍA NACIONAL DE RENTAS Avda.Apoquindo, 4499Santiago (Chile) Real Estate INVERSIONES IBÉRICAS

C.R. ARGENTINA S.A. Avda. de Córdova,1450Buenos Aires (Argentina) Reinsurance INVERSIONES IBÉRICAS

SOCIEDAD CONSTRUCTORA Y DE INVERSIONES Avda.Apoquindo, 4499 Real Estate INVERSIONES IBÉRICASMARTÍN ZAMORA LTD. Santiago (Chile) CIA NACIONAL DE RENTAS

INVERSIONES MAPFRE RE. Calle 72/10-07-oficina 502 Securities and Real Estate MAPFRE REBogotá (Colombia) Investment & Management INVERSIONES IBÉRICAS

MAPLUX REINSURANCE COMPANY LTD "E Building Immeuble C6,Parc Reinsurance MAPFRE REd´Activile Syrdall Munsbanch CORPORACIÓN MAPFRE(Luxemburgo)

MAPFRE RE MANAGEMENT SERVICES Philpot Lane, 2-3U.K. COMPANY LIMITED Londres (Reino Unido) Real Estate Services MAPFRE RE

MAPFRE RE ASSESORÍA LTDA. Rua Sao Carlos do Pinhal, 696 Consultancy MAPFRE RESão Paulo (Brazil) ITSEMAP DO BRASIL

ADMINISTRADORA DE PROPIEDADES S.A. Napoleón 3096 Santiago (Chile) Real Estate INVERSIONES IBÉRICAS

COMERCIAL Y TURISMO S.A. Napoleón 3096 Santiago (Chile) Real Estate INVERSIONES IBÉRICAS

MAPFRE RE HOLDINGS INC. 100 Campus DriveNew Jersey 07932-2006 (U.S.A.) Holding MAPFRE RE

MAPFRE REINSURANCE CORPORATION 100 Campus DriveNew Jersey 07932-2006 (U.S.A.) Insurance and Reinsurance MAPFRE RE HOLDINGS

INMOBILIARIA PRESIDENTE Bouchard 547 piso 14FIGUEROA ALCORTA S.A. B. Aires (Argentina) Real Estate MAPFRE RE

INMOBILIARIA TIRILLUCA S.A. Agustinos, 853 Santiago (Chile) Real Estate INVERSIONES IBÉRICAS



98,700 48.8867 127,467 87,368 6,458 - (D) D.T. C

8,055 100.0000 3,150 3,254 1,651 - (B) E.Y. L

1,150 99.98330.0167 1,803 (1,177) 525 - (B) E.Y. L

158,762 84.33341 0.0100 138,738 133,103 20,389 (12,531) (A) E.Y. C

7,151 74.93001,997 25.0700 2,957 5,012 184 - (A) E.Y. C

9,674 99.9986 18,994 15,134 2,040 - (A) E.Y. C

17,192 99.9986 5,986 30,124 (1,757) - (A) E.Y. C

22,827 99.6759 11,449 9,368 2,086 - (A) E.Y. C

4,887 31.4400 17,157 (687) (926) - (C) E.Y. C

1 99.0000- 1.0000 794 (954) (57) - (B) E.Y. C

305 92.4000 584 (254) 1 - (A) E.Y. C

126 99.9900 221 (79) (17) - (A) - -

137 50.0000- 50.0000 148 (11) - - (A) - -

1,575 94.9000128 5.0999 5,006 (2,660) 4 - (A) E.Y. C

2,005 99.96301 0.0370 2,522 310 - - (A) E.Y. C

- 100.0000 818 (533) (351) - (A) - -

14 99.9998- 0.0002 1,226 (1,186) (26) - (B) - -

1 31.2900 841 (773) (76) - (C) - -

7 31.2000 132 (52) (57) - (C) - -

114,524 100.0000 42,425 60,008 5,827 - (A) E.Y. C

110,000 100.0000 3,855 105,625 5,343 - (A) E.Y. C

4,603 99.9000 5,348 (1,038) 298 - (A) - -

3,278 43.7500 8,454 (860) (100) - (C) E.Y. C




REINSURANCE (continued)ITSEMAP MÉXICO SERVICIOS Porfirio Diaz, 102 Col.NochebuenaTECNOLÓGICOS MAPFRE S.A. México D.F. (Mexico) Consultancy ITSEMAP SERV.TECNOLÓGICOS

ITSEMAP PORTUGAL SEGURANCA E PREVENCAO LIMITADA Rua Castillo, 52 Lisbon (Portugal) Consultancy ITSEMAP SERV.TECNOLÓGICOS

ITSEMAP VENEZUELA SERVICIOS Avda.Libertador, Torre MaracaiboTECNOLÓGICOS MAPFRE S.A. Caracas (Venezuela) Consultancy ITSEMAP SERV.TECNOLÓGICOS

ITSEMAP CHILE, SERVICIOS Apoquindo, 4499 Consultancy ITSEMAP SERV.TECNOLÓGICOSTECNOLÓGICOS MAPFRE S.A. Santigo (Chile) INVERSIONES IBÉRICAS

ITSEMAP BRASIL SERVICIOS Rua Sao Carlos do Pinhal, Consultancy ITSEMAP SERV.TECNOLÓGICOSTECNOLÓGICOS MAPFRE S.A. 696 – São Paulo (Brazil) M.R. ASESORÍAS

MAPFRE CÍA DE SERVICIOS GENERALES Junior Tarata, 16 Consultancy MAPFRE RELima (Peru) INVERSIONES IBÉRICAS

MAPFRE MANDATOS Y SERVICIOS Figueroa Alcorta, 3102 Services C.R. ARGENTINAB. Aires (Argentina) MAPFRE RE

REINSURANCE MANAGEMENT INC. 100 Campus DriveNew Jersey 07932-2006 (U.S.A.) Services MAPFRE RE HOLDINGS

ASSISTANCEMAPFRE ASISTENCIA CIA. INTERNACIONAL Gobelas 41-45 Insurance and Reinsurance CORPORACIÓN MAPFREDE SEGUROS Y REASEGUROS S.A. (Madrid) MAPFRE MUTUALIDAD

IBEROASISTENCIA PORTUGAL Avda. Liberdade, 40Lisbon (Portugal) Travel Assistance MAPFRE ASISTENCIA

BRASIL ASISTENCIA Ed.Crystal Tower Alameda Mamore989 06454-040 S.Paulo (Brazil) Travel Assistance MAPFRE ASISTENCIA

AFRIQUE ASSISTANCE 16, Rue Dr.Alphonse Laverning1002 (Tunisia ) Travel Assistance MAPFRE ASISTENCIA

VENEASISTENCIA Avda.del Libertador Torre Travel Assistance MAPFRE ASISTENCIAMaracaibo Caracas (Venezuela) MAPFRE RE

COMPAÑÍA DE ASISTENCIA DE LOS ANDES S.A. Carrera, 11, Nº 93 - B – 09 Travel Assistance MAPFRE ASISTENCIABogot (Colombia) INVERS. MAPFRE RE

IBEROASISTENCIA

FEDERAL ASSIST 3401 N.W. 82 ND suite 3090 MiamiFlorida 33122 (E.E.U.U.) Travel Assistance MAPFRE ASISTENCIA

IBEROASISTENCIA ARGENTINA S.A. Tucuman, 744 Travel Assistance MAPFRE ASISTENCIAB. Aires (Argentina) IBEROASISTENCIA

SUR ASISTENCIA Av.Apoquindo 4499 Travel Assistance MAPFRE ASISTENCIASantiago de Chile (Chile) IBEROASISTENCIA

IBEROASISTENCIA S.A. Gobelas, 41-45 (Madrid) Travel Assistance MAPFRE ASISTENCIAMAPFRE MUTUALIDAD

IRELAND ASSIST 22-26 Prospect Hill Galway (Ireland) Travel Assistance MAPFRE ASISTENCIA

GULF ASSIST E.C. Manama Centre Building Manama (Barhrain) Travel Assistance MAPFRE ASISTENCIA

FRANCE ASSISTANCE 55, Rue RaspailLevallois Perret (France) Travel Assistance MAPFRE ASISTENCIA

EUROSOS ASSISTANCE 282 Messogion Avenue 155,62 Travel Assistance IBEROASISTENCIANeo Psichico. Athens (Greece) MAPFRE ASISTENCIA

CARIBE ASISTENCIA Avda. Tiradentes Esq.Pres. Gonzalez. Edif. La Cumbre. Ens. Naco. Domingo-R.Dominicana Travel Assistance MAPFRE ASISTENCIA



96 99.9998 63 82 97 - (C) - -

203 99.9857 229 12 1 - (C) - -

- 100.0000 - - - - (C) - -

23 75.00008 25.0000 70 (40) - - (C) - -

306 99.9792- 0.0208 551 (291) 6 - (C) - -

78 98.00001 1.0000 109 (30) - - (C) - -

- 0.9999123 99.0000 146 - (23) - (B) - -

- 100.0000 - - - - (A) E.Y. C

59,471 99.99712 0.0029 56,732 4,966 2,760 (1,806) (A) E.Y. C

- 100.0000 62 (21) (411) - (A) E.Y. C

5,482 99.9990 5,168 1,209 (895) - (A) E.Y. C

363 49.0000 655 43 51 - (B) MENJ C

335 99.99001 0.0020 154 190 (10) - (A) E.Y. C

518 94.8900- 0.0008- 5.0977 248 220 78 - (A) E.Y. L

1,143 100.0000 1,601 (719) 262 - (A) E.Y. C

1,181 99.9900- 0.0100 2,718 (1,572) 34 - (A) E.Y. C

496 99.0000- 1.0000 389 523 370 - (A) E.Y. C

260 99.93001 0.0700 334 1 (75) - (A) E.Y. C

288 100.0000 254 265 99 - (B) E.Y. C

487 74.6250 640 218 564 (821) (A) E.Y. C

- 99.5800 522 3 (880) - (B) E.Y. C

- 0.5000591 99.5000 587 57 (50) - (A) E.Y. C

294 51.9997 293 141 192 - (A) E.Y. C




ASSISTANCE (continuación)ECUASISTENCIA Avda.Doce de Octubre, 1942 – Travel Assistance MAPFRE ASISTENCIA

Quito (Ecuador) ANDIASISTENCIA

CONSULTING, DE SOLUCIONES C/Gobelas 41-45 Consultancy MAPFRE ASISTENCIAY TECNOLOGÍAS SIAM (Madrid) IBEROASISTENCIA

PERÚ ASISTENCIA S.A. Tarata 160-9ª -Miraflores Travel Assistance MAPFRE ASISTENCIALima (Perú) IBEROASISTENCIA

VIAJES MAPFRE S.A. Sor Ángela de la Cruz,6 (Madrid) Travel Assistance MAPFRE ASISTENCIAIBEROASISTENCIA

VIAJES CITEREA S.L. Gomez Laguna, 9 (Zaragoza) Travel Assistance VIAJES MAPFRE, S.A. IBEROASISTENCIA

MÉXICO ASISTENCIA Porfirio Díaz 100 Mexico D.F. (Mexico) Travel Assistance MAPFRE ASISTENCIA

IBERO ASISTENCIA SERVICIOS DE Gobelas 41-45 (Madrid) Telemarketing MAPFRE ASISTENCIATELEMARKETING S.L. IBEROASISTENCIA

ALLMAP ASSIST GMBH Im Rosengarten, 256 61118 Travel Assistance MAPFRE ASISTENCIA Bal Vilbel (Germany) IBEROASISTENCIA

PANAMÁ ASISTENCIA Calle 50 local 9 D, piso 9Panamá, Bella Vista (Panama) Travel Assistance MAPFRE ASISTENCIA

TUR ASSIST. Hakki Yeten Caddesi Travel Assistance MAPFRE ASISTENCIADogu is Merkezi 17/2 (Turkey) IBEROASISTENCIA

URUGUAY ASISTENCIA Rincón, 487 of.610 Travel Assistance MAPFRE ASISTENCIAMontevideo (Uruguay) IBEROASISTENCIA

ASISTENCIA BOLIVIANA Celso Castedo Barba, 39Centro- Santa Cruz (Bolivia) Travel Assistance MAPFRE ASISTENCIA

COSTA RICA ASISTENCIA Sabana Norte rest Chicote 100 mN 25E 200 N 25 E San José de Costa Rica (Costa Rica) Travel Assistance MAPFRE ASISTENCIA

QUETZAL ASISTENCIA Diagonal 6, zona 10 Ed.interna-ciones, Of. 301 (Guatemala) Travel Assistance MAPFRE ASISTENCIA

EL SALVADOR ASISTENCIA S.A. Centro Finarc Gigarte Torre B 3º Travel Assistance MAPFRE ASISTENCIAnivel sobre Alameda Roosvelt IBEROASISTENCIAS.Salvador (El Salvador)

NICASSIT S.A. Colonial Los Robles Managua (Nicaragua) Travel Assistance MAPFRE ASISTENCIA

BENELUX ASSIST. S.A. Rue de Treves, 45 Bruxelles (Belgium) Travel Assistance MAPFRE ASISTENCIA

NOVASSIST S.L.R. Vía G. Cuboni, 12 Roma (Italia) Travel Assistance MAPFRE ASISTENCIAIBEROASISTENCIA

VIAJES TÍVOLI Coso,89-91 (Zaragoza) Travel Assistance MAPFRE ASISTENCIA

GENERAL SERVICES REINSURANCE LIMITED 38/39 Fitzwilliam SquareDublin 2 (Ireland) Reinsurance MAPFRE ASISTENCIA

NUOVI SERVIZI AUTO S.P.A. Strada Trossi 10/A 13030 Granting of Guarantees MAPFRE ASISTENCIAVerrone (Italy) IBEROASISTENCIA

BRICKELL FINANCIAL SERVICES INC. 3081 Salzed Street Coral Gables Fl 33134 (USA) Travel Assistance MAPFRE ASISTENCIA

MAPFRE ASISTENCIA ORO C/Gobelas 41-45 (Madrid) Services for the ederly MAPFRE ASISTENCIAIBEROASISTENCIA



95 50.0000- 49.9900 23 126 45 - (B) E.Y. C

3,238 99.0000- 1.0000 3,240 3 - - (B) - -

76 99.8636- 0.1361 95 98 (117) - (B) - -

3,556 99.7600- 0.2400 3,422 376 95 - (B) E.Y. C

- 99.0000- 1.0000 - - - - (B) - -

293 99.9900 155 404 247 (A) E.Y. C

106 26.5000- 73.4500 331 253 (183) - (B) E.Y. C

84 99.9500- 0.0500 120 (56) 21 - (B) - -

205 58.0000 480 5 79 - (B) E.Y. C

155 91.6667- 8.3333 25 84 60 - (B) E.Y. C

321 94.8165- 5.1835 303 10 109 - (A) - -

90 99.4600 118 (40) 12 - (B) - -

137 100.0000 253 (140) 24 - (B) - -

669 99.9920 155 23 399 - (A) - -

70 99.9900- 0.0100 55 25 101 - (A) P.M.A. C

38 100.0000 41 (24) 21 - (B) - -

570 70.0000 1,922 (1,090) (18) - (B) E.Y. C

21 99.0000- 1.0000 100 - (79) - (B) - -

125 20.0000 155 1,588 125 - (B) - -

424 100.0000 500 (76) 343 - (A) (F) E.Y. C

795 99.9900- 0.0100 1,100 15 1,115 - (A) (F) - -

52 100.0000 465 (411) 506 - (A) (F) E.Y. C

5,985 99.7500- 0.2500 17,000 - 34 - (B) (F) E.Y. C




REAL ESTATEMAPFRE INMUEBLES S.A. Prieto Ureña,6 (Madrid) Real Estate CORPORACIÓN MAPFRE

DESARROLLOS URBANOS CIC. S.A. Prieto Ureña, 6 (Madrid) Real Estate Services MAPFRE INMUEBLESCORPORACIÓN MAPFRE

SERVICIOS INMOBILIARIOS MAPFRE S.A. Prieto Ureña,6 (Madrid) Real Estate MAPFRE INMUEBLESDESARR. URBANOS, CIC

INMOBILIARIA BRAVO UREÑA S.L. Juan Bravo, 3 (Madrid) Real Estate MAPFRE INMUEBLES

PUERTA DE ALCORCÓN 12 S.L. C/Arzobispo Morcillo, 62 (Madrid) Real Estate MAPFRE MUTUALIDAD

MM REAL STATE LLC Blue Lagoon, Drive Suite,200 Miami (USA Real Estate MAPFRE MUTUALIDAD

OTHERSMAPFRE SOFT AMÉRICA S.A. 18 de Julio, 841 Computer related Services CORPORACIÓN MAPFRE

Montevideo (Uruguay) MAPFRE MUTUALIDAD

PROGRESS ASSICURAZIONI S.P.A. Villa de Gregorio Piazza Alberico Gentili,3 Palermo (Italy) Insurance CORPORACIÓN MAPFRE

MAPFRE ASIAN INSURANCE CORPORATION Rada St. Corner de la RosaSta. Manila (Filipinas) Insurance CORPORACIÓN MAPFRE

DETECTAR D.T. TRANSF. E ADMON. DE RISCOS Avda.MºCoelho Aguiar, 215São Paulo (Brazil) Risk Administration CORPORACIÓN MAPFRE

FANCY INVESTMENT S.A.. Avda. 18 de Julio, 841Montevideo (Uruguay) Financial CORPORACIÓN MAPFRE

CAJA MADRID BOLSA SOCIEDAD DE VALORES Y BOLSA Calle Serrano 39.(Madrid) Securities Broker Firm CORPORACIÓN MAPFRE

GESMADRID SOCIEDAD GESTORA Pº de la Castellana 189, DE INSTITUCIONES DE INVERSIÓN COLECTIVA 6ªplanta (Madrid) Investment Firm CORPORACIÓN MAPFRE

CAJA MADRID PENSIONES, S.A. ENTIDAD GESTORA DE FONDOS DE PENSIONES Pº de la Castellana 189 (Madrid) Pension Fund Management Firm CORPORACIÓN MAPFRE

CLUB MAPFRE S.A. Ctra.Pozuelo a Majadahonda 52 (Majadahonda) Servicies MAPFRE MUTUALIDAD

CENTRO INTERNACIONAL DE FORMACIÓN Ctra. Nacional I, km 32,500 Research, Training & MAPFRE MUTUALIDADDE DIRECTIVOS S.A. (San Agustín de Guadalix) Advisory Services CORPORACIÓN MAPFRE

MAPFRE SERVICIOS DE INFORMÁTICA S.A. Ctra.Pozuelo a Majadahonda 52 Computer Related Services MAPFRE MUTUALIDAD(Majadahonda) MAPFRE SEG. GENERALES

CENTRO DE EXPERIMENTACIÓN Ctra.Valladolid, km 1 (Ávila) Research, Training & MAPFRE MUTUALIDADY SEGURIDAD VIAL MAPFRE S.A. Advisory Services CORPORACIÓN MAPFRE

EDITORIAL MAPFRE S.A. Pº Recoletos, 25 (Madrid) Publishing Company CORPORACIÓN MAPFREMAPFRE MUTUALIDAD

CONSTITUCIÓN Y LEYES S.A. C/Rafael Calvo, 42 (Madrid) Publishing Company MAPFRE MUTUALIDAD

MAPFRE AGROPECUARIA CÍA. INTERCIONAL Crta. De Pozuelo a Majadahonda, 52 Insurance and Reinsurance MAPFRE MUTUALIDADDE REGUROS Y REASEGUROS S.A. Majadahonda (Madrid) CORPORACIÓN MAPFRE

CLÍNICA CEMTRO S.A. C/Ventrisquero de la Condesa, 42(Madrid) Hospital MAPFRE MUTUALIDAD

GUIVICEN S.A. C/Ventrisquero de la Condesa, 42(Madrid) Hospital MAPFRE MUTUALIDAD



30,465 99.9203 16,240 26,095 4,671 (1,994) (B) E.Y. C

510 99.9216- 0.0784 383 77 7 - (B) E.Y. L

300 99.9000- 0.1000 300 3 17 - (B) E.Y. L

601 50.0000 1,202 - 2,162 - (B) E.Y. L

1,509 100.0000 - - - - (F) - -

8,612 100.0000 8,803 - (191) - (A) - -

- 55.0000- 45.0000 3,444 (3,318) - - (B) E.Y. C

7,365 48.9731 12,000 2,622 416 - (D) - -

6,842 93.2481 4,326 1,997 1,015 - (A) E.Y. C

7,072 100.0000 5,489 1,170 412 - (A) E.Y. C

3,621 100.0000 13,208 (10,168) 581 - (A) - -

8,199 30.0000 24,762 1,589 3,030 (2,142) (D) D.T. C

11,870 30.0000 26,187 5,127 10,115 (9,843) (D) D.T. C

7,645 30.0000 21,280 3,017 2,757 (2,294) (D) D.T. C

1,658 99.9984 2,600 (237) (705) - (B) E.Y. L

413 99.99980.0002 290 122 1 - (B) E.Y. L

1,736 95.833086 4.1670 1,803 736 11 - (A) E.Y. C

11,413 99.9999- 0.0001 14,922 (2,331) (1,079) - (A) E.Y. C

- 0.02241,626 99.9776 1,503 95 143 - (B) E.Y. L

362 99.9999 847 (4) (8) - (B) E.Y. L

5,000 99.99000.0100 10,000 - 19 - (F) E.Y. L

1,731 24.0000 7.212 174 850 - (D) E.Y. -

3,105 24.0000 3,445 6,970 130 - (D) E.Y. -




OTHERS (continued)MAPFRE INTERNET S.A. Crta. Pozuelo a Majadahonda, 52 Computer related Services MAPFRE VIDA

Majadahonda (Madrid) MAPFRE SEGUROS GENERALESMAPFRE INDUSTRIALMAPFRE RECORPORACIÓN MAPFREMAPFRE ASISTENCIAMAPFRE MUTUALIDADMAPFRE AGROPECUARIA

MAPFRE MULTICENTRO DEL AUTOMÓVIL S.A. Crta. De Pamplona a Zaragoza, Polígono Ind. Cordovilla (Navarra) Services MAPFRE MUTUALIDAD

MULTISERVICAR CENTRO S.A Crta. Antigua de Ajalvir s/n Research, Training & MAPFRE MUTUALIDAD(Alcalá de Henares) Madrid Advisory Services CESVIMAP

MULTISEVICAR ASTURIAS S.A. C/ Gil de Jaz, 10 (Oviedo) Research, Training & MAPFRE MUTUALIDADAdvisory Services CESVIMAP

MULTISERVICAR AVILA S.A. Crta de Valladolid km 1 (Ávila) Research, Training & MAPFRE MUTUALIDADAdvisory Services CESVIMAP

MULTISERVICAR M. S.A. C/ Arcipreste de Hita, 4 Research, Training & MAPFRE MUTUALIDAD(Majadahonda) Madrid Advisory Services CESVIMAP

MIDDLESEA INSURANCE P.L.C. Floriana JTL, 16 (Malta) Insurance CORPORACIÓN MAPFRE

MAPFRE INFORMÁTICA A.I.E. Ctra.Pozuelo-Majadahonda, 52 Computer related Services MAPFRE INDUSTRIAL(Madrid) MAPFRE GUANARTEME

MAPFRE INVERSIÓNMAPFRE SEG.GENERALESMAPFRE VIDAMAPFRE CAUCIÓN Y CRÉDITOMAPFRE CAJA SALUDMAPFRE CAJA MADRID HOLDINGMAPFRE FINISTERREMAPFRE REMAPFRE ASISTENCIAMAPFRE AMÉRICAMAPFRE MUTUALIDAD

CESVI FRANCE S.A.S. Zone d´Activite Industriel Chalem- Studies for the optimationbert, Rue Evariste Gallois ,86130, of car insurance tariffsJaunay-Clan Poitiers (France) CESVIMAP

CESVI ARGENTINA S.A. Calle 9 y 17. Parque Ind.Pilar Research, Training & MAPFRE ARGENTINA SEGUROSBuenos Aires (Argentina) Advisory Services MAPFRE MUTUALIDAD

CESVI BRASIL S.A. CENTRO DE EXPERIMENTO Rua Amador Aguiar, 700-City Scientific and Technical E SEGURANZA VIARIA Empresarial – São Paulo (Brazil) Research MAPFRE MUTUALIDAD

CESVI COLOMBIA Avda. Bogotá-Medellín, km 18 Scientific and Technical MAPFRE S.G. DE COLOMBIASanta Fe de Bogotá (Colombia) Research MAPFRE MUTUALIDAD

CESVI MÉXICO Calle 1 Sur nº 101 Parque Ind. Research Centre SEGUROS TEPEYACToluca 2000 Toluca (Mexico) CESVIMAP

MAPFRE AMÉRICAMAPFRE AMÉRICA S.A. Ctra.Pozuelo Majadahonda, 52 Holding CORPORACIÓN MAPFRE

(Madrid) MAPFRE MUTUALIDAD

ARGENTINAMAPFRE ARGENTINA HOLDING S.A. Lavalle, 348 B.Aires (Argentina) Holding MAPFRE AMÉRICA

MAPFRE ARGENTINA SEGUROS S.A. Lavalle, 348 B.Aires (Argentina) Insurance MAPFRE ARGENTINA

ACONCAGUA SEGUROS DE RETIRO S.A. Lavalle, 348 B.Aires (Argentina) Insurance MAPFRE ARGENTINA HOLDINGMAPFRE ARGENTINA SEGUROS



364 15.0000547 22.0000293 1.250024 1.000025 1.000048 2.0000

11,707 50.0000226 5.0000 30,000 (809) (5,766) - (D) E.Y. L

1,342 75.5000 18,398 (275) (350) - (B) - -

607 99.99990.0001 600 - - - (F) - -

61 99.9999- 0.0001 60 - - - (F) - -

61 99.9999- 0.0001 60 - - - (F) - -

251 99.9999- 0.0001 250 - - - (F) - -

3,804 5.4855 14,455 16,372 1,234 - (D) - -

70 7.000070 7.00005 0.5000

120 12.000050 5.000025 2.5000

- 0.1000- 0.1000- 0.1000

10 1.0000- 1.0000- 0.5000

595 59.5000 1,000 - - - (D) E.Y. C

610 10.000 6,100 127 - - - - -

2 4.37001,650 49.7000 3,139 (227) 91 - (D) E.Y. C

2,494 100.0000 3,925 (1,192) 138 - (D) E.Y. C

82 3.64002,148 63.9500 1,735 1,039 70 - (D) E.Y. C

161 8.1400512 34.8800 3,222 179 6 - (D) E.Y. C

437,067 84.91691 0.0001 403,977 (570) (5,349) - (A) E.Y. C

16,118 100.0000 60,600 (34,571) 1,812 - (A) E.Y. C

20,901 99.9979 17,917 1,207 1,779 - (A) E.Y. C

1 23.56881 76.4312 8 (7) - - (A) - -




ARGENTINA (continuación)SURASSUR S.A. Lavalle, 348 B. Aires (Argentina) Insurance Brokerage MAPFRE ARGENTINA HOLDING

MAPFRE ARGENTINA A.R.T. Lavalle 348, Buenos Aries Work accidents Insurance MAPFRE ARGENTINA HOLDING(Argentina) MAPFRE ARGENTINA SEGUROS

BRASILMAPFRE VERA CRUZ SEGURADORA S.A. Av.María Coelho Aguiar, 215 Insurance MAPFRE DO BRASIL

São Paulo (Brazil) MAPFRE AMÉRICA

SEGURADORA ROMA S.A. Avda.9 de Julio 4017São Paulo (Brazil) Insurance MAPFRE VERA CRUZ SEGURADORA

MAPFRE DO BRASIL CONSULTORÍA Rua Sao Caros do Pinhal Advisory Services CORPORACIÓN MAPFREE SERVICIOS LTDA. São Paulo (Brazil) MAPFRE AMÉRICA

SANTACATARINA SEGUROS E PREVIDENCIA, S.A. Rua Padre Mighelinho, 80Florianapolis (Brazil) Insurance MAPFRE VERA CRUZ SEGURADORA

CHILEMAPFRE CHILE SEGUROS S.A. Teatinos 280, piso 6º Holding MAPFRE AMÉRICA

Santiago de Chile (Chile) INVERSIONES MAPFRE CHILE RE

EUROAMÉRICA ASESORÍAS GENERALES S.A. Teatinos 280, piso 4º Santiago de Chile (Chile) Investment Company MAPFRE CHILE SEG.

MAPFRE COMPAÑÍA DE SEGUROS Teatinos 280, piso 4º Insurance MAPFRE CHILE SEG.GENERALES DE CHILE S.A. Santiago de Chile (Chile) EUROAMÉRICA ASESORÍAS

COLOMBIAMAPFRE SEGUROS GENERALES DE COLOMBIA S.A. Carrera, 7, nº 74-36 Insurance MAPFRE AMÉRICA

Santa Fe de Bogota (Colombia) APOINT

CREDIMAPFRE Carrera, 7, nº 74-36 Real Estate Financial GESTIMAPSanta Fe de Bogota (Colombia) MAPFRE S.G. DE COLOMBIA

GESTIMAP S.A. Carrera, 7, nº 74-36 Information on MAPFRE S.G. DE COLOMBIASanta Fe de Bogota (Colombia) vehicle spare parts CREDIMAPFRE

AUTOMOTORES CAPITAL LTDA Carrera 7, nº 74-36 Repair, purchase andSanta Fe de Bogota (Colombia) sale of vehicles CREDIMAPFRE

UNITED STATESMAPFRE USA CORP. 6101 Blue Lagoon, Drive Suite,200

Miami (USA) Holding MAPFRE PRAICO CORP.

AMSTAR INSURANCE COMPANY 6101 Blue Lagoon, Drive Suite,200 Miami (USA) Insurance MAPFRE CORPORATION OF FLORIDA

AMSTAR MANAGEMENT COMPANY 6101 Blue Lagoon, Drive Suite,200Miami (USA) Insurance MAPFRE CORPORATION OF FLORIDA

MAP HOLDING 6101 Blue Lagoon, Drive Suite,200 Miami (USA) Financial MAPFRE CORPORATION OF FLORIDA

M & F PREMIUM FINANCE 6101 Blue Lagoon, Drive Suite,200 Miami (USA) Financial MAP HOLDING

MAPFRE INSURANCE COMPANY OF FLORIDA 6101 Blue Lagoon, Drive Suite,200Miami (USA) Insurance MAPFRE CORPORATION OF FLORIDA



24 100.0000 95 (29) (42) - (A) E.Y. C

7,742 99.269657 0.7304 2,848 3,862 1,089 - (A) E.Y. L

16,907 35.137331,211 64.8627 85,794 (42,959) 5,892 - (A) E.Y. C

2,291 46.0000 5,387 597 - - (D) E.Y. C

57 0.514316,902 99.4857 29,684 (885) 11 - (A) E.Y. C

148 13.3125 676 179 - - (D) - -

23,347 99.99371 0.0042 24,682 6,440 (134) - (A) E.Y. C

6,841 100.0000 6,118 (132) 855 - (A) E.Y. C

8,487 59.15005,861 40.8500 15,399 (940) 2,149 - (A) E.Y. C

16,662 94.22944,242 5.7623 33,426 (19,464) 1,189 - (A) E.Y. C

- 5.06421,887 94.9144 1,615 668 10 - (A) E.Y. C

234 92.588822 7.3831 167 (1) 3 - (B) E.Y. C

- 100.0000 1 2 - - (B) - -

15,162 100.0000 162 15,000 - - (A) E.Y. C

4,005 100.0000 800 3,482 (277) - (A) E.Y. C

28 100.0000 20 8 - - (A) E.Y. C

297 100.0000 405 (108) - - (A) E.Y. C

44 100.0000 8 36 - - (A) E.Y. C

8,446 100.0000 1,191 7,028 227 - (A) E.Y. C




MEXICOMAPFRE TEPEYAC S.A. Av.Magnocentro 5 Col.C.San Insurance MAPFRE AMÉRICA

Fernando Hixquilucan (Mexico) GRUPO CORPORATIVO LML

GRUPO CORPORATIVO LML Av. Magnocentro 5 Col. C. San Fernando Hixquilucan (Mexico) Holding MAPFRE AMÉRICA

EDITORIAL DIANA S.A. DE C.V. Roberto Gayol 1291 del Valle Mexico D.F. (Mexico) Publishing Company SEGUROS TEPEYAC

UNIDAD MÓVIL DE DIAGNÓSTICO S.A. Av.Magnocentro 5 Col.C.San Fernando Hixquilucan (Mexico) Medical Services SEGUROS TEPEYAC

ASSET DEFENSA LEGAL MEXICANA S.A. DE C.V. M.M. de Llano 140 MTY Nuevo León (Mexico) Legal Advisers SEGUROS TEPEYAC

PARAGUAYMAPFRE PARAGUAY CÍA DE SEGUROS S.A. Av.Mariscal López, 910

Asunción (Paraguay) Insurance MAPFRE AMÉRICA

PERUMAPFRE PERÚ, CÍA. DE SEGUROS Y REASEGUROS Av.Veintiocho de Julio, 873

Miraflores- Lima 18 (Peru) Insurance and Reinsurance MAPFRE AMÉRICA

TERRENOS Y LOCALES S.A. Av.Veintiocho de Julio, 873 Real Estate MAPFRE PERÚMiraflores- Lima 18 (Peru) MAPFRE PERÚ VIDA

PUERTO RICOMAPFRE PRAICO CORP. Avda.Chardón C.González Hato

RE.Y. - San Juan (Puerto Rico) Insurance MAPFRE AMÉRICA

PUERTO RICAN AMERICAN INSURANCE COMPANY Avda.Chardón C.González Hato RE.Y. – San Juan (Puerto Rico) Insurance MAPFRE USA CORP.

PREFERRED RISK INSURANCE COMPANY Avda.Chardón C.González Hato RE.Y. – San Juan (Puerto Rico) Insurance PUERTO RICAN AMERICAN INS.

PAN AMERICAN INSURANCE COMPANY Avda.Chardón C.González Hato RE.Y. – San Juan (Puerto Rico) Insurance MAPFRE USA CORP.

PUERTO RICAN INSURANCE AGENCY INC. Avda.Chardón C.González Hato RE.Y. – San Juan (Puerto Rico) Mediación de seguros MAPFRE USA CORP.

PAN AMERICAN FINANCE CORPORATION Avda.Chardón C.González Hato Financial MAPFRE USA CORPRE.Y. – San Juan (Puerto Rico) PAN AMERICAN INS.CO.

CANADAN LIFE INSURANCE COMPANY Avda.Chardón C.González Hato RE.Y. – San Juan (Puerto Rico) Insurance MAPFRE USA CORP

URUGUAYMAPFRE URUGUAY S.A. Bulevar Artigas, 459

Montevideo (Uruguay) Insurance MAPFRE AMÉRICA

APOINT S.A. Av.Gral.Flores 2422Montevideo (Uruguay) Financial MAPFRE AMÉRICA

VENEZUELAMAPFRE LA SEGURIDAD S.A. Calle 3ª Parcela 9 Edif. Seg.

La Seguridad Caracas (Venezuela) Insurance and Reinsurance MAPFRE AMÉRICA

CEFOPROSEG C.A. Calle 3ª Parcela 9 Edif. Seg. La Seguridad Caracas (Venezuela) Education MAPFRE LA SEGURIDAD

INVERSORA SEGURIDAD C.A. Calle 3ª Parcela 9 Edif. Seg. La Seguridad Caracas (Venezuela) Policy Funding MAPFRE LA SEGURIDAD

CORPORACIÓN SLS 024 C.A. Calle 3ª Parcela 9 Edif. Seg. La Seguridad Caracas (Venezuela) Sale of Cemetery Plots MAPFRE LA SEGURIDAD

INMOBILIARIA 96 C.A. Calle 3ª Parcela 9 Edif. Seg. La Seguridad Caracas (Venezuela) Real Estate MAPFRE LA SEGURIDAD



21,194 55.660257,343 44.3398 10,135 86,593 7,537 - (A) E.Y. C

91,029 100.0000 42,732 (7,000) 2,966 - (A) E.Y. C

3,628 20.1552 25,163 (18,459) (272) - (D) E.Y. C

310 99.9982 205 (171) 31 - (B) E.Y. C

138 78.8145 246 (148) 25 - (B) E.Y. C

1,847 81.2200 4,030 (2,106) 360 - (A) E.Y. C

5,283 98.9471 4,123 970 370 - (A) E.Y. C

1,130 66.39481,130 33.6052 1,696 - (85) - (A) E.Y. C

150,143 100.0000 5,201 144,973 (31) - (A) E.Y. C

90,354 100.0000 4,001 77,732 8,621 - (A) E.Y. C

18,368 100.0000 800 15,784 1,784 - (A) E.Y. C

25,292 100.0000 880 21,517 2,895 - (A) E.Y. C

205 100.0000 2 164 39 - (A) E.Y. C

249 37.2208419 62.7792 65 410 193 - (A) E.Y. C

4,254 100.0000 2,000 2,254 - - (A) (F) E.Y. C

3,104 100.0000 4,502 (1,715) 318 - (A) E.Y. C

19,271 100.0000 3,516 548 (73) - (A) - -

60,587 99.5159 25,335 115,446 12,848 - (A) E.Y. C

6 100.0000 - 6 (1) - (B) E.Y. C

19,217 100.0000 11,017 3,831 4,725 - (A) E.Y. C

1,.525 100.0000 1,525 - - - (A) E.Y. C

6 100.0000 6 - (6) - (A) E.Y. C




VENEZUELA (continuación)ESTACIONAMIENTOS EL CHORRO Calle 3ª Parcela 9 Edif. Seg.

La Seguridad Caracas (Venezuela) Property Administration MAPFRE LA SEGURIDAD

EL SALVADORLA CENTROAMERICANA S.A. Alameda Roosevelt, 31-07

San Salvador (El Salvador) Insurance MAPFRE AMÉRICA

INMOBILIARIA AMERICANA S.A. Alameda Roosevelt, 31-07San Salvador (El Salvador) Real Estate MAPFRE AMÉRICA

ESPAÑAMAPFRE SOFT S.A. Ctra.Pozuelo-Majadahonda, 52. Real Estate MAPFRE AMÉRICA

Majadahonda (Madrid) MAPFRE MUTUALIDAD

MAPFRE AMÉRICA VIDAMAPFRE AMÉRICA SEGUROS DE VIDA, S.A. General Perón, 40 (Madrid) Holding MAPFRE MUTUALIDAD

MAPFRE ARGENTINA SEGUROS DE VIDA, S.A. Lavalle, 348 Buenos Aires Insurance MAPFRE AMÉRICA VIDA, S.A.(Argentina) MAPFRE ARGENTINA

MAPFRE VERA CRUZ VIDA E PREVIDENCIA, S.A. Av.María Coelho Aguiar, 215 Insurance MAPFRE AMÉRICA VIDA, S.A.São Paulo (Brazil) MAPFRE VERACRUZ SEGURADORA, S.A.

FANCY

DTVM Avda. María Coelho Aguiar, 215 Securities DistributionSão Paulo (Brazil) MAPFRE AMÉRICA VIDA, S.A.

MAPFRE VERACRUZ CONSULTORÍA Avda. María Coelho Aguiar, 215 ADMINISTRAÇAO DE FONDOS S/C LTDA. São Paulo (Brazil) Consultance MAPFRE AMÉRICA VIDA, S.A.

MAPFRE COLOMBIA VIDA, S.A. Carrera 7, nº 74-36 Insurance MAPFRE AMÉRICA VIDA, S.A.Bogot (Colombia) INVER. MAPFRE RE

MAPFRE COLOMBIA

MAPFRE CHILE VIDA, S.A. Teatinos, 280, Santiago (Chile) Holding MAPFRE AMÉRICA VIDA, S.A.

MAPFRE COMPAÑÍA DE SEGUROS DE VIDA DE CHILE Teatinos, 280, Santiago (Chile) Insurance MAPFRE CHILE VIDA

TEPEYAC ASESORES Av. Magnocentro 5 Col.C.San Fund Administration MAPFRE AMÉRICA VIDA, S.AFernando Hixquilucan (Mexico) SEGUROS TEPEYAC

INVERSIONES PERUANAS General Perón, 40 (Madrid) Holding MAPFRE AMÉRICA VIDA, S.A.MAPFRE AMÉRICA

MAPFRE PERÚ VIDA, S.A. Avda. 28 de Julio, MirafloresLima (Perú) Insurance INVERSIONES PERUANAS

CORPORACIÓN FINISTERRE Avda.Garcilaso de la Vega 1168, Lima (Perú) Undertakers Services MAPFRE PERÚ VIDA, S.A.

PUERTO RICAN AMERICAN LIFE Avda.Chardón C.González Hato Insurance MAPFRE AMÉRICA VIDA, S.A.INSURANCE COMPANY RE.Y. – San Juan (Puerto Rico) MAPFRE U.S.A. CORP.

PUERTO RICAN AMERICAN LIFE Avda.Chardón C.González Hato PUERTO RICAN AMERICAN FINANCIAL SERVICES CO. RE.Y. – San Juan (Puerto Rico) Insurance Agents LIFE INSURANCE

Figures in EUR thousands(*) Net values after deduction of pending payments and provisions for depreciation of investments.

Consolidation method or procedure(A) Controlled companies fully consolidated(B) Controlled companies consolidated by the equity method(C) Controlled companies excluded from consolidation

(D) Affiliates and investee companies recorded by the equity method(E) consolidation(F) Companies consolidated this year for the first time



9 90.0000 - 9 (1) - (A) E.Y. C

10,718 71.4818 9,153 1,001 1,587 - (A) P.M.A. C

3,614 71.4007 6,196 (1,105) 8 - (A) P.M.A. C

1,679 99.9991- 0.0009 2,161 245 (193) - (B) E.Y. L

52,401 100.0000 96,000 (40,814) (2,661) - (A) E.Y. C

752 55.000023 20.0000 5,271 (19,539) 35 - (A) E.Y. -

18,653 73.54003,511 11.7300

3,080 14.6600 30,310 (9,407) 124 - (A) E.Y. C

543 100.0000 414 69 60 - (A) E.Y. C

6 99.9900 6 (3) 3 - (A) E.Y. C

3,560 74.9997- 0.0001- 0.0001 7,082 - 183 - (A) E.Y. C

4,085 75.0000 6,594 (959) - - (A) E.Y. C

5,560 100.0000 6,469 (721) (188) - (A) E.Y. C

- 51.000044 16.0000 523 2 (253) - (B) - -

7,010 67.03871,427 12.9613 21,879 (5,084) (6,338) - (D) E.Y. L

5,739 65.9725 7,335 3,983 283 - (A) E.Y. C

5,166 100.0000 6,012 (2,072) (2,599) - (A) E.Y. C

7,337 60.0000269 15.0000 1,067 11,017 (812) - (A) E.Y. C

- 100.0000 360 156 (570) - (B)(F) - -

Audit firmE.Y. Ernst & YoungD.T. Deloitte & ToucheMENJ R.MenjouP.M.A Perez, Mejía y Asociados

Audit firm"L" Limited"C" Full"—" No review carried out


APPENDIX 2

SUMMARISED CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OFMAPFRE INVERSION, SOCIEDAD DE VALORES, S.A. AS AT 31 DECEMBER 2003

EUR 000s

BALANCE SHEET

AssetsFixed assets 1,387Trading portfolio 789,795Financial intermediaries 19,616Other assets 8,187Total Assets 818,985

LiabilitiesShareholders equity 74,185Reserves in fully consolidated companies 14,394Negative consolidation difference 1,166Year results attributable to the group 16,654Interim dividend paid (8,800)Third-party funding 697,425Other liabilities 23,961Total Liabilities 818,985

PROFIT AND LOSS ACCOUNT EUR 000s

IncomeBrokerage and markets 3,995Management 35,521Ordinary margin 39,516Operating expenses 13,000Operating margin 26,516Other results 93Pre-tax result 26,609

After tax result 16,654

Holding Companies

HOLDING COMPANIES | pag. 161

CORPORACIÓN MAPFRE | pag. 161 ·166

CORPORACIÓN MAPFRE is the holding company for the main joint-stock companies of

SISTEMA MAPFRE. It is the main vehicle of SISTEMA MAPFRE for accessing the capital

markets and sharing its development and expansion with investors.

Executive Auditing Remuneration ComplianceCommittee Committee and Appointments Committee

Committee

ChairmanD. Carlos Álvarez Jiménez First First First

Vicechairman Vicechairman Vicechairman

Executive Vice-ChairmanD. Domingo Sugranyes Bickel Chairman Chairman

Second Vice-ChairmanD. Francisco Ruiz Risueño Second Second Second Chairman

Vicechairman Vicechairman Vicechairman

Managing DirectorD. Ricardo Blanco Martínez Member

MembersD. Víctor Bultó MilletD. Juan Fernández-Layos Rubio MemberD. Rafael Galarraga SoloresD. Santiago Gayarre Bermejo MemberD. Dieter Göbel BrúcknerD. Luis Hernando de Larramendi Martínez Member Member MemberD. Luis Iturbe SanzD. Manuel Jesús Lagares Calvo Chairman MemberD. Alberto Manzano Martos MemberD. José Manuel Martínez MartínezD. Antonio Miguel-Romero de Olano Member MemberD. Filomeno Mira Candel MemberD. Alfonso Rebuelta Badías Member Member Member MemberD. Pedro Unzueta Uzcanga Member

Member SecretaryD. José Manuel González Porro Member Secretary Member Secretary Member Secretary

Board of Directors

GOVERNING BODIES


At the end of fiscal year 2003, MAPFRE MUTUALIDAD held 55.2% of the share capital of

CORPORACION MAPFRE, 9,514 Spanish shareholders held another 15.1%, and 404 foreign

investors held the remaining 29.7%.

In June 2003, Standard & Poor’s rating agency upgraded the counterparty risk and bond issue

ratings it assigns to CORPORACIÓN MAPFRE from ‘A+/positive outlook’ to ‘AA-/stable

outlook’.

At the end of June, the shares of CORPORACIÓN MAPFRE were included in two prestigious

stock indices: the IBEX 35 index and the DOW JONES STOXX INSURANCE index, the last of

which includes the shares of the largest insurance companies of 18 European countries.

KEY FIGURES

The insurance and reinsurance companies in which CORPORACIÓN MAPFRE holds direct or

indirect control are fully consolidated in its accounts. Companies engaged in other types of

business, such as fund management, real estate and security services, are consolidated by the

equity method.

In 2003, the evolution of the various items of the balance sheet and the profit and loss account

were affected positively by the results of the Units and negatively by the devaluation of Latin

American currencies and the appreciation of the Euro against the US dollar, as explained in

the following paragraphs.

Balance sheet

› Consolidated total assets at 31 December 2003 totalled _19,074.3 million, a 25.2% increase

with respect to the previous year. Investments represented approximately 79.6% of the

assets, with a net book value of _15,182.6 million, a 25.1% increase, which is especially

noteworthy considering the devaluations suffered by the currencies of the main Latin

American countries.

› Consolidated shareholders’ equity amounted to _1,764.2 million, a 3.7% increase over 2002.

Of the total equity amount detailed above, _675.7 million corresponded to the holdings of

minority shareholders in subsidiaries, and _1,088.5 million to the shareholders of

CORPORACIÓN MAPFRE. Consolidated shareholders’ equity per share amounted to _6.0 at

year-end.

› Technical reserves stood at _15,329.7 million at 31 December 2003, a 27.7% increase with

respect to the previous year.

Profit and loss account

› In 2003, the total revenues of CORPORACION MAPFRE and its subsidiaries reached _6,693

million, a 3.6% decrease with respect to the _6,944.5 million recorded in the previous year.

These figures were negatively affected by the depreciation of the American currencies

referred to previously.

The Madrid Stock Exchange building


› The consolidated profit after tax reached _228.2 million, a 19.2% increase. The attributable

profit, after tax and minority interests, reached _141.3 million, a 24.6% increase. Earnings

per share reached _0.78.

_25.6 million in respect of amortisation of consolidated goodwill was included in the

consolidated profit and loss account.

INVESTMENTS MADE

During fiscal year 2003, CORPORACIÓN MAPFRE made investments in group and affiliate

companies totalling _176.1 million, the most significant of which were the following:

› Capital increase and loan to MAPFRE-CAJA MADRID HOLDING DE ENTIDADES

ASEGURADORAS, for an overall amount of _104.6 million, which enabled the company to

fund the purchase of 98.0724% of the shares in the MUSINI Group.

› Capital increases and loans to MAPFRE ASISTENCIA for an overall amount of _40 million,

to fund the acquisition of ROAD AMERICA (Miami, USA), NUOVI SERVIZI AUTO S.p.A. (Italy)

and GENERAL SERVICES REINSURANCE Ltd. (Ireland), as well as launching ‘Proyecto Oro’

to provide services for the elderly.

› Capital increase at MAPFRE RE, by contributing the ownership of a unique property located

in Paseo de Recoletos 25, Madrid (valued at _30.0 million by independent surveyors) and

_23.8 million in cash. As a result of this increase, which totalled _60 million, the

shareholding of CORPORACIÓN MAPFRE in MAPFRE RE rose slightly to 84.3%.

› Purchase of a 40% shareholding in MAPFRE ASIAN for _3 million. With this acquisition

CORPORACIÓN MAPFRE increased its stake in MAPFRE ASIAN from 53.2% to 93.2%.

› Capital increase at PROGRESS ASSICURAZIONI S.p.A. in the amount of _1.5 million.

› Purchase of a 10% shareholding in QUAVITAE, S.A. from MAPFRE ASISTENCIA for _3.1

million.

The aforementioned investments were financed by increasing debts with financial institutions

for an amount of _138.5 million.

SHARE PERFORMANCE ON THE STOCK MARKET

The shares of CORPORACION MAPFRE traded for 250 days on the "Mercado Continuo" (the

Spanish electronic market), which implies a trading frequency of 100%. A total of 197,672,419

shares changed hands during this fiscal year, compared to 156,683,085 in the previous fiscal

year, a 26.2% increase in trading volumes. The amount of these transactions totalled _1,865.3

million, compared to _1,149.2 million in 2002, a 62.3% increase.


In 2003, the shares of CORPORACION MAPFRE recorded a considerably more favourable

performance than those of most European insurance groups. Throughout the year, the share

price increased by 45.3%, thus outperforming by 13.4% the IBEX 35 index and by 31.6% the

DOW JONES STOXX INSURANCE index.

The yield from dividends paid during the year was equal to 2.2% of the average share price for

the year. At year end, nine Spanish and international brokers had ‘buy’ recommendations on

the shares of CORPORACION MAPFRE, against five recommendations to ‘hold’ and three to

‘sell’.

The Finance and Investors Relations Department of CORPORACION MAPFRE have carried out

an intense communication activity with analysts and investors. Every quarter, results have

been presented in meetings with analysts in Madrid and London, and by means of conference

calls, along with comprehensive complementary information, which was released

simultaneously to the public through the CNMV (the Spanish Securities and Exchange

Commission).

Meetings were held during the fiscal year with 17 Spanish institutional investors and

investment managers, and 177 institutional investors and investment managers from Austria,

Belgium, Bermuda, Canada, Denmark, Finland, France, Germany, Holland, Ireland, Italy,

Japan, Portugal, Singapore, Sweden, Switzerland, the United Kingdom and the USA.

Furthermore, several institutional investors and analysts from different countries were

received in the headquarters of CORPORACIÓN MAPFRE.

All the public information relative to CORPORACION MAPFRE and its results is available on

the web page of SISTEMA MAPFRE in the section dedicated to investors. At the end of 2003,

CORPORACION MAPFRE has been awarded, together with Union Fenosa, the distinguished

"Llotja" prize in its XXXIX edition, which the Barcelona Chamber of Commerce grants in

recognition of the "comprehensive, frequent and reliable information system made available

to actual and potential investors".

SUBSEQUENT EVENTS

In December 2003, subsidiary MAPFRE RE decided to carry out a _150 million capital increase

within the first four months of 2004. The Board of Directors of CORPORACIÓN MAPFRE

agreed to subscribe for the portion corresponding to its shareholding in this subsidiary

(_126.5 million) and to take up any shares that may remain unsubscribed for by other

shareholders.

TARGETS

CORPORACIÓN MAPFRE has set itself the following targets for the 2004-2006 period:

› Achieve an annual increase of over 10% in Non-life insurance premiums and in funds under

management (MAPFRE VIDA).

› Maintain a positive technical result in the insurance and reinsurance businesses

(combined ratio equal to, or lower than, 100% in Non-life insurance).


› Keep the return on equity above 10%, and increase earnings per share.

› Achieve an average annual increase in net results equal to, or greater than 10%, assuming

the present structure of the consolidated group of CORPORACIÓN MAPFRE and its

subsidiaries.

SUMMARY BALANCE SHEET

ASSETS 2003 2002 2001 LIABILITIES 2003 2002 2001

Intangible assets and start-up expenses 547.7 497.3 506.1 Capital and reserves 947.2 963.5 1,082.1

Net result 141.3 113.4 79.8Investments 15,182.6 12,132.8 10,999.7

External shareholders 675.7 624.3 649.2Participation by reinsurance in technical reserves 1,041.3 526.4 477.7 Technical reserves 15,329.7 12,008.2 10,682.6

Deposits received on Credits 1,219.4 1,081.8 1,144.9 ceded reinsurance 112.1 94.0 79.2

Other assets 1,083.3 999.4 892.3 Other liabilities 1,868.3 1,434.3 1,447.8

TOTAL ASSETS 19,074.3 15,237.7 14,020.7 TOTAL LIABILITIES 19,074.3 15,237.7 14,020.7

Figures in million euros


PROFIT AND LOSS ACCOUNT

ITEM 2003 2002 2001

DIRECT INSURANCE AND ACCEPTED REINSURANCEPremiums earned 5,095.1 5,378.2 5,611.0Claims (3,362.2) (3,099.6) (3,333.5)Other technical expenses (1,783.6) (2,388.4) (2,601.7)

Result direct insurance and accepted reinsurance (50.7) (109.8) (324.2)

CEDED AND RETROCEDED REINSURANCE Premiums and variations in the unearned premium reserves (684.8) (576.6) (440.6)Claims paid and variation in the outstanding claims reserve 280.3 249.0 360.4Variation in other technical reserves. commissions and participations 128.5 116.3 98.6

Result ceded and retroceded reinsurance (276.0) (211.3) 18.4

OTHER TECHNICAL RESULTSNet investment income 735.1 643.7 569.8Net other technical income/(expenses) (65.5) (51.9) (47.2)

Other technical results 669.6 591.8 522.6

Result of the life and non-life technical accounts 342.9 270.7 216.8

NON-TECHNICAL ACCOUNTNet investment income 37.9 38.3 39.8Amortisation of goodwill (25.6) (27.5) (18.5)Net other non-technical income/(expenses) (21.2) (21.7) (4.1)Net extraordinary income/(loss) (13.4) (0.8) (22.4)

Result of the non-technical account (22.3) (11.7) (5.1)

Result before tax and minority interests 320.6 259.0 211.7



MAPFRE–CAJA MADRID HOLDING* | pag. 167 ·171

GOVERNING BODIES

MAPFRE-CAJA MADRID HOLDING DE ENTIDADES ASEGURADORAS S.A. is the company

through which the strategic alliance between SISTEMA MAPFRE and the CAJA MADRID

Group, in Life, General and Health Insurance in Spain is implemented. The business activities

of this holding company have developed very satisfactorily in 2003.

Board of DirectorsChairman

Mr. Alberto Manzano Martos

Vice-Chairman Mrs. Elena Gil García

Director – General ManagerMr. Esteban Tejera Montalvo

DirectorsMr. Matías Amat RocaMr. Ignacio Baeza GómezMr. Ramón Ferraz RicarteMr. Santiago Gayarre BermejoMr. Sebastián Homet DupráMEDIACIÓN Y DIAGNÓSTICOS, S.A. (Represented by Mr. Pedro Bedia Pérez)Mr. Antonio Miguel-Romero de OlanoMr. Filomeno Mira CandelPARTICIPACIONES Y CARTERA DE INVERSIÓN S.L. (Represented by Mr. Javier María Tello Bellosillo)Mr. Mariano Pérez ClaverMr. Domingo Sugranyes BickelMr. Enrique de la Torre Martínez

Secretary Mr. José Manuel González Porro

Deputy Secretary Mrs. Isabel Hernando de la Cuerda

* This holding company comprises insurance companies MAPFRE VIDA, MAPFRE SEGUROSGENERALES, MAPFRE CAUCIÓN Y CRÉDITO, MUSINI and MAPFRE CAJA SALUD. Its shares are ownedby CORPORACIÓN MAPFRE (51%) and CORPORACIÓN FINANCIERA CAJA MADRID (49%).

The signing of the purchase of MUSINI and MUSINI VIDA



ASSETS 2003 2002 2001 LIABILITIES 2003 2002 2001

Intangible assets and start-up expenses 433.6 410.0 434.2 Capital and reserves 934.4 831.9 755.3

Net profit 147.6 122.5 110.6Investments 13,195.5 10,236.2 8,721.8

External shareholders 11.7 25.7 31.9Participation by reinsurance in technical reserves 895.6 330.2 262.8 Technical reserves 13,768.3 10,497.8 8,910.4

Deposits received Credits 714.1 548.4 469.4 on ceded reinsurance 131.9 97.8 77.0

Other assets 813.6 735.5 563.8 Other liabilities 1,058.5 684.6 566.8



PROFIT AND LOSS

ITEM 2003 2002 2001

DIRECT INSURANCE AND ACCEPTED REINSURANCEPremiums earned 3,332.8 3.580.0 3.641.5Claims (2,298.3) (1,919.9) (1,786.8)Other technical expenses (1,267.5) (1,822.8) (2,055.6)


CEDED AND RETROCEDED REINSURANCE Premiums and variations in the unearned premium reserves (453.9) (322.2) (222.1)Claims paid and variation in the outstanding claims reserve 231.3 182.8 134.9Variation in other technical reserves, commissions and participations 117.8 87.6 73.7

Result ceded and retroceded reinsurance (104.8) (51.8) (13.5)




NON-TECHNICAL ACCOUNTNet investment income 26.9 19.4 22.9Amortisation of goodwill (20.1) (19.3) (12.5)Net other non-technical income/(expenses) 5.4 5.8 9.4Net extraordinary income/(loss) 3.3 0.3 (3.4)

Result of the non-technical account 15.5 6.2 16.4




KEY FIGURES

Balance Sheet

› Consolidated shareholders’ equity amounted to _1,093.7 million and increased by 11.6% due

to the capital increases carried out in July and December 2003 and the results for the year.

Of that figure, _11.7 million correspond to the holdings of minority shareholders in its

subsidiaries.

› Funds managed in savings products by MAPFRE VIDA and its subsidiaries (insurance

technical reserves, pension funds and investment funds) reached _15,452.1 million, which

include _428.1 million of the Life Insurance technical reserves of MUSINI that will be

transferred to MAPFRE VIDA during the course of 2004.


› The consolidated revenues of the Company and its subsidiaries from insurance and

reinsurance activities reached _4,316 million in 2003, of which _3,421 corresponded to

written and accepted premiums.

› Non-life insurance claims, net of reinsurance, including claims handling costs but

excluding the appropriation to the equalisation reserve, equal to 65% of net premiums

earned.

› Administration, acquisition and other net technical expenses were equal to 14.5% of net

premiums earned.


› The consolidated profit, after tax and minority shareholders, amounted to _147.6 million.

Its breakdown by subsidiary is given in the following table (figures in million euros):

Results of subsidiaries

MAPFRE VIDA 123.7

MAPFRE SEGUROS GENERALES 111.8

MAPFRE CAUCIÓN Y CRÉDITO 9.9

MAPFRE CAJA SALUD 14.5

MUSINI 2.8

TOTAL 262.7

Individual result of the holding company 97.4

Consolidation adjustments (103.2)

Amortisation of goodwill and portfolio acquisition costs (24.8)

Result before tax and minority shareholders 232.1

Tax (81.7)

Result after tax 150.4

Minority shareholders (2.8)Net result 147.6


MAIN ACTIVITIES

› During fiscal year 2003, the company acquired 98.0724% of the shares of MUSINI S.A. for

_298.5 million, of which _100.2 million corresponded to the value assigned to MUSINI VIDA

S.A., the acquisition of which was wholly financed by MAPFRE VIDA out of its shareholders’

equity and _198.3 million to the rest of the MUSINI Group, the purchase of which was

financed through capital increases to the value of _100 million and through loans at market

terms granted by the Company’s shareholders in proportion to their respective

shareholdings.

› In February 2003, the Company acquired shares in MAPFRE VIDA, as a result of the public

buy-out bid it had launched, for an amount of _5.7 million.

OUTLOOK

The company has set itself the following general objectives for the 2004 – 2006 period:

› To achieve a consolidated volume of premiums of _4,986.2 million by 2006, excluding

transactions related with the externalisation of corporate pension commitments,

compared with _3,421 million in 2003.

› To achieve a net attributable profit equal to 3.5% of total revenues by 2004, compared with

3.4% in 2003.

› To continue its policy of acquiring insurance companies in order to consolidate a clear

leading position on the Iberian Peninsula.

› To optimise the results of the alliance between MAPFRE and CAJA MADRID.

Operating Units and Companies

OPERATING UNITS AND COMPANIES | pag. 175

MOTOR INSURANCE OPERATING UNIT | pag. 175 ·184

GOVERNING BODIES

In 2003 there was a marked recovery in the growth of motorcar sales. According to available

estimates, 1,903,887 new vehicles were registered, a 7.04% increase over the previous year,

and the net growth in the number of vehicles in Spain is put at approximately 3.32%. Against

this backdrop, the growth in motor insurance premiums, which according to ICEA was 7.2%,

is modest. MAPFRE MUTUALIDAD, for its part, recorded an 8.9% increase, 1.7% above the

sector figure.

With regard to results, 2003 was the best year ever for MAPFRE MUTUALIDAD, with a pre-tax

profit of _257 million for the parent company itself. Rigorous risk selection, tarification and

management, as well as increasingly competent personnel, have undoubtedly been the key to

business success in the fiscal year analysed in this report.

Headquarters of MAPFRE MUTUALIDAD in Majadahonda

Executive CommitteeChairman

Mr. Santiago Gayarre Bermejo

Vice-Chairman Mr. Miguel María Muñoz Medina

DirectorsMr. Bernabé Gordo PinMr. Carlos Llaneza AllerMr. Emilio Madrigal MartínMr. Esteban Pedrayes Larrauri

Secretary Mr. Claudio Ramos Rodríguez


KEY FIGURES *

Balance sheet

› Investments at book value amounted to _2,775.3 million, a _454.3 million increase over the

previous year. Of these, _969.9 million corresponded to cash and liquid assets, _1,279.7

million to financial investments and _525.7 million to real estate.

› Own funds were _1,104.3 million, a 22.6% increase over the previous year.

› Technical reserves amounted to _2,028.2 million, exceeding the legally required coverage

level by _940.4 million.

› The solvency margin at year-end showed an excess of _1,577 million, being equal to 6.23

times the minimum legal requirement.


› Revenues reached _1,973 million, an 11.7% increase over the previous year. Of this figure,

_1,858.5 million corresponded to premiums and the remaining _114.5 million to financial

income.

› Total management expenses amounted to _378.7 million and were equal to 20.4% of

premiums written. Internal management expenses were _280.1 million, equal to 15.1% of

premiums written, whereas external management expenses (commissions) totalled _98.6

million, equal of 5.3% of premiums written.


Assets 2003 2002 2001 Liabilities 2003 2002 2001


Net result 200.8 120.3 98.1Investments 2,069.2 1,877.4 1,365.3

Participation by reinsurancein technical reserves 0.7 1.1 1.0 Technical reserves 2,028.2 1,733.3 1,487.6

Credits 463.4 388.0 351.5 Other liabilities 265.0 211.2 191.6

Other assets 859.2 573.5 745.9


Figures in million euros and from MAPFRE MUTUALIDAD, excluding its subsidiaries.

* Key figures refer to non-consolidated financial statements of MAPFRE MUTUALIDAD


› Claims amounted to _1,234.4 million, a 6.2% increase over the previous year, and

corresponded almost exclusively to Motor insurance. The loss ratio as a percentage of net

premiums earned was 68.8%.

› The technical account showed a profit of _246.2 million, equal to 13.2% of premiums

written.

› The pre-tax profit for 2003 was _256.6 million, a 63.6% increase.

OTHER KEY FIGURES

› Insured vehicles reached 4,360,224, an increase of 353,146, or 8.8%, on the previous year.

PROFIT AND LOSS

Item 2003 2002 2001

DIRECT INSURANCE AND ACCEPTED REINSURANCEPremiums earned 1,789.7 1,639.0 1,438.1Claims (1,359.5) (1,261.9) (1,163.6)Variation in other technical reserves (259.2) (243.5) (199.0)

Result direct insurance and accepted reinsurance 171.0 133.6 75.5

CEDED AND RETROCEDED REINSURANCE Premiums and variations in the unearned premium reserves (5.2) (6.4) (1.6)Claims paid and variation in the outstanding claims reserve 2.9 2.4 2.0Variation in other technical reserves. commissions and participations (0.3) 0.1 0.0





NON-TECHNICAL ACCOUNTInvestment income and expenses (12.0) (15.1) 6.9Other non-technical income/(expenses 22.3 13.8 9.0Extraordinary items 0.1 6.5 0.3



Figures in million euros and from MAPFRE MUTUALIDAD, excluding its subsidiaries.


INVESTMENTS

Item 2003 2002 2001Book value Market value Book value Market value Book value Market value

Real estate 525.7 823.6 510.2 763.5 470.9 664.8Fixed income securities 398.2 416.8 175.8 188.3 4.0 4.0Equities 692.1 1,446.7 710.7 1,113.5 685.7 966.7Investment fund holdings 185.0 199.7 181.8 178.4 110.3 127.8Cash and bank deposits 969.9 969.9 735.8 735.8 723.4 723.4Other investments 4.4 4.4 6.7 6.7 4.2 4.1

TOTAL INVESTMENTS 2,775.3 3,861.1 2,321.0 2,986.2 1,998.5 2,490.8


0 500 1000 1500 2000 2500 3000year · 2001 |

year · 2002 |

year · 2003 |

470.9

4.0

1,523.6

1,998.5

510.2

175.8

1,635.0

2,321.0

525.7

398.2

1,851.4

2,775.3

Real Estate Fixed income securitiesOther investments Total investments

Investments at Book Value

year · 2001 |

year · 2002 |

year · 2003 |

1,137.7

251.1

1,375.4

282.3

1,878.9

301.6

Solvency margin Minimum legal requirement

Solvency Margin

year · 2001 |

year · 2002 |

year · 2003 |

1,555.2

1,260.9

1,973.3

1,479.8

2,678.9

1,738.5

Qualifying assets Reserves to be covered

Coverage of Reserves


PRINCIPAL ACTIVITIES

Technical management

The outstanding claims reserves established in 2002 have maintained a very satisfactory level

of sufficiency, confirming the effectiveness of the statistical model used by MAPFRE

MUTUALIDAD to calculate such reserves. The adjustment to the new mortality tables of the

cost of the outstanding compensation payments under the form of annuities, which in

accordance with applicable legislation could have been scheduled over thirteen years, was

charged fully against the results of 2003, thereby increasing the reserves by more than _6

million. The outstanding reserves for personal injury claims affected by the amendments in

the legal requirements concerning the adjustment of such claims introduced by Law 34/2003

dated 4 November were likewise fully appropriated.

In 2003, work was carried out to develop a new set of motor insurance tariffs, to become

effective on 1 January 2004, that unifies those used by all SISTEMA MAPFRE companies. This

will lead to substantial improvements in their sufficiency, fairness and competitiveness, and

will also make the underwriting more efficient and easier. All technical aspects relative to the

transfer to MAPFRE MUTUALIDAD of the Motor insurance portfolios of MARES and MAPFRE

AGROPECUARIA were also reviewed.

Finally, a breakdown cover for second-hand vehicles was introduced and made available on a

trial basis exclusively to vehicles sold by MAPFRE MULTICENTRO DEL AUTOMÓVIL.

Sales initiatives

651,521 new policies were written, a 14% increase over the previous year, and 84% of these

corresponded to motorcars. The average premium for these policies grew 5% over the

previous year to _574 per vehicle. The net increase was 343,146 policies and at the end of the

year 4,360,224 vehicles were insured. Nearly 18% of all vehicles registered in Spain in 2003

were insured by MAPFRE.

Advertising and contact with mutualists

All the advertising material of the Motor Insurance Operating Unit has been redesigned, by

adopting a closer and more uniform approach to the client backed by the slogan "If you think

about a car, think about MAPFRE". The company continued to be involved in the main

domestic motor shows, and it had a notable presence at the ‘Salón Internacional de

Barcelona’. 57 sales initiatives and more than 200 local advertising campaigns were carried

out.

Claims management and services

During 2003 the restructuring of the Claims Area, which began at the beginning of last year,

was completed and the basic objectives established in connection with the specialisation of

claims officers, training and claims settlement were achieved. During the year, a total of

3,024,262 claims were handled and the following points should be borne in mind in order to

appreciate the work carried out:


› In Property Damage 2,784,295 claims were handled, 89% of which have been settled.

Plans to concentrate claim filings at the National Claims Centre and in the Multi-Regional

Centres have progressed and a total of 1,947,913 filings were processed there, representing

64% of all claims handled by the Company. The fight against fraud has continued: 16,137

cases were detected and rejected, leading to savings of over _35 million.

› In Personal Injury 232,487 claims of injured persons were handled, of which: 2,502 related

to deaths; 137 to serious injuries; 94,370 to injuries of varying severity; and 135,478 to

claims to meet payment of medical expenses. Within the year 72% of the claims were

settled, by reaching amicable agreements in 48,883 cases, thereby speeding up

settlements to the victims or their heirs in 85% of the claims without resorting to legal

proceedings.

› In Legal Defence there were 307,085 claims against third parties, of which 236,021 related

to property damage and 71,064 to personal injury, with settlement of 83% and 68% of the

cases, respectively.

In order to carry out the activities detailed above:

› The 414 adjusters of MAPFRE MUTUALIDAD handled 968,043 assessments, of which 45%

were settled in our Adjustment and Quick Payment Centres. .

› The medical and physiotherapy personnel of MAPFRE MUTUALIDAD’s Medical Service,

which has 10 centres equipped with a consultation, radiography and rehabilitation facilities,

treated 50,644 injured persons and rehabilitated 3,234 of them, with a total of 61,162

consultations.

› The Legal Services staff of the various regional sub-centres directed, monitored and

assessed the performance of lawyers and solicitors who handled 111,192 claims.

In Roadside Assistance a total of 868,081 cases were taken care of, of which 79% related to

breakdowns, 15% to accidents and the remainder to other services, a 17% increase over the

previous year. It is worth noting that 4,781 cases involved medical attention.

The ‘Línea MAPFRE Autos’ call centre, which continues to be one of the most popular

services with both our mutualists and the distribution network, handled 6,376,012 calls, a 15%

increase over the previous year. Roadside assistance continues to be the most sought-after

service, accounting for 74% of all calls.

Training

Training was reinforced devoting specific attention to those employees most closely involved

with the technical and sales organisation, for which purpose training sessions were

scheduled and attended by 6,926 persons. In order to make this possible, the involvement of

those responsible for implementation, training and quality control in the different regional

sub-centres was fundamental.


Several manuals were regularly updated and sales guidelines were prepared to meet the

requirements of the Territorial structure.

Finally, the e-learning pilot scheme carried out in the Renting training course should be

mentioned as it has given positive results that will enable us to continue with this dynamic,

flexible and highly effective system.

BREAKDOWN AND EVOLUTION OF DIRECT AND ACCEPTED PREMIUMS

Branch PREMIUMS % VARIATION2003 2002 2001 03/02 02/01 01/00

NON LIFE Motor civil liability 1,043.3 963.9 851.1 8.2 13.3 21.2Motor other risks 485.0 443.9 397.4 9.3 11.7 16.5Occupants 62.7 60.9 55.9 3.0 8.9 14.3Assistance 107.4 92.5 76.0 16.1 21.7 18.6Civil liability 66.6 56.9 42.8 17.0 32.9 20.2Privación permiso de conducir 16.1 12.8 9.2 25.8 39.1 35.3Other 8.6 8.1 5.7 6.2 42.1 50.0

TOTAL 1,789.7 1,639.0 1,438.1 9.2 14.0 19.6

Figures in milion of euros

OTHER SIGNIFICANT ITEMS

Item AMOUNT % VARIATION2003 2002 2001 03/02 02/01 01/00

Management expenses 378.7 338.3 283.7 11.9 19.25 8.6Claims 1,234.4 1,162.1 1,067.0 6.2 8.91 12.7Net investment income 86.4 74.9 70.5 15.3 6.24 (30.1)Result before tax and minority interests 256.6 156.8 121.9 63.6 28.63 23.9Result after tax and minority interests 200.8 120.3 98.1 66.9 22.63 18.6

Figures in milion of euros

STAFF

Category 2003 2002 2001

Managers 988 671 497Clerical staff 1,910 1,941 1,877Commercial staff 9 73 121Other 528 608 586

TOTAL 3,435 3,293 3,081


Information and organisational systems

In 2003 a number of projects were developed, some of which produced tangible

improvements during the year, while the remainder established the basic strategies and

guidelines to be followed in 2004. The adaptations concerning the revision of the 2004 tariffs,

which will unify the tariffs of all Motor portfolios in SISTEMA MAPFRE, was the most

important development.

In the area of business support applications, the following applications came into operation:

cancellations prevention, sales information systems and budget management. In the Claims

area, the centralisation of the servers of the regional sub-centres in the Majadahonda EDP

centre made it possible to merge the TRAMES subsystems into a single application, thereby

giving greater potential and flexibility. Important operational improvements or new

applications were also implemented in the software used by ‘Línea MAPFRE Autos’, in

connection with the Internet branch.

With regard to basic infrastructure and technology, the new platform for delegates (PDM),

which replaces the previous single employee platform, is important.

As far as new business areas are concerned, the development of business and accounting

applications for MAPFRE RENTING, CLUB MAPFRE and MULTICENTRO DEL AUTOMÓVIL are

worthy of mention. In the course of 2003, work began on adapting these applications to SAP,

which will be the accounting system common to all of them.

The Business Continuity Plan should be mentioned as a project of special note, the two first

stages of which have been completed: definition and identification of processes, and definition

of action plans.

Substantial sums of money have also been spent on projects that will become fully

operational in 2004, such as TRON21, SIRED and the Review of Information Systems.

SUBSIDIARY AND AFFILIATE COMPANIES

MARES

The company wrote premiums for an amount of _68.7 million and closed the year with a pre-

tax profit of _11.2 million and 88,097 insured vehicles.

MAPFRE MUTUALIDAD set up this company as an ancillary operation, in order to test the

advantages and disadvantages of certain new departures from its traditional practices, such

as centralised underwriting, telephone business and personalised tariffs. Having

accomplished these objectives, it was considered that it was no longer necessary to maintain

it as an independent legal entity; therefore it was taken over by MAPFRE MUTUALIDAD on 1

December 2003.


MAPFRE SEGUROS GERAIS (PORTUGAL)

The Portuguese insurance sector accumulated losses of _358 million between 2000 and 2002

amounted, and indications are that 2003 will also be a year of poor results. In spite of this,

MAPFRE SEGUROS GERAIS has had excellent results for the sixth consecutive year, in which

it exceeded its budget by a wide margin.

Premiums written were _66.6 million, a 24.4% increase over the previous year. The loss ratio

improved in comparison with 2002, to a figure of 54% of premiums written, while operating

expenses fell by 3.3%.

This substantial improvement in all the management indicators led to a pre-tax profit of _5.8

million, equal to 8.7% of premiums written and 54% larger than the figure for the previous

year.

The number of policies grew by 14% to a total of 182,193, of which: 68% corresponded to Motor

insurance; 26% to General Insurance; and the remaining 6% to Accidents at Work.

In July 2003 MAPFRE SEGUROS GERAIS was named Best Non-life Insurance Company in

Portugal by a panel composed of Deloitte & Touche, Dun & Bradstreet and the business

magazine EXAME, which highlighted its dynamism, profitability and financial stability.

A rigorous underwriting policy, a proactive attitude to risk prevention and to the development

of cross-border business agreements, cost control and prudent financial investments, have

been, together with the employees’ identification with the company’s mission and business

vision, the keys to effective management.

CESVIMAP

The Centre for Road Research and Safety (CESVIMAP) has achieved all the targets set for the

year, providing MAPFRE MUTUALIDAD with all planned services related to the cost of car

repairs. Its most relevant activities have been the training courses for adjusters and the

preparation of research reports on repair methods and times to be applied in objective

valuations of repairs of bodywork and paintwork.. In all 202 training courses were given to

2,056 persons.

The creation of CESVIMAP’s virtual classroom, as an alternative and a complement to a

physical training presence, should also be noted. The introductory "on line" course for vehicle

adjusters is the first of those that will make up the future training programme through this

medium. Special mention should also be made of the approval by the Generalitat de

Catalunya of five textbooks on the specialist subject of bodywork, at the intermediate level of

the professional series Maintenance of Self-propelled Vehicles.

This attitude towards extending knowledge by means of courses and publications originates

from research activities that can be enumerated as follows: 16 vehicle analyses, with their

respective repair manuals and repair costs reference scale; 40 technological tests of

equipment, tools and repair materials; 15 research projects on materials and vehicle repair

techniques; and 125 reports on reconstructions of traffic accidents.


In 2003 construction of the new building for the Treatment Centre for Withdrawn Vehicles

(VFU) was completed. In these new installations covering an area of more than 6,000m2,

furnished with the most advanced equipment, vehicles that are total write-offs will be cleaned

of contaminants, and any re-usable parts will be stripped and sold. It is expected to be

operational in the first quarter of 2004.

CESVIMAP had revenues of _13.9 million during the year.

CLUB MAPFRE DEL AUTOMÓVIL (The Automobile Club)

The purpose of this company is to provide policyholders with services and added exclusive

benefits in connection with vehicles, drivers and driving. During its first complete year of

operation it attracted 70,017 members and 8,590 participating establishments.

MULTICENTRO MAPFRE DEL AUTOMÓVIL (MAPFRE multi-brand car dealership)

The business of this company focuses on offering to policyholders and the general public

vehicles under favourable conditions and with a full guarantee.

The results of the first full year of the Pamplona multicentro were positive: 669 vehicles were

sold, procedures for selling insurance and financing were developed and, more importantly,

useful experience was gained in this new line of business, which will be beneficial to the next

multicentros in Alcalá de Henares, Valencia and Oviedo, for whose construction the initial

steps were taken in 2003.

MAPFRE RENTING

The business of this company focuses on offering to policyholders and the general public the

opportunity to purchase a vehicle by means of an operating lease system. In 2003 a total of

2,161 contracts were signed and 1,911 vehicles were delivered, which takes the fleet to 2,793

vehicles.

SUBSEQUENT EVENTS

After obtaining the mandatory approvals, on 1 January 2004 the takeover of MAPFRE

AGROPECUARIA by MAPFRE MUTUALIDAD was finalised.

OUTLOOK

In 2004, MAPFRE MUTUALIDAD intends to continue along the lines of its present strategy,

based on growing business volumes, gradual cost reduction and the improvement of services

for, and communications with mutualists.

The budgets approved by the Board of Directors for 2004 estimate net premiums written of

_2,065 million, a loss ratio equal to 70% of premiums written and an expense ratio of 20%.


Despite a difficult start due to international geopolitical uncertainty, 2003 ended positively for

the financial markets, breaking the negative trend started in 2000. The gradual recovery in

confidence by economic agents after the Iraq war, the gradual improvement in the global

economic environment, assisted by a background of historically low interest rates, and good

company profits were the principal factors which contributed to significant rises in the stock

markets. Other distinctive features of the year were the marked depreciation of the US Dollar,

high oil prices, accommodating monetary policies implemented by the central banks in order

LIFE OPERATING UNIT | pag. 185 ·194

GOVERNING BODIES

Board of Directors Executive Committee Compliance Committee

ChairmanMr. Sebastián Homet Duprá Chairman

1st Vice-ChairmanMrs. Mª Jesús Fernández Antón

2nd Vice-ChairmanMr. Pedro Unzueta Uzcanga

1st Vice-Chairman

MemberManaging Director

Mr. Víctor Bultó Millet

2nd Vice-Chairman Chairman

DirectorsMr. Rafael Fontoira SurisMr. Santiago Gayarre BermejoMr. Luis Hernando de LarramendiMr. Manuel Jesús Lagares CalvoMr. Alberto Manzano MartosMr. Juan Martín Sáinz de la MazaMrs. Francisca Martín TaberneroMr. Antonio Miguel-Romero de OlanoMr. Filomeno Mira CandelMr. Mariano Pérez ClaverMr. Francisco Ruiz RisueñoMr. Esteban Tejera MontalvoMr. Enrique de la Torre Martínez (1)Mr. Carlos Vela García-Noreña

Member

Member

Member

Member

MemberMember

Member

Member

Member

Secretary (not a director)Mrs. Mª Presentación Ataz Orihuela Secretary

Deputy Secretary to the Executive CommitteeMr. Luis María Polo Rodríguez

(1) Representing PARTICIPACIONES Y CARTERA DE INVERSIÓN S.L.

Head office of MAPFRE VIDA (Madrid)


to consolidate the economic recovery and greater stability in the emerging markets. Against

this economic and financial background:

› Life Insurance ended the year with fairly positive results. According to information supplied

by ICEA, managed savings increased by 6% over 2002, _108,700 million, a figure which

confirms the important position of Life Insurance among the principal medium- and long-

term savings and financial instruments.

› Investment Funds have evolved much better than in previous years, with significant

increases in both assets under management and the number of holders. After three

consecutive years of falls, 2003 can therefore be considered to be the year of recovery in

this sector, pointing out that every month of the year produced positive net subscriptions.

Investor preferences have leaned towards products with an increasingly large risk

component as the year progressed and as stock market prospects improved.

The assets managed by the Collective Investment Institutions (companies and funds

investing in securities and real estate) rose to _229,404 million by the end of the year with

more than 8.3 million holders. Funds managed in Securities Investment Funds stood at

_198,056 million, an increase of nearly 16%, while the total number of holders increased by

8.4% to 7.7 million. Net subscriptions amounted to _20,901 million, predominantly in equity

guaranteed funds (_12,434 million, which represents nearly 50% of the total), followed by

short-term fixed income funds (_5,980 million) and money market funds (_3,395 million).

Other funds, with a larger exposure to equities, such as global funds, also experienced a

substantial positive influx (_3,547 million) and, although their share of total new

subscriptions was comparatively smaller, it is interesting to note that pure equity funds

also had positive inflows this year. The least good development was in balanced funds, both

fixed income and equity.

› Growth in Pension Funds has continued to be most satisfactory: the volume of assets has

reached _55,552 million, 15% higher than in 2002, with an estimated figure of 6 million

participants. Net contributions for 2003 amounted to _4,800 million, of which _4,000

million corresponded to individual plans, whose managed assets have increased by 18.9%

over the last twelve months to _31,257 million; and _750 million to employers’ plans, whose

assets have increased by 10.2% to _23,457 million.

Against this market background, MAPFRE VIDA and its subsidiaries MAPFRE INVERSIÓN and

MAPFRE VIDA PENSIONES have together ended the year on a very positive note overall.


KEY FIGURES

Balance Sheet

› The total volume of funds under management which include technical reserves and assets

managed in investment and pension funds, increased by 23.6% to _15,452.1 million.

› Total assets reached _11,967.2 million, a 20.9% increase.

› The investment portfolio had a book value of _11,678.8 million, a 21.4% increase over fiscal

year 2002.

› The coverage of technical reserves showed a surplus of _901 million and the solvency

margin was equal to 176.1% of the minimum legal requirement.


› Consolidated revenues reached of _2,435.6 million, a 14.9% decreased with respect to the

previous year. Of that figure, _1,651.4 million corresponded to insurance premiums written

which, excluding transactions related with the externalisation of corporate pension

commitments, were equal to a budgetary coverage of 106.2% and decreased by 13.5%.

› Internal and external management expenses were equal to 0.8% of total funds under

management, compared with 0.9% last year, excluding in both years transactions related

with the externalisation of corporate pension commitments.

› The consolidated profit before tax and minority shareholders was _123.1 million, a 19.9%

increase with respect to the previous year. Net profit after tax and minority shareholders,

reached _86 million, 13.3% higher than in 2002.

MAIN ACTIVITIES

› The volume of savings managed by the Agents Channel, represented by technical reserves,

stood at _5,769 million at the end of the year, a 7.3% increase with respect to 2002.

Premiums written in the period reached _801 million, equalling last year’s figure, not

counting transactions related with the externalisation of corporate pension commitments.

These figures reflect a particularly positive development of sales in Personal Annuities,

which grew by 12%, and Retirement Savings Insurance, where new business has practically

tripled compared with 2002. Personal Term Life and Accident Insurance, which last year

experienced growth rates of more than 60%, has again demonstrated its potential with

increases of 14%.

It is worth mentioned the expansion of the offering of group products within the Agents

Channel, which, despite the expiration of the deadline for the externalisation of corporate

pension commitments, has enabled sales of regular premiums group products to achieve

a budgetary coverage of 226%.


› The volume of savings managed in products sold through the CAJA MADRID Channel,

represented by its technical reserves, was _4,208 million at 31 December 2003, a 10.5%

increase with respect to December 2002. Premiums written reached _822 million, with

budgetary coverage of 117%.

These results reflected a strong volume of new business in personal savings insurance,

particularly in the case of the ‘Renta Inversión’ insurance product, which continued to be

widely demanded due to its unique nature as a long-term product with a competitive

guaranteed rate of return, additional risk benefits and a favourable tax treatment.

As in 2002, sales of savings and retirement insurance products with guaranteed rates of

return have compensated in 2003 for the drop in sales of unit-linked multi-fund insurance

products caused by the crisis in equity markets and by the removal of the tax charge on

transfers between investment funds.

Personal term Life insurance has developed very positively, with total premiums of _33

million, a 34% increase over 2002. These figures include the premiums of the ‘Nexo’

accidental death insurance, which has achieved a figure of 72,739 policyholders, and the

‘Vida-Renta’ insurance product, with 17,795 policies written in the year. Both products form

a sound foundation for the development of non-loan related business.




Investments 10,909.4 8,734.9 7,222.3 Net result 86.0 75.9 69.9

Investments on account of Life policyholders assuming investment risk 446.1 574.7 739.4

Technical reserves 10,679.8 8,611.4 7,083.1Participation by reinsurance in technical reserves 8.1 10.9 17.7 Technical reserves relating to Life

insurance when investment risk is assumed by policyholders 446.1 574.7 739.4

Credits 227.6 235.9 225.6 Deposits received on ceded reinsurance 3.5 10.5 13.1

Other assets 354.4 337.6 218.8 Other liabilities 433.9 331.8 247.7




› From 1 October 2003, MAPFRE VIDA has effective control of MUSINI VIDA, the acquisition

of which strengthens its presence in corporate insurance in which the said company

specialises. Specifically, in respect of business for the last quarter of the year, it

contributed revenues from direct insurance premiums written of _29 million, as well as a

volume of mathematical reserves of _1,148.6 million at 31 December 2003.

› MAPFRE INVERSIÓN closed fiscal year 2003 with a volume of funds under management of

_2,341 million and a total of 183,491 holders, an increase of 18.9%, better than the sector as

a whole (15.9%). Although all funds experienced growth in their respective assets under

management, the increases, primarily due to new contributions, in fixed income funds

(25.6%) and guaranteed funds (21.8%) stand out. Balanced funds and international equity

funds grew by 14.9% and 7.8%, respectively.

PROFIT AND LOSS

Item 2003 2002 2001

DIRECT INSURANCE AND ACCEPTED REINSURANCEPremiums earned 1,641.4 2,223.3 2,600.1Claims (1,218.1) (1,046.9) (1,094.0)Variation in other technical reserves (724.2) (1,354.7) (1,670.3)Other technical expenses (135.1) (121.4) (105.0)


CEDED AND RETROCEDED REINSURANCE Premiums and variations in the unearned premium reserves (32.9) (41.0) (30.9)Claims paid and variation in the outstanding claims reserve 18.0 16.0 23.1 Variation in other technical reserves, commissions and participations 14.4 19.1 6.3





NON-TECHNICAL ACCOUNTNet investment income 26.6 20.2 21.3Amortisation of goodwill (0.6) (0.4) (0.4)Net other non-technical income/(expenses) 0.3 0.6 0.9Net extraordinary income/(loss) 1.0 0.0 (3.9)





INVESTMENTS


Real estate investments 213.5 408.8 217.2 386.1 217.6 364.8Fixed income securities 9,429.4 10,009.0 7,613.7 8,203.2 6,033.0 6,328.8Equities 230.8 264.4 223.3 220.9 208.3 242.4Investment fund holdings 851.7 906.7 986.4 995.1 1,161.4 1,254.3Cash 126.9 126.9 144.7 144.7 66.8 66.8Other investments 826.5 835.0 434.4 473.3 458.3 465.1

TOTAL INVESTMENTS 11,678.8 12,550.8 9,619.7 10,423.3 8,145.4 8,722.2


2000 4000 6000 8000 10000 12000year · 2001 |

year · 2002 |

year · 2003 |

217.6

6,033

1,894.8

8,145.4

217.2

7,613.7

1,788.8

9,619.7

213.5

9,429.4

2,035.9

11,678.8



year · 2001 |

year · 2002 |

year · 2003 |

820.1

325.8

803.1

402.7

869.7

493.9


Solvency Margin


Sales efforts concentrated on the renewal of the guarantees associated with the following

funds: FONDMAPFRE INTERNACIONAL GIII FIM and FONDMAPFRE BOLSA GX FIM

(formerly known as FONDMAPFRE EUROPA GARANTIZADO FIM) and the launch of the first

guarantee offered to investors in FONDMAPFRE BOLSA GIX FIM (formerly FONDMAPFRE

INTERNACIONAL FIM). The first and last are linked to the IBEX 35, S&P 500, SMI and FTSE

100 equity indices; FONDMAPFRE BOLSA GIX FIM’s guarantee is linked to changes in the

DJ Eurostoxx 50, S&P 500, SMI and FTSE 100 indices and to the Iboxx Euro Sovereigns Total

Return Index 1-3.

› Funds managed by MAPFRE VIDA PENSIONES grew 16% to _1,557 million.

Funds in the defined contribution system reached a volume of _853 million, of which _770

million corresponded to the individuals’ pensions system and the remaining _83 million to

the employers’ pensions system. The assets of the defined benefits plan managed by the

company amounted to _704 million.

There were 125,365 participants, of which 109,956 in the individuals’ pensions system and

15,409 in the employers’ pensions system.

year · 2001 |

year · 2002 |

year · 2003 |

8,441.8

7,617.9

9,823.9

8,994.2

11,784

10,883



year · 2001 |

year · 2002 |

year · 2003 |

11,591.5

12,871.8

15,427.8

Funds under Management

Funds under Management


BREAKDOWN AND EVOLUTION OF DIRECT INSURANCE AND ACCEPTED REINSURANCE PREMIUMS

Branches PREMIUMS % VARIATION2003 2002 2001 03/02 02/01 01/00

SAVINGSIndividual 1,249.9 1,619.3 1,484.6 (23.0) 9.0 18.0Single premiums 873.4 1,232.6 1,048.2 (29.0) 18.0 26.0Regular premiums 376.5 386.7 436.4 (3.0) (11.0) 3.0

Group 252.5 165.2 126.6 53.0 30.0 8.0Single premiums 217.0 135.2 105.4 61.0 28.0 7.0Regular premiums 35.5 30.0 21.2 18.0 42.0 13.0

Total savings 1,502.4 1,784.5 1,611.2 (16.0) 11.0 17.0

RISKIndividual 64.8 50.9 49.7 27.0 2.0 (38.0)Group 84.2 73.8 83.7 14.0 (12.0) 54.0

Total risk 149.0 124.7 133.4 19.0 (7.0) (1.0)

EXTERNALISATIONS 0.0 320.4 860.8 - (63.0) (3.0)

TOTAL 1,651.4 2,229.6 2,605.4 (26.0) (14.0) 9.0


OTHER SIGNIFICANT FIGURES


Management expenses 125.6 112.6 98.3 11.5 14.5 10.7Claims 1,200.0 1,030.9 1,070.9 16.4 -3.7 155.5Net investment income 544.3 457.7 393.0 18.9 16.5 72.2Result before tax and minority interests 123.1 102.7 95.9 19.9 7.1 11.7Result after tax and minority interests 86.0 75.9 69.9 13.4 8.6 9.4


STAFF

Categories 2003 2002 2001

Managers 263 221 199Clerical staff 464 452 334Commercial staff 507 635 767Others 100 110 132

TOTAL 1,334 1,418 1,432


OUTLOOK

In the absence of any extraordinary events, the outlook for financial markets in 2004 is

positive. From the macroeconomic point of view, expectations point to a consolidation of the

positive trend on which 2003 ended, with forecasts of faster growth across all geographic

areas. It is expected that company results will continue to evolve favourably and that interest

rates, despite having reached the end of their reduction cycle, will remain at historically low

levels. Although moments of instability associated with various factors, such as changes in

the exchange rate of the US Dollar and oil prices, cannot be excluded entirely, the reduction

in the risk premium compared with last year and the improvement in fundamentals may allow

the equity markets to maintain the trend of gradual recovery in their indices. Against this

economic background:

› Insurance is likely to show a clear growth trend as the year goes on. In this regard, sales

of single premium products should increase significantly as and when medium- and long-

term interest rates rise.

The strong development prospects for the Assured Pension Plans (PPAs) should be finally

confirmed in 2004, once their initial launch stage is overcome and certain regulatory issues

are clarified. That should lead distribution networks to offer a wider range of such products

and should raise the level of public interest in a new, profitable instrument to complement

State pension benefits. We can also expect life and term annuities and term Life insurance

to continue their clear growth trend observed over the last few years.

In 2004, the sales strategy of the Agents Channel will continue to focus on increasing its

productivity levels. That will be achieved by developing and consolidating the new territorial

structural model adopted by SISTEMA MAPFRE, particularly in five basic areas: achieving

the new business targets set for the advisors; increasing the number of agents and

delegates who qualify as ‘large producers’; increasing training efforts at various levels in

the organisation; strengthening sales campaigns; and developing direct distribution by

sales staff. To sum up, the efficiency indices of the distribution network will improve

through a greater customer focus directed at offering a comprehensive, high quality

service.

The targets set for the CAJA MADRID Channel for 2004 are centred on consolidating the

present portfolio of savings and protection products. In the case of the former, the focus

will be on increasing the degree of diversification by type of product and on adapting

regular premium products to current market terms. In the case of protection products,

efforts will focus on promoting the growth of those types that can be sold without any link

to the typical banking products of CAJA MADRID. Technical sales support provided to the

Bank’s distribution network will be enhanced also with respect to Group insurance

products. Finally, special attention will be given to improving the quality of service that

offices and customers receive, for which purpose work on reviewing and upgrading the

operating systems will be increased.


› Prospects for the Investment Funds sector are positive: in the expected environment, the

maintenance of the present tax treatment and the improvement seen in returns are factors

according to which allow it is reasonable to assume that individual will continue

channelling their savings towards investment funds. Also, the new Investment Funds Law

35/2003, whose corresponding regulations are pending development, expands the

investment opportunities for the collective investment institutions, while consolidating

their tax regime.

As far as products are concerned, money market funds could continue capturing investors’

interest as a vehicle for placing liquidity until the investment decision is taken. As risk

aversion diminishes, funds with a larger equity component could again be the most

demanded, to the detriment of fixed income products, and guaranteed funds can be

expected to moderate their growth rate.

› The tax measures approved over the last few years, the most significant of which being the

raising of the limits to the maximum contribution to Pension Plans and the separation of

the contribution limits between the individuals’ and the employers’ pensions systems, will

allow the sector to continue to show positive growth rates in a country such as Spain, which

still has low levels long-term retirement savings.


GENERAL INSURANCE OPERATING UNIT* | pag. 195 ·204

GOVERNING BODIES


Chairman Mr. Filomeno Mira Candel

Vice-ChairmanMr. Matías Salvá Bennasar

Managing DirectorMr. Ángel Alonso Batres

2nd Vice-Chairman

1st Vice-ChairmanDirector and General Manager

Mr. Ignacio Baeza Gómez

Chairman

Chairman

DirectorsMr. José Barbosa HernándezMr. Rafael Beca BorregoMr. Íñigo Castellano BarónMr. Ramón Ferraz RicarteMrs. Carmen Hernando de LarramendiMrs. Carmen Juan JosaMr. Carlos Llaneza AllerMr. Tomás Pérez RuizMr. Domingo Sugranyes BickelMr. Ildefonso Sánchez BarcojMr. Esteban Tejera MontalvoMr. Francisco Vallejo Vallejo

Member

Member

Member

MemberMember

Member

Secretary (not a director) Mr. Rafael Estévez Comas Secretary

According to initial ICEA estimates, in 2003 the total volume of premiums written by the insurance sector

decrease by 14% to _41,500 million, reflecting the conclusion of the process of externalisation of corporate

pension commitments in 2002. The Non-life branch grew 9.4% to _23,832 million and personal multi-peril

insurance by 13% to _2,750 million.

Head office of MAPFRE SEGUROS GENERALES (Madrid)

* This Operating Unit is formed by MAPFRE SEGUROS GENERALES, its insurance subsidiaries MAPFREGUANARTEME, MAPFRE FINISTERRE y ORIENTE, and various research, technical management andconsulting companies. The data, figures and financial statements given have been obtained bysubtracting the contribution of MAPFRE INDUSTRIAL, which is part of the Commercial Insurance Unitfrom an operating and management perspective.


Against this market background, the General Insurance Operating Unit of MAPFRE achieved

results in 2003 which can be described as very positive, in a year in which the integration of

MAPFRE FINISTERRE required an additional management effort from all departments of

MAPFRE SEGUROS GENERALES, the parent company of the Unit.

The growth in the Unit’s premiums, 14.7% for all Non-life branches, was higher than that

announced by ICEA for the market as a whole. Home Combined Insurance grew 17.6%,

Condominiums Combined Insurance 18.8%, Retailers Insurance 22.5%, Burial Insurance

5.4%, Accident Insurance 18.4%, Third-party Liability Insurance 16.4%, Other Damages to

Property Insurance 21.5%, and Motor Insurance 15%.

The technical results by business line can be considered as very satisfactory, albeit there was

a slight technical loss result in Burial Insurance as a result of adjustment of reserves to the

maximum technical interest rate set for 2003. Taking into account investment income, the

result for the technical account of the Burial Insurance branch was _1.4 million.

As a whole, the Unit earned a profit before tax and goodwill amortisation of _84.2 million,

equal to 9.4% of premiums, a 9.9% increase with respect to the previous year.

KEY FIGURES

Balance Sheet

› Consolidated shareholders’ equity amounted to _219.8 million, a 10.5% decrease with

respect to 2002, due to the acquisition and amortisation of the shares of minority

shareholders by MAPFRE GUANARTEME.

› Net investments made in 2003 amounted to _50 million. Taking these investments into

account, real estate assets stood at _139.9 million, financial investments at _433.3 million,

cash at _144.5 million, other investments at _51.5 million, and investments in Group

companies (MAPFRE INDUSTRIAL) at _32 million. All this gives a net total investment of

_800.8 million compared with _744.5 million last year.

› Technical reserves amounted to _834.6 million, a 15.7% increase with respect to 2002.

› The consolidated coverage of technical reserves showed a surplus of _108.4 million, and

the consolidated solvency margin was equal to 1.8 times the minimum legal requirement.


› Consolidated revenues amounted to _966.8 million, of which _895.9 million corresponded

to direct insurance premiums written, a 13.9% increase with respect to the previous year.


› The loss ratio, calculated as a percentage of premiums earned, was 58.9%, 1.9 points

higher than the previous year, profit sharing and returns, as well as the variations in Burial

and Life Insurance reserves, in the equalisation reserve, and in the provisions for

payments on claim settlement agreements being included as claims. In the General

Insurance branch, this ratio stood at 56.5%; in Motor Insurance at 76.7%; and Life

Insurance 4.5%. All branches of business recorded a favourable claims experience, which

led to satisfactory technical results.

› Management expenses were equal to 34.7% of premiums written, in line with the previous

year, and were allocated as follows: claims handling expenses, 4.8%; direct insurance

acquisition costs, 22.1%; administrative expenses, 3.6%; investment expenses 0.3%; 3.1%,

other technical expenses; and non-technical expenses, 0.8%.

› Ordinary investment income amounted to _34 million, equal to 3.8% of premiums written,

compared with 3.7% last year. The company also recorded net profit on investments of _1.5

million, essentially resulting from the release of provisions for depreciation, especially of

investment fund holdings (_6.9 million) and a share of the profits of equity-accounted

companies (_1.3 million), less amortisation of consolidated goodwill (_5.2 million) and

extraordinary losses from realisations (_1.5 million).



Shareholders, uncalled capital - - 60.1 Capital and reserves 173.1 193.8 184.9

Intangible assets and start-up expenses 118.2 125.8 132.1 Net result 46.7 40.3 38.1

Investments 624.4 566.1 464.1 External shareholders - 11.5 16.7

Investments in Group companies 32.0 30.0 24.0Technical reserves 834.6 721.0 642.9

Participation by reinsurance in technical reserves 80.2 76.5 79.4 Deposits received on

ceded reinsurance 32.4 30.2 27.9

Credits 196.0 165.2 147.3 Debts 168.0 163.4 194.7





› The consolidated profit before tax and minority shareholders reached _76.5 million

compared with _68.6 million the previous year. The net profit after tax and minority

interests was _46.7 million.

MAIN ACTIVITIES

› Total policyholders exceeded 3,400,000, representing over 5,900,000 people, 1,868,000

homes, 1,129,000 families insured in the Burial Insurance branch, 171,650 businesses and

over 85,000 condominiums.

› About 1,150,000 claims were handled, and the Integrated Service Centre (CIS) dealt with

5,700,000 calls, figures which underscore the efforts devoted to customer service. The

opening and consolidation of the new Teruel platform to complement those in Madrid, Las

Palmas and Valencia, within the framework of a policy of setting up micro centres in areas

which offer high productivity, lower costs, disaster recovery solutions, and improve the

local image of MAPFRE, is worthy of mention.


Item 2003 2002 2001

DIRECT INSURANCE AND ACCEPTED REINSURANCEPremiums earned 843.1 750.7 615.8Claims (508.3) (435.3) (363.2)Other technical expenses (261.2) (236.5) (198.7)


CEDED AND RETROCEDED REINSURANCE Premiums and variations in the unearned premium reserves (105.8) (96.5) (86.0)Claims paid and variation in the outstanding claims reserves 55.0 55.2 49.4Variation in other technical reserves, commissions and participations 37.2 27.9 24.4





NON-TECHNICAL ACCOUNTNet investment income 0.9 (1.1) (0.1)Amortisation of goodwill (5.2) (5.2) (3.9)Net other non-technical income/(expenses) 5.8 4.4 9.1Net extraordinary income/(loss) 2.4 0.1 0.2

Result of the non-technical account 3.9 (1.8) 5.3




INVESTMENTS


Real estate investments 139.9 193.5 129.4 182.7 113.5 155.9Fixed income securities 355.5 384.1 327.2 354.6 247.3 260.5Equities 23.5 28.0 23.2 24.7 24.4 25.9Investment fund holdings 54.3 56.1 45.7 39.8 34.9 35.4Cash 144.5 144.5 148.4 148.4 158.8 158.8Other investments 51.5 53.0 40.6 49.6 43.8 46.0

TOTAL INVESTMENTS 768.8 859.1 714.5 799.8 622.7 682.5


2000 4000 6000 8000 10000 12000year · 2001 |

year · 2002 |

year · 2003 |

113.5

247.3

261.9

622.7

129.4

327.2

257.9

714.5

139.9

355.5

273.4

768.8



year · 2001 |

year · 2002 |

year · 2003 |

686

567.4

808.4

627

837

728.6



year · 2001 |

year · 2002 |

year · 2003 |

210.4

100.6

256.1

112.1

241.4

133


Solvency Margin


The CIS has continued working with the centralised issuance system (CEDISE), which

complements the GESCOM Platform. The operations of the Agents Service Centre, the

Portfolio Call Centre, which handles any unusual request from customers in record time, and

the support centre for the CAJA MADRID Channel have been optimised. Support was provided

in the definition and set-up of the SDS platform in CAJA MADRID.

In 2003, the CIS secured a quality certification in compliance with the UNE-EN ISO 9001:2000

standard, which will enable it to use the AENOR quality seal.

› Once again, the increasing importance of the CAJA MADRID channel as a source of new

individuals’ business originating from its customer base deserves to be mentioned. The

portfolio obtained from this channel has reached a total of 459,000 policies.

› The activities of the regional departments of all sub-centres has been redirected in order

to increase their attention to the various administrative, technical and management

factors which influence business results. For this purpose, rankings have been drawn up

to monitor in detail enable the measures adopted and their effectiveness, thus

encouraging competition among regional offices.



LIFE 5.4 10.4 11.2 -48.0 -7.1 -

NON-LIFEPersonal Accidents 100.2 84.6 68.6 18.44 23.32 37.75Assistance 8.0 6.0 4.2 33.33 42.86 -Health assistance 0.0 0.2 0.1 -100.00 100.00 -Motor other risks 31.9 27.4 23.1 16.42 18.61 27.62Motor civil liability 99.8 87.2 75.4 14.45 15.65 24.42Burial 159.5 151.3 111.6 5.42 35.57 576.36Sickness 3.5 3.7 2.8 -5.41 32.14 -Fire 1.4 1.5 1.2 -6.67 25.00 71.43Commercial combined 86.1 70.3 49.5 22.48 42.02 6.68Condominiums combined 86.5 72.8 60.6 18.82 20.13 24.44Home combined 276.9 235.5 193.8 17.58 21.52 37.54Industrial combined 7.5 10.4 34.5 -27.88 -69.86 15.00Other damages to property 11.3 9.3 5.9 21.51 57.63 13.46Civil liability 14.2 12.2 9.8 16.39 24.49 78.18Marine hull 2.2 2.3 1.4 -4.35 64.29 -Marine goods 1.5 1.5 1.3 - 15.38 18.18

TOTAL NON-LIFE 890.5 776.2 643.8 14.7 20.57 51.52

TOTAL 895.9 786.6 655.0 13.9 20.09 54.16



› The restructuring of the Commercial Department begun at the end of last year has

advanced through the creation of the Marketing and Customer Service departments. Among

their activities, the improvement of sales productivity control and the co-operation with the

Customer Database Department, for launching sales and tele-marketing campaigns and

carrying out customer segmentation analyses, are worthy of mention. A new operating

arrangement has been established with CAJA MADRID, which leads to expect a significant

increase in new insurance business production through the bank channel.

Relations with brokers have developed significantly. A dedicated department was set up in

2003 to change and improve the operating arrangements with this group of producers in

order to offer them a better service and simplify their work.

› The acquisition of all shares in subsidiary MAPFRE GUANARTEME was completed in the

fiscal year. Therefore, MAPFRE SEGUROS GENERALES has become the owner of 100% of

the share capital of that company.

› The Claims Department, which was renamed as the Benefits Department, has streamlined

with excellent results the independent specialised structure created at the end of last year

through the integration of the various departments in charge of managing services and

payments.

The integration of MAPFRE FINISTERRE required a number of changes in order to take

over the handling of Burial Insurance claims, particularly creating and developing the role

of the Assistance Managers. As far as the network of collaborators is concerned, several

initiatives have been undertaken to promote their loyalty, as well as to strengthen controls

on the quality and delay in the performance of repairs. The Legal Defence Department has

also been reorganised and has taken on the correspondence of French mutual MACIF.

To make all these projects possible, a 3,700 sqm building has been leased in Paseo de

Recoletos 8 (Madrid), and progress has been made with the necessary technological

improvements, beginning the exploitation of the document management systems and of

the statistical information from the data warehouse, and commencing the second phase of

project SIGMA.

› In 2003, the Technical Department developed a specific plan for each sub-centre based on

new information about guarantees, types of insurance cover, premiums, offices and

agents, broken down by type of risk, average premium, claims frequency and average cost.

New valuation criteria for insured assets have been implemented in the issuance tools

within a graphic environment (GESCOM), and new, improved management and analysis

tools have been introduced, outstanding among which is VISUAL GIS, which enables to

visualise the location of the portfolio on a map.

Several new products have been developed: ‘Hipoteca Protegida’ (Protected Mortgage) and

‘Hogar Patrimonial’ (Household Assets) in Property Insurance, and ‘Renta 80’ in Accident

Insurance.

› The Legal Services Department has made a significant contribution by aligning criteria

with those set by SISTEMA MAPFRE, actually implementing them all the legal aspects of


the Unit (company, contractual, litigation, etc.), and, in particular, adapting them to the

operations of MAPFRE FINISTERRE. Among the many activities it carried out, it is worth

mentioning the establishment of a new system to reply in writing to queries from the

various departments of the Unit, thus improving quality, rigour and response times, as well

as the increase in the volume of legal advice and support provided to the different

departments of the Unit in the various aspects of the business.

› The Economic, Financial and Actuarial Control Department has been working actively,

particularly with respect to the analysis of the portfolios of MAPFRE FINISTERRE, the

preparation of the 2003-2007 business plan for the Life business, and an analysis of the

implementation of the IFRS and of the Solvency II requirements.

› Among the activities carried out by the Deputy General Management Area of

Administration and Finance, it is worth mentioning: the significant progress made in

simplifying and optimising operational management, automating a large number of

processes, thereby reducing execution times and increasing productivity; and the

alignment of the management procedures of MAPFRE FINISTERRE with those of the Unit,

which will require further effort in 2004.

The consolidation of the structure of the investment portfolios, the unification of the

accounting records of financial transactions, and the direct handling of the administration

of real estate investments (GLOBALIZA) have been tackled. The development of safety and

control measures for the implementation of the rules laid down in the Personal Data

Protection Law (‘Ley Orgánica de Protección de Datos Personales’) is also worthy of

mention.

› In the areas attached to the Deputy General Management Area of Corporate Development,

it is worth mentioning: the gradually increasing autonomy of the Human Resources and

Systems Departments due to the decentralisation of the corresponding functional units of

SISTEMA MAPFRE; the progress made with Internet applications, of which the most

outstanding are the implementation of insurance quote calculators for practically all the

products of the Unit and the publication of sales information for the new Universal Burial

(‘Seguro Universal de Decesos’) and the Platinum Household (‘Hogar Platino’) insurance

products. The Internet Branch for individuals has been opened and provides extensive

services relating to its products; a large number of applications have been included on the

desktop of the Internal Portal and the employees of the Unit have been given access to a

new version of the ‘Infocol’ Portal.

The expansion and improvement work carried out on the customer databases is

particularly outstanding, with innovative operational developments, such as the important

Customer Value (‘Valor de Cliente’) project, which makes it possible to classify customers

and to measure their profitability in order to direct sales and portfolio retention initiatives.

In the Information Technology Department, particular attention has been given to adapting

the IT processes of MAPFRE FINISTERRE to those of the Unit. The Projects Office has been

set up to ensure strict monitoring of the Department’s work assignments, as well as an

efficient budgetary control. The Information Centre, which provides solutions for the data

availability requirements of the various sections of the Unit by using state-of-the-art tools

to extract, process, prepare and control information, has become fully operational.


Progress has been made towards the integration of external distribution channels and

Internet developments have been initiated which will allow easier access and improved

services for brokers and agents. Finally, the Technology Department has been adapted to

the new architecture of SISTEMA MAPFRE.

The Department has also contributed to the preparation of the White Book of the Personal

Insurance Unit and to the strategic planning for each sub-centre by preparing a ‘white

book’ for each of them (currently underway), which sets out their undertakings and

objectives for the 2004 – 2006 period. On a separate note, the foundations have been laid

for the commencement of operations in the Principality of Andorra, which should take

place in early 2004.

The set-up of the Human Resources department and the consolidation of its team has

advanced further: the decentralisation of payroll administration has been completed;

progress has been made in the implementation of the skills management system; and the

valuation processes in several sub-centres have been finalised. A training co-ordination

plan for the Unit has also been designed and its new career plans and the framework for

its remuneration policies have been implemented.

› The Commercial Insurance Unit was set up within MAPFRE in January 2003. It brings

together the businesses of MAPFRE INDUSTRIAL, MAPFRE CAUCIÓN Y CRÉDITO, as well

as the recently acquired MUSINI. As a result of this, MAPFRE INDUSTRIAL, which in 2003

has already been operating in functional integration with the Commercial Insurance Unit,

will cease to be part of the corporate and legal structure of the General Insurance

Operating Unit over the course of 2004.

OUTLOOK

The objectives set for 2004 represent a continuation of the activities carried out during 2003.

Nevertheless, the following deserve to be highlighted:

› To adapt the sales structures to the new territorial structure framework adopted by

SISTEMA MAPFRE.

› To finalise the transfer of the relevant departments and structures to the new Commercial

Insurance Unit.



Management expenses 310.7 268.9 216.9 15.54 23.97 62.35Claims 496.8 428.1 360.7 16.05 18.69 48.56Net investment income 35.5 19.6 24.5 81.12 -20.00 14.49Result before tax and minority interests 76.5 68.6 61.3 11.52 11.91 15.66Result after tax and minority interests 46.7 40.3 38.1 15.88 5.77 17.23



› To conclude the process of integrating MAPFRE FINISTERRE and adapt its management

procedures to those of the Unit.

› To promote business development through the various channels: the Agents network, into

which the organisation of MAPFRE FINISTERRE is being satisfactorily incorporated, the

Bank channel, brokers and the Internet which, starting with the provision of services, is set

to become a new distribution channel in the short term.

› To ensure on a continuous basis the exploitation of the opportunities provided by new

technologies to improve the effectiveness and efficiency of the sales and customers

retention activities, of the services offered to customers, and of the management of the

company in general.

› To develop new business lines related to the traditional insurance activities as a means of

widening the customer portfolio.

› To maintain the initiatives directed at modifying procedures and increasing the efficiency

of the whole Unit, with the overriding objective of reducing management expenses in order

to strengthen its competitive position.

› To establish as a permanent priority the increase of the rates of retention of customers

and policies, by reducing cancellations, processing and analysing the portfolio to detect

possible improvements in the covers taken out and reviewing critically the quality of the

services provided to customers.

› To streamline the structure created in the revised Benefits Department, including the

development of new services for policyholders and customers.

› To seek to consolidate the major qualitative leap in the activities of the CIS, in order to

improve its high level of efficiency in providing services to policyholders, to the distribution

network and specialised areas of the Company and to open a new micro call centre if

customer care needs so require.

STAFF

Categories 2003 2002 2001

Managers 424 272 194Clerical staff 1,091 992 782Commercial staff 187 254 303Others 182 184 256

TOTAL 1,884 1,702 1,535

INFORMATION ON CLAIMS MANAGEMENT

Item 2003 2002 2001

Number of claims processed 1,363,730 1.268.734 1,158,824Number of claims settled 1,152,973 1.047.043 940,867Settlement rate for claims reported in the year 83.6 81,4 73.3

Settlement rate for all claims processed 84.5 82.5 81.2

Ratio of claims to net premiums written 55.4 54.4 55.1

Number of policies (thousand) 4,017 3,756 3,675


COMMERCIAL INSURANCE UNIT | pag. 205 ·213

ChairmanMr. Filomeno Mira Candel

1st Vice-Chairman Mr. Ángel Alonso Batres

2nd Vice-ChairmanMr. Alfonso Rebuelta Badías

DirectorsMr. Ricardo Blanco MartínezMr. Pedro José de Macedo Coutinho de AlmeidaMr. Ignacio Miguel-Romero de OlanoMr. Luis Antonio Santamaría CampuzanoMr. Esteban Tejera Montalvo

Secretary (not a director) Mr. Francisco Javier Bergamín Serrano

General ManagerMr. José Luis Calvo López

Board of DirectorsMAPFRE INDUSTRIAL


Chairman

MAPFRE CAUCIÓN Y CRÉDITO

Mr. Filomeno Mira Candel Chairman

2nd Vice-ChairmanMr. Alfonso Rebuelta Badías 2nd Vice-Chairman

Managing Director - General ManagerMr. Luis Antonio Santamaría Campuzano Member

1st Vice-ChairmanMr. Ángel Alonso Batres 1st Vice-Chairman

Chairman

DirectorsMr. Francisco Arenas RosMr. Ricardo Blanco MartínezMr. José Ramón Buzón FerreroMr. José Font i Fatjó dels XiprersMr. José María García AlonsoMr. Pedro José de Macedo Coutinho de AlmeidaMr. Juan Martín QueraltMr. Ignacio Miguel-Romero de OlanoMr. Eduardo Rodríguez PiedrabuenaMr. Fernando Sobrini AburtoMr. Esteban Tejera MontalvoMr. Antonio Tomás Sancho

Member

Member

Member

Member

MemberMember

Secretary (not a director) Mr. Francisco Javier Bergamín Serrano

Secretary


Mr. Filomeno Mira Candel

Vice-Chairman Mr. Alberto Manzano Martos

DirectorsMr. Ignacio Baeza GómezMr. Jose M. González PorroMr. Sebastián Homet DupráMrs. Amparo Larrondo ClimentMr. Esteban Tejera Montalvo

Secretary (not a director) Mr. Ángel L. Dávila Bermejo

Managing DirectorMr. Ángel Alonso Batres

MUSINI

GOVERNING BODIES

Head office of MUSINI (Madrid)


SUMMARY BALANCE SHEET*


Investments 1,133.2 286.9 245.6 Capital and Reserves 235.7 43.3 46.8

Group investments 21.0 - - Net profit 26.1 16.4 11.4

Participation by reinsurance in technical reserves 812.5 242.4 165.6 External shareholders 5.8 11.6 12.6

Technical reserves 1,765.0 552.1 417.2Credits 276.8 140.3 85.7

Deposits received on ceded reinsurance 96.0 57.2 35.9


TOTAL ASSETS 2,431.9 811.2 597.1 TOTAL LIABILITIES 2,431.9 811.2 597.1


PROFIT AND LOSS *

Item 2003 2002 2001






Other technical results 10.8 4.9 8.1Result of the life and non-life technical accounts 33.1 19.9 14.9

NON-TECHNICAL ACCOUNTNet investment income 1.6 0.9 1.1Net other non-technical income/(expenses) 5.3 4.9 2.6

Result of the non-technical account 6.9 5.8 3.7Result before tax and minority interests 40.0 25.7 18.6


* Aggregated figures for MAPFRE INDUSTRIAL, MAPFRE CAUCIÓN Y CRÉDITO and MUSINI (4th quarter 2003)


According to initial ICEA estimates, in all the Non-life branches of the Spanish insurance

sector, premiums were written to the value of _23,800 million, a 9% increase with respect to

2002.

Although there are no separate figures for the corporate and institutional risks segment, it

can be derived from available information that the recovery in prices and underwriting

conditions begun in 2002 has continued, although with differences among the various lines of

business, leading to significant increases in the volume of premiums written and a

substantial improvement in technical margins.

Conversely, the volume of Life insurance business arising from corporates and institutions

has decreased sharply, affecting significantly the total figures for this line of business, as a

result of the conclusion of the process of externalisation of corporate pension commitments,

which generated extraordinarily large volumes of premiums in 2001 and 2002.

In the Credit and Surety branches, premium rates have remained at similar levels to last year.

In the Surety branch, downward pressure from the competition was counterbalanced by

upward pressure from the reinsurance sector. Despite stable rates, business in both

branches is estimated to have increased by 13% compared with last year, which would be in

line with the levels achieved in 2002.

Against this market background, the three companies in the Commercial Insurance Unit of

SISTEMA MAPFRE (MAPFRE INDUSTRIAL, MAPFRE CAUCIÓN Y CRÉDITO and MUSINI – the

latter being included in the Unit at the end of 2003) have had a very positive fiscal year, making

progress in defining the future configuration of this operating unit, which was created at the

beginning of 2003.

AGGREGATED KEY FIGURES

Balance Sheet

› Shareholders’ equity, including minority interests, was _267.6 million at the end of the

year, of which _5.8 million corresponded to the share of minority shareholders.

› Technical reserves for direct insurance and accepted reinsurance reached _1,765.0

million, a 220% increase, due to the inclusion of MUSINI in the fourth quarter of 2003.

› Total investments amounted to _1,154.2 million, an _867.3 million increase, basically due

to the inclusion of MUSINI. Broken down by type of assets, real estate assets accounted

for _14.8 million, financial investments for _1,118.4 million and the cost of the investment

in MUSINI VIDA for _21 million.

› The coverage of technical reserves showed a surplus of _62.2 million, and the solvency

margin was equal to 2.6 times the minimum legal requirement.


INVESTMENTS


Real estate investments 14.8 24,3 0.5 0.5 0.7 0.7Fixed income securities 628.7 651.2 231.4 252.5 202.0 214.0Equities 56.6 56.6 1.7 1.7 1.6 1.6Investment fund holdings 98.3 112.1 20.2 21.6 18.9 19.7Cash 120.9 120.9 99.1 99.1 62.9 62.9Other investments 334.8 371.5 32.4 32.7 21.7 21.7

TOTAL INVESTMENTS 1,254.1 1,336.6 385.3 408.1 307.8 320.6


CAUCION Y CREDITO |

INDUSTRIAL |

MUSINI |

121.5

87.9

523.2

494.1

1,032.1

1,031.6

TOTAL | 1,676.8

1,613.6



0 2000 4000 6000 8000 10000 12000year · 2001 |

year · 2002 |

year · 2003 |

0.7

202

21.7

307.8

0.5

231.4

32.4

385.3

14.8

628.7

610.6

1,254.1



CAUCION Y CREDITO |

INDUSTRIAL|

MUSINI |

19.2

9.3

59.4

47.2

205

52.4

TOTAL | 283.6

108.9


Solvency Margin



› Revenues reached _644.8 million, a 40.3% increase with respect to the previous year. Of

that figure, gross written and accepted premiums accounted for _596.6 million.

› Management expenses amounted to _125.3 million, and were equal to 22% of premiums

earned.

› Claims from direct insurance reached _339.5 million, and as a whole were equal to 56.9%

of premiums earned.

By business line, the loss ratios were: 68.6% for Fire and Damage; 67.6% for Third-party

Liability; 36.6% for Transport; 19.6% for Engineering; 51.1% for Accidents; 1.0% for Surety;

and 63.9% for Credit.

› The aggregated profit for the fiscal year was _40.0 million before tax and minority interest,

and _26.1 million after tax and minority interests, broken down as follows:

Before tax After taxand minority interests and minority interests

MAPFRE INDUSTRIAL 27.6 17.8MAPFRE CAUCIÓN Y CRÉDITO 9.7 6.1MUSINI 2.7 2.2

It should be pointed out that, as far as MUSINI is concerned, in 2003 the calculation of all its

mathematical reserves for the Life branch was adapted to the requirements of the Insurance

Regulations with regard to interest rates, choosing not to adopt the treatment allowed under

their temporary provisions for business written in previous years, which resulted in an

extraordinary increase of _32.1 million in the appropriation to the said technical reserves.


MAIN ACTIVITIES

The Commercial Insurance Unit of SISTEMA MAPFRE was set up at the end of 2002 through

the organisational integration of MAPFRE INDUSTRIAL and MAPFRE CAUCIÓN Y CRÉDITO

with a view to supporting large Spanish companies in their international expansion, setting up

operations in Europe either directly, or through alliances, and offering a comprehensive

service to corporate customers.

This new project was implemented in 2003, achieving an initial level of integration of the

governing bodies, internal audit, human resources and headquarters. Progress was also

made with respect to the plans to integrate the administrative, financial, IT and reinsurance

integration areas, as well as to the co-ordination of the territorial presence and sales efforts

in general. MUSINI, which was awarded in mid-2003 and acquired in the month of December

of that year, represented a major quantitative and qualitative change for the strategy of the

Unit; therefore, some of the plans concerning the integration of the Unit and changes in its

legal and corporate structure were postponed until 2004.

The financial results obtained by MAPFRE INDUSTRIAL and MAPFRE CAUCIÓN Y CRÉDITO in

2003 were excellent both in terms of growth (27%) and results (45% more than in 2002),

exceeding targets and confirming the favourable market conditions and MAPFRE’s

outstanding position in this sector. The Unit’s return on equity has continued rising to 35%.

Among the activities carried out by MAPFRE INDUSTRIAL during the year, the following are

worthy of mention:

› The Sales Department achieved across all business lines growth rates higher than the

market, and improved its ability to offer products through the various distribution

channels. Training programmes in the sales organisation were also reinforced and the

company’s technical and sales structure consolidated.

› The main focus of the Technical Department was the control of the claims, which was kept

below the break-even point in each branch, in general with lower ratios than those of the

market. Specific plans for reviewing and updating portfolios by sector were implemented

in accordance with technical and market circumstances.

› In the Administration Department, progress was made with simplifying and optimising

operational management and new management information systems were developed.

› In 2003, MAPFRE INDUSTRIAL joined the international underwriting pools ‘La Réunion

Aerienne’ and ‘La Réunion Spatiale’, providing 7% of their total capacity, and acquired the

majority of the capital of ITSEMAP. At present, it is in the process of acquiring a majority

shareholding in SERMAP. Through these initiatives, the Company is drawing up a more

comprehensive customer service strategy.


Among the activities carried out by MAPFRE CAUCIÓN Y CRÉDITO during the year, the

following are worthy of mention:

› 327,027 companies were classified and reclassified, a 14.4% increase with respect to the

previous year. There are a total of 847,614 companies in the database.

› During the course of the fiscal year, the Portfolio Conservation Department was set up and

already achieved very positive results in 2003. A policy for small companies, whose

distribution should begin in the first quarter of 2004, was designed. A report was prepared

analysing the introduction of an ‘Expert System for Risk Measurement’, using advanced

data mining and processing technology.

› MAPFRE AMÉRICA CAUCIÓN Y CRÉDITO has increased its holdings in its subsidiaries,

acquiring the holdings of other SISTEMA MAPFRE companies and is preparing an

extensive development plan with a special focus on Brazil and Mexico. In 2003, the

American subsidiaries recorded good growth rates in local currency and achieved results

in line with the budget. Overall, loss ratios were below budgeted figures.

MUSINI underwent a long and complex, albeit finally successful, privatisation process in 2003,

which required extra work commitment for the specific tasks required by such a process.

Among the operating activities carried out by the Company, the following are worthy of

mention:

› The Business Administration Department was further developed, making it possible,

together with the final implementation of new computer applications (reinsurance and

automatic policy printing) to obtain major improvements in terms of quality and efficiency.

› The international presence continued to develop positively, with a significant increase in

the volume of transactions carried out and a gradually larger volume of business in the

countries in which the member companies of the Latin American Network of Insurance

Companies, which MUSINI joined in May 2002, operate.

› The sales action plan boosted the activity of both the sales departments of the

headquarters, as well as that of the territorial offices. Thanks to innovative products,

substantial progress has been made in expanding the customer base.

› As far as the development of complementary activities is concerned, the most outstanding

achievement was the creation of the incident management service, specifically designed to

meet the needs of large companies.



Branch of business PREMIUMS % VARIATION2003 2002 2001 03/02 02/01 01/00

Fire and damages 140.1 81.4 40.9 72.2 99.0 38.2Third-party liability 174.6 102.2 76.3 70.9 33.9 26.9Engineering 40.9 22.4 15.2 82.6 47.4 31.5Transport 98.6 75.8 40.2 30.1 88.6 27.5Credit 86.1 70.5 56.3 22.1 25.2 17.8Surety 10.5 8.6 8.0 22.1 7.5 5.8Life 16.1 - - - - -Accident 2.7 - - - - -

TOTAL 569.6 360.9 236.9 57.8 52.3 25.9




Management expenses 125.3 83.3 64.7 50.4 28.7 27.1Claims 339.4 239.7 172.0 41.6 39.4 26.0Net investment income 25.9 12.7 14.8 103.9 (14.2) 1.4Result before tax and minority interests 40.0 25.7 18.6 55.6 38.2 86.0Result after tax and minority interests 26.1 16.4 11.4 59.1 43.8 93.2


STAFF

Category 2003 2002 2001

Managers 248 136 109Clerical staff 402 375 322Commercial staff 144 99 87Otros 191 117 104

OTHERS 985 727 622


OUTLOOK

After the acquisition of MUSINI, the basic strategic target for 2004 will be the total integration

of the common services of all three companies (MAPFRE CAUCIÓN Y CRÉDITO, MAPFRE

INDUSTRIAL and MUSINI), retaining specialised operating divisions for Large Industrial Risks

(with an international perspective), Small- and Medium-sized Enterprises, and Credit and

Surety. Alongside this operational integration there will also be a corporate and legal

restructuring, which will involve the reassignment of an appropriate amount of capital and

reserves for the new situation and the international services development plan.

The new territorial structure framework adopted by SISTEMA MAPFRE includes a major

innovation which will affect strategic development over the next few years. Excellent

prospects are opening up for the Commercial Insurance Unit with the creation of corporate

sales departments in those sub-centres with high potential, comprehensive care for

corporate customers and the convenience of concentrating the technical, administrative and

specialist sales support departments in large territorial centres.

Even though an increasingly tough market environment can be foreseen for the Industrial

Business, it is expected that the coming fiscal years will allow a consolidation of MAPFRE’s

outstanding market position. In this regard, the significant growth rates budgeted for the

business written in the branches comprising this line of business will lead to a substantial

increase in market share. The expected loss and expense ratios will lead to a favourable

difference in results with respect to the market.

From the management point of view, special attention will be given in 2004 to increasing the

Unit’s financial capacity, expanding services to policyholders as a way of differentiating our

offering and creating customer loyalty, and improving reinsurance treaties by adopting new

structures, increased retention and non-proportional contracts.

With regard to the management of the Credit and Surety branches, the achievement of set

targets will be monitored on a continuous basis and the optimisation of the service given to

policyholders with respect to the information processes relating to their policies will be

pursued. Abroad, the Surety insurance business will be commenced in the Colombian

subsidiary and a feasibility study will be carried out to analyse the creation of a Surety

company in Mexico.

INFORMATION ON CLAIMS MANAGEMENT*

Item 2003 2002 2001

Number of claims processed 125,791 109,535 96,547Number of claims settled 78,923 65,735 56,648Settlement rate for all claims processed 62.7% 60.0% 58.7%Ratio of claims to net premiums written 63.1% 55.5% 61.1%Number of policies (thousand) 167,010 151,563 119,233

* Figures for MAPFRE INDUSTRIAL and MAPFRE CAUCION Y CRÉDITO (Spanish business)


Health Insurance has traditionally accounted for a significant part of total premiums in the

Spanish insurance industry, ranking third, behind Life and Motor Insurance. According to

initial ICEA estimates, the volume of premiums in this branch of the insurance market was

_3,580 million in 2003, a 9% increase with respect to 2002. Against this market background,

MAPFRE CAJA SALUD has had a very positive year and achieved premium growth higher than

the average for the sector.

According to a survey of the policyholders of nine companies, including the largest ones in the

sector, carried out by the Madrid Medical Association, MAPFRE CAJA SALUD is the fastest

medical insurance company in dealing with administrative procedures.

MAPFRE CAJA SALUD | pag. 215·221

GOVERNING BODIES


Mr. Esteban Tejera Montalvo

Vice-ChairmanMrs. Mª Jesús Fernández Antón

DirectorsMr. Juan Fernández PalaciosMr. Rafael Galarraga SoloresMr. Pedro Guillén GarcíaMr. Sebastián Homet DupráMrs. Amparo Larrondo ClimentMr. Luis Leguina CebreirosMr. Alberto Manzano MartosMr. Ángel Oso CanteroMr. Juan José Rufilanchas SánchezMr. Carlos Sanz HerranzMr. Severiano Solana MartínezMr. Domingo Sugranyes Bickel

Secretary (not a director) Mrs. Isabel Hernando de la Cuerda

Head office of MAPFRE CAJA SALUD(Madrid)


KEY FIGURES*

Balance Sheet

› Shareholders’ equity amounted to _91.1 million, a 9.3% increase with respect to 2002.

› Investments reached _92.5 million, a 14.2% increase.

› Technical reserves totalled _48 million, and have increased by 25.8% compared with the

previous year.

› The coverage of technical reserves showed a surplus of _50 million, and the solvency

margin was approximately equal to 204.5% of the minimum legal requirement.


› Premiums earned in the year were _278.2 million, a 13.5% increase with respect to the

previous year.

› The loss ratio, including claims handling expenses, was equal to 81.5% of premiums,

compared with 81.2% in 2002.

› Administrative, acquisition and other technical expenses reached _47.2 million, equal to

17% of premiums. Of that figure, _26.1 million corresponded to the Health Assistance

branch, being equal to 13.8% of the premiums in that branch of business, and _21.1 million

to the Sickness branch, being equal to 23.8% of the premiums in that branch of business.

› The combined ratio of claims and expenses as a percentage of premiums went from 97.4%

in 2002 to 97.6% in 2003.

› Investment income in the technical account grew 23.2% with respect to the previous year.

› The result of the technical account of the non-Life branches was a profit of _10.5 million,

a 9.5% increase over the previous year. The non-technical account recorded a profit of _1.8

million.

› The profit before tax reached _12.3 million, against _11.5 million in fiscal year 2002.

* Key figures refer to the individual (non-consolidated) financial statements of MAPFRE CAJA SALUD.


SUMMARY BALANCE SHEET*



Investments 92.5 81.0 76.5 Net profit 7.8 7.1 3.5

Credits 12.4 5.5 6.5 Technical reserves 48.0 38.1 24.2


TOTAL ASSETS 156.0 130.2 106.9 TOTAL LIABILITIES 156.0 130.2 106.9


PROFIT AND LOSS*

Item 2003 2002 2001



CEDED AND RETROCEDED REINSURANCE Premiums and variations in the unearned premium reserves - - (0.4)Claims paid and variation in the outstanding claims reserve - - -Variation in other technical reserves, commissions and participations - - 0.1

Result ceded and retroceded reinsurance - - (0.3)




NON-TECHNICAL ACCOUNTNet investment income 1.0 1.8 0.3Amortisation of goodwill - - -Net other non-technical income/(expenses) 0.3 0.1 -Net extraordinary income/(loss) 0.5 - (3.0)

Result of the non-technical account 1.8 1.9 (2.7)



* Key figures refer to the individual (non-consolidated) financial statements of MAPFRE CAJA SALUD.


MAIN ACTIVITIES

In 2003, the Company successfully achieved the main targets it had set itself for that year:

› Completion of its nationwide presence, both with respect to the agreements with providers

of healthcare services and to territorial support and administrative structure.

› Creation of its own Data Processing Centre and inclusion of its products in CAJA MADRID’s

Insurance Distribution Software (SDS).

› Development of the new In-house Medical Centres Department.

SUBSIDIARIES

Medical Check-Up Centre (‘Centro Médico de Chequeos’)

Its activities focus on the provision of healthcare services in Madrid. The key figures for the

year were as follows:

› The volume of revenues from healthcare services reached approximately _1.1 million.

› The company recorded a loss of _0.4 million this fiscal year, of which _0.3 million were

extraordinary losses from previous years.

› In 2003, the company carried out a capital increase of _2.4 million, which was fully

subscribed for by MAPFRE CAJA SALUD.

Given the positive developments in turnover and the operational and corporate restructuring

measures carried out in 2003, it can be expected that the company will make a profit by next

year.

Igualservicios S.L.

The main activity of this company is the provision of medical services in Huesca and

Barbastro. The most significant facts for the year were as follows:

› The volume of revenues from medical services was _1.3 million, the same as last year.

› The company is close to break-even point, with a loss of _0.1 million this fiscal year.

Centros Médicos Islas Canarias

This company focuses primarily on providing medical services to the extensive portfolio of

policyholders that the company has in the Canary Islands. It commenced operations in

December 2003, in the building purchased in Tenerife to be used as a medical centre.




NON-LIFEHealth Assistance 189.3 165.3 121.2 14.5 36.4 16.9Sickness 88.9 79.9 46.6 11.3 71.5 732.1

TOTAL 278.2 245.2 167.8 13.5 46.1 53.5




Management expenses 43.3 37.7 25.4 14.9 48.4 139.6Claims 226.8 199.1 135.4 13.9 47.0 43.6Net investment income 7.3 6.6 4.0 10.6 65.0 (242.9)Result before tax and minority interests 12.3 11.5 5.5 7.0 109.1 5,400.0Result after tax and minority interests 7.8 7.1 3.5 9.9 102.9 3,400.0


STAFF

Category 2003 2002 2001

Managers 134 119 32Clerical and commercial staff 359 286 100TOTAL 493 405 132


Servimedec Balear

This company was acquired in 2003 and concentrates primarily on providing medical services

in Palma de Mallorca. The most significant facts for the year were as follows:

› The volume of revenues from medical services was _0.7 million.

› The result was a loss of _0.1 million.

This company is expected to be restructured and transferred to another centre in 2004.

OUTLOOK

The company has set itself targets for 2004 which involve making a pre-tax profit equal to no

less than 4.4% of premiums earned, achieving an increase in the volume of premiums that

will enable to reach a market share of about 7.7%, and maintain an expense ratio equal to

about 17% of premiums. The following actions have been planned in order to achieve these

objectives:

› Implementation of technological, actuarial and management improvements to enable it to

become a leader in the design of new products. For this the following have been initiated

as new projects: the Product Workshop and the New Pricing System.

› Improvement in the service that the company provides to the various distribution channels

and adaptation of its business areas to the new territorial structure framework adopted by

SISTEMA MAPFRE.

› Increase in customer loyalty by setting up the Portfolio Retention Department and

strengthening the services provided to policyholders, healthcare providers and distribution

networks via the Call Centre, Internet, SIRED and SDS services.

› Provision of comprehensive, high quality services to customers before, during and after

the sale.

› Consolidation of the In-House Medical Centres department in order to improve the quality

of the healthcare services provided to policyholders.


MAPFRE AGROPECUARIA concluded 2003 with excellent results. The premium growth

targets were met satisfactorily, and the loss ratio improved for the second consecutive year

as a result of careful risk selection and of the actions taken on the portfolio.

General Insurance confirmed itself for another year as the distinctive business of the

Company, with covers specifically designed for agricultural and livestock producers and for

animals, through products which, in many cases, are unique in the market. Premium grew in

excess of 27%, in spite of actions devoted to portfolio pruning and risk selection. The loss ratio

was 66.1%.

MAPFRE AGROPECUARIA | pag. 223 ·230

GOVERNING BODIES


ChairmanMr. Mariano de Diego Hernández Vice-Chairman

Executive First Vice-ChairmanMr. José Antonio Moreno Rodríguez Chairman

Second Vice-ChairmanMr. Ignacio Barco Fernández Member Chairman

DirectorsMr. Ángel Alonso BatresMr. Pedro Barato TrigueroMrs. Rosa María García CondeMr. José García-Carrión JordanMr. Emilio Giménez de Córdoba y Fernández PintadoMr. Alberto Manzano MartosMr. Miguel Márquez OsorioMr. José Manuel Martínez MartínezMr. Isaac Muga CañoMr. Luis Navarro FernándezMr. Esteban Tejera MontalvoMr. Manuel Vierna Pita

Member

Member

Member

Secretary (not a Director)Mrs. Mª Presentación Ataz Orihuela Secretary

Managing DirectorMr. José Pablo Vicente Torres

Head office of MAPFRE AGROPECUARIA(Madrid)


In Motor insurance, the fall in premiums on vans used in agriculture has been amply

compensated by a net rise of 10,200 tractor policies. The loss ratio in this branch has fallen by

more than 12% in comparison with the previous year to 51.4%.

Combined Agricultural Insurance policies increased as a result of the inclusion of new livestock

lines within the Annual Plan. Furthermore, the weather was comparatively more benign than in

previous years, which helped to produce favourable results.

Pre-tax profit increased by 9.2% compared with the preceding year, exceeding the target set in

the budget by 7.9%.

During 2003 all the necessary work was carried out to finalise the integration of MAPFRE

AGROPECUARIA within SISTEMA MAPFRE by merging it with MAPFRE MUTUALIDAD, following

the approval of the operation by the Annual General Meeting of Mutualists that took place on 28

March 2003. This process was formally ratified by the General Directorate of Insurance by

resolution dated 31 October 2003 and became effective on 1 January 2004.

KEY FIGURES

Balance sheet

› Shareholders’ equity amounted to _53.3 million, a 12.8% increase over the previous year.

› Technical reserves were _117.1 million, a 12% increase over the previous year.

› Coverage of technical reserves showed an excess of _47.1 million and the solvency margin

was equal to 3.2 times the minimum legal requirement.

› The book value of investments was _122.5 million, a _15.8 million increase over the

previous year, and broke down as follows: _57.9 million in financial investments; _28.8

million in real estate; and _35.8 million in cash and liquid assets.


› Direct insurance premiums written amounted to _141 million, a 17.5% increase over the

previous year, of which: _50.6 million corresponded to General Insurance, an increase of

27.1%; _28.1 million to Motor Insurance, an increase of 1.8%; and _62.3 million to Combined

Agricultural Policies, an increase of 18.7%. Accepted reinsurance Premiums were _8.6

million.

› Management expenses were _39.3 million, equal to 26.3% of premiums written compared

with 24.2% for the previous year. Of these: _4.3 million corresponded to claims handling

expenses; _25.6 million to acquisition costs; _6.3 million to administration costs; and _3.1

million to other technical expenses.





Net profit 6.4 6.0 5.9Investments 86.7 89.1 80.7

Participation by reinsurance in technical reserves 0.0 12.4 12.3 Technical reserves 117.1 104.6 89.8

Deposits received on ceded reinsurance 0.0 5.0 3.9

Credits 43.3 33.0 32.7




PROFIT AND LOSS

Item 2003 2002 2001

DIRECT INSURANCE AND ACCEPTED REINSURANCEPremiums earned 146.4 117.9 90.9Claims incurred (101.5) (87.8) (75.2)Other technical expenses (31.9) (24.8) (20.2)Variation. stabilization/equalization reserve (5.5) 1.2 5.2


CEDED AND RETROCEDED REINSURANCEPremiums and variations in the unearned premium reserves (21.2) (15.2) (13.2)Claims paid and variation in the outstanding claims reserve 12.4 7.7 11.3Variation in other technical reserves. commissions and participations 6.7 4.3 3.2





NON-TECHNICAL ACCOUNTNet investment income 3.4 1.5 1.4Amortisation of goodwill 0.0 0.0 0.0Net other non-technical income/(expenses) (0.9) 1.8 1.2Net extraordinary income/(loss) 0.0 0.2 0.1





INVESTMENTS


Real estate 28.8 38.9 29.4 38.9 27.9 33.3Fixed income securities 46.2 51.8 45.2 51.6 37.4 42.3Equities 7.5 14.5 9.7 14.3 10.7 14.0Investment fund holdings 4.0 4.3 4.0 3.7 4.0 4.4Cash 35.8 35.8 18.1 18.1 13.7 13.7Other investments 0.2 0.2 0.3 0.3 0.3 0.3



year · 2001 |

year · 2002 |

year · 2003 |

95.1

64.8

112.5

82.8

128

89.2



2000 4000 6000 8000 10000 12000year · 2001 |

year · 2002 |

year · 2003 |

27.9

37.4

28.7

94

29.4

45.2

32.1

106.7

28.8

46.2

47.5

122.5

Real Estate Fixed income securitesOther investments Total investments


year · 2001 |

year · 2002 |

year · 2003 |

48.5

13.4

60.7

19.1

69.3

21.4


Solvency Margin


› Direct insurance claims amounted to _89.4 million, of which: _33.5 million corresponded

to General Insurance, and were equal to 66.1% of premiums written, 12.5% more than the

previous year; _14.5 million to Motor Insurance, and were equal to 51.4% of the premiums,

11.2% less than the previous year; and _41.5 million corresponded to Combined Agricultural

Insurance, net of the Consortium for Insurance Compensation cover, which were equal to

66.6% of the premiums, 8.1% less than the previous year. The loss ratio in accepted

reinsurance was equal to 90.7% of premiums.

› Net recurring financial income was _6.1 million, a 12.9% increase over the previous year.

› The technical account showed a profit of _6.1 million, equal to 4.1% of premiums earned.

The non-technical account showed a positive result of _2.5 million.

› The pre-tax profit for the year was _8.6 million.


a) Direct insurance

› Multi-peril policies, which cover the family and business of agricultural producers, have

once again been the main product of the Company. Their volume of premiums amounted

to _30.4 million, a 24.7% increase over the previous year. The group’s three branches

(Combined Policy, Agricultural Policy and Greenhouse Insurance) have grown quite

uniformly, noting the increase of 3,139 policies in Combined Farmers’ Insurance.

In spite of difficult weather conditions during the year, the loss ratio was one of the best in

recent years and stood at 61.9% of acquired premiums under the Agricultural Policy, 52.6%

under the Combined Policy and 43.5% in the case of Greenhouse Insurance.

› The Combined hunting and fishing insurance continues without significant improvement:

total policies at the end of the year were 120,063, almost the same as the previous year. In

this same line the average premium was _21.09, similar to the previous year. Premium

volume was _2.6 million, an increase of 3%.

The loss ratio was good, at 36.5% of premiums written. Management expenses remain very

high, however, and new policy issuance systems must be introduced in order to reduce

them.


› The Third-Party Liability branch was among the fastest growing in the year: the number of

policies was 33,379 (4.8% up on 2002), and the volume of premiums written stood at _10.6

million, a 30.9% increase over the previous year.

The loss ratio was equal to 98.5% of premiums written. Corrective measures introduced in

recent months are beginning to bring about improved results.

› In Livestock insurance, the number of policies grew 8.7% to 11,785. The performance of

equine insurance was worthy of mention with an increase of 565 policies.

Premium income stood at _5.1 million (56% up on the previous year), while the loss ratio

was equal to 67.7% of premiums written.

› The number of Combined Agricultural Insurance policies was 87,927 (7% less than the

previous year), while the premium contribution from MAPFRE AGROPECUARIA amounted

to _92.38 million (_0.8 million less than 2002). Our market share was 21.24%, 1.76% less

than the previous year, which did not prevent MAPFRE AGROPECUARIA from being the

company that contributes by far the most premiums to AGROSEGURO (Spanish Pool of

Combined Agricultural Insurance Companies.)

By line of business, the following were notable: insurance for cattle farms (_26 million and

43% of the market); multiple citrus crops (_12.6 million and 23% of the market); cover for

the destruction expenses of specific risk materials (_12.5 million and 25.5% of the market);

and the cover for grapes for wine production (_12 million, with an 18% increase this year).

By sub-centre, the most notable increases in policy issuance were recorded in South-east,

Catalonia II and Eastern Andalusia.

The involvement of MAPFRE AGROPECUARIA in coinsurance increased to 15.2%, as a

result of the alignment process between contribution and underwriting of premiums.

The loss ratio as a percentage of accrued premiums of the 2003 series was 85.1% (34%

below that of the previous year), split between 88.1% in the viable lines and 83.1% in the

experimental lines.

› The number of in-force Motor insurance policies was 208,380, a net growth of 3.6%. The

loss ratio as a percentage of premiums written was 51.4%, an improvement of more than

11% on the previous year.

During 2001, the Company concentrated its business on insuring tractors and agricultural

machinery. For this reason, in spite of increasing its net tractor premiums by 13.5%, the

overall increase in this branch of business was 1.8%, achieving 99.1% of the budgeted

target. Tractors accounted for 51% of the premiums, and the remaining 49% to vans.

MAPFRE AGROPECUARIA has a market share, measured on the basis of all registered

vehicles, of 18.03% for tractors and 16.63% for agricultural machinery.




NON-LIFEAccidents 1.8 1.5 1.2 20.0 25.0 20.0Fire 0.2 0.1 0.1 100.0 0.0 0.0Other damages to property 74.6 64.0 41.0 16.5 56.1 31.4Motor civil liability 22.1 21.6 20.6 2.3 4.8 3.0Motor other risks 6.1 6.1 5.6 0.0 8.9 (1.8)Civil liability 10.6 8.1 6.2 30.8 30.6 63.2Home combined 1.2 1.0 0.8 20.0 25.0 (11.1)Industrial combined 22.2 17.7 14.0 25.4 26.4 32.1Other combined 10.8 9.1 7.3 18.7 24.6 21.7

TOTAL 149.6 129.2 96.8 15.8 33.5 22.1




Management expenses 39.3 31.8 26.5 23.6 20.0 19.9Claims 97.2 84.0 71.9 15.7 16.8 63.8Net investment income 7.5 6.0 6.2 25.0 (3.2) 1.6Result before tax and minority interests 8.6 7.9 6.4 8.9 23.4 (7.2)Result after tax and minority interests 6.4 6.0 5.9 6.7 1.7 25.5


STAFF

Category 2003 2002 2001

Managers 29 29 23Clerical staff 112 100 91Commercial staff 63 62 69Others 5 8 9

TOTAL 209 199 192


b) Accepted reinsurance

The reinsurance contracts signed with MAPFRE MUTUALIDAD and MAPFRE SEGUROS

GENERALES, under which these companies cede to MAPFRE AGROPECUARIA their share in

the Combined Agricultural Insurance policies, have been renewed.

The Company continues to reinsure the pet insurance cover included in the Household Insu-

rance policies issued by MAPFRE SEGUROS GENERALES, providing technical support to that

Company, and managing this type of claims on its behalf.

The share in international agricultural reinsurance contracts is increasing through MAPFRE

RE. The focus remains on SISTEMA MAPFRE companies in Latin America, although the par-

ticipation in contracts of insurance companies located in other continents is also rising. In

2003, the Company participated in reinsurance contracts in Algeria, Argentina, Brazil, Chile,

Germany, Greece, France, Italy, Mexico, Norway, Poland, Romania, Uruguay and the USA in

areas such as crop, livestock, fish farming, forestry, and property insurance.

c) International business

The need to find solutions to catastrophic situations in different fields of agricultural activity

means that the interest in this type of insurance cover continues to grow, and in many regions

it is beginning to be developed or its growth is being consolidated. In 2003 there were new

catastrophes, such as the drought that seriously affected Central and Eastern Europe, the

torrential rains in Ecuador, the outbreaks of foot-and-mouth disease in South America, etc.

In both the European Union and other international forums (World Bank, Interamerican Deve-

lopment Bank), the debate has intensified about the role that agricultural insurance should

play in the income policy for agriculture and stockbreeding.

In connection with work involved in publicising agricultural insurance, this year there were

visits from a number of countries (Argentina, Brazil, Chile, Cuba and Japan) and a two-week

seminar was organised with a view to training the technical staff of the MAPFRE subsidiaries

in Argentina, Brazil, Chile and Mexico.


The economic environment in which the subsidiaries of MAPFRE AMÉRICA operate has

improved over the course of 2003 as a result of the following factors:

MAPFRE AMÉRICA | pag. 231 ·236

GOVERNING BODIES

Board of Directors Executive Committee

ChairmanMr. Santiago Gayarre Bermejo Chairman

1st Vice-Chairman Mr. Sebastián Homet Duprá

2nd Vice-Chairman Mr. Rafael Beca Borrego 2nd Vice-Chairman

Managing DirectorMr. Rafael Casas Gutiérrez 1st Vice-Chairman

Directors & General ManagersMr. Francisco Bravo GarcíaMr. Antonio Núñez Tovar

MemberMember

DirectorsMr. Ángel Alonso BatresMr. Antonio Eraso CampuzanoMr. José Mª García AlonsoMrs. Elena Gil GarcíaMr. Luis Mª González LlanoMr. Andrés Jiménez HerradónMr. Jaime Laffitte MesaMr. Rafael Márquez OsorioMr. Miguel Muñiz de las Cuevas*Mr. Alfonso Rebuelta BadíasMr. Domingo Sugranyes BickelMr. Esteban Tejera MontalvoMr. Francesco Vanni D'Archirafi

Member

Member

MemberMember

Secretary (not a director) Mr. Claudio Ramos Rodríguez Secretary

Includes the appointments and re-elections submitted to the General Meeting.

* Representing Mediación y Diagnósticos, S.A.

Head office of MAPFRE TEPEYAC (Mexico)

* MAPFRE AMÉRICA is a holding company under which the companies operating primarily in Non-lifedirect insurance in twelve countries on the American Continent are grouped.


› The boom and strengthening of raw material prices, principally soya, copper and coffee, of

great significance in countries where such products can represent up to 40% of their

exports;

› Positive market development, due to increased international liquidity and reduced aversion

to risk, that, within the emerging markets, has particularly benefited countries such as

Brazil and has generally allowed a recovery in foreign confidence in respect of the whole

region.

This improvement in the Latin American economic environment can be seen from the

recovery in the exchange rate of many of the region’s currencies against the US Dollar, the

reduction in interest rates, the containment of the inflation indices and the growth in the GDP

of some countries in the region affected by the economic crisis of last year. Nonetheless, the

unfavourable trend in the exchange rate of the US Dollar against the Euro is adversely

affecting the volume of business and the results of our subsidiaries.

MAPFRE AMÉRICA and its subsidiaries have had a very positive financial year, in which they

achieved a consolidated operating profit of _52 million and a profit after tax and minority

interests of _37.8 million, 42.6% higher than in 2002. These figures are the result of the steady

improvement in the management and of the actions taken in 2003, among which the following

deserve to be mentioned: the analysis and ongoing cleaning up of loss-making portfolios; the

reduction of management expenses; and the introduction of improvements in the technical

management of claims.

KEY FIGURES

Balance Sheet

› Consolidated shareholders’ equity, including minority shareholders, amounted to _506.7

million, a 6.5% decrease with respect to 2002, basically due to the depreciation of the US

Dollar and of some currencies of the region. Minority shareholdings accounted for _5.9

million, a decrease of 15.7%.

› Investments amounted to _994.8 million, a 6.4% decrease.

› Technical reserves reached _855.1 million, a 2.2% decrease with respect to 2002.


› Consolidated premiums written amounted to _1,235.9 million, a 7.8% decrease with

respect to the previous year, due to the appreciation of the Euro against the US Dollar and

the depreciation of some currencies of the region.

› Management expenses were equal to 28.4% of premiums earned, a 16.8% decrease with

respect to the previous year.

› The loss ratio, calculated as a percentage of premiums earned in the direct business, was

59.7%, a 19% decrease with respect to 2002.





Net profit 37.8 26.5 18.1Investments 994.8 1,062.4 1,295.2

External shareholders 5.9 7.1 65.2Participation by reinsurance in 156.4 152.5 160.1technical reserves Technical reserves 855.1 874.3 1,094.1





PROFIT AND LOSS

Item 2003 2002 2001

DIRECT INSURANCE AND ACCEPTED REINSURANCEPremiums earned 1,168.3 1,253.7 1,427.7Claims (697.3) (861.1) (1,023.0)Other technical expenses (340.1) (411.4) (465.1)

Result direct insurance and accepted reinsurance 130.9 (18.7) (60.4)






NON-TECHNICAL ACCOUNTNet investment income 7.4 5.6 3.7Amortisation of goodwill (3.5) (7.4) (4.0)Net other non-technical income/(expenses) (12.7) 4.3 (7.7)Net extraordinary income/(loss) (13.2) 2.4 (12.2)

Result of the non-technical account (22.0) 5.0 (20.1)




› The financial result was _97.3 million, a 44% decrease with respect to the previous year,

due to the widespread reduction in the interest rates paid on the assets in which a

significant share of the subsidiaries’ investments are placed.

› The consolidated gross profit, before tax and minority interests, reached _48.5 million, of

which _10.1 million went to corporation tax and _0.6 million to the share of profits

attributable to minority shareholders. The net profit attributable to the company, after tax

and minority interests, was _37.8 million, an increase of 42.6%.

MAIN ACTIVITIES

The principal activity of the subsidiaries continued to be geared to the direct Non-life

insurance business, with a greater relative weight of Motor Insurance, which accounted for

51% of the consolidated premiums written during the year. However, the General Insurance

business grew very significantly in 2003, accounting for 34% of the consolidated premiums

written.

The process of integrating the management departments of MAPFRE’s Life and Non-Life

Direct Insurance companies in each country, in order to improve the services provided to

policyholders, obtain cost savings and exploit synergies in the companies’ sales efforts, was

completed in 2003.

OUTLOOK

The budget for 2004 points to consolidated premium revenues of _1,259 million, which

represents an increase of 2% on 2003. This objective takes into account the foreseeable

consequences of the Euro rising against the US Dollar and the depreciation of some Latin

American currencies, particularly the Venezuelan Bolivar, which is expected to continue in

2004.

In addition, it is expected that the net profit after tax and minority interests will increase, with

a positive contribution to consolidated profits from all companies.

| 24.8% MAPFRE TEPEYAC (Mexico)| 18.1% MAPFRE VERA CRUZ SEGURADORA (Brazil)| 16.2% MAPFRE USA (Puerto Rico-Florida)| | 15.1% MAPFRE LA SEGURIDAD (Venezuela)| 11.3% MAPFRE ARGENTINA| 6.4% MAPFRE CIA. SEG. GENERALES CHILE

| 3.0% MAPFRE CIA. SEG. GENERALES COLOMBIA| 2.3% LA CENTRO AMERICANA (El Salvador)| 1.7% MAPFRE PERU SEG. GENERALES| | 0.6% MAPFRE PARAGUAY| 0.5% MAPFRE URUGUAY

Breakdown of Premiums by Company




LIFE 39.8 39.4 51.9 1.0 (24.1) 78.5

NON-LIFE Motor 602.6 683.7 857.0 (11.9) (20.2) 11.2General 393.5 384.3 352.6 2.4 9.0 9.2Health and Accident 132.4 146.3 166.3 (9.5) (12.0) 16.4

TOTAL NON-LIFE 1,128.5 1,214.3 1,375.8 (7.1) (11.7) 11.3

TOTAL 1,168.3 1,253.7 1,427.7 (6.8) (12.2) 12.8




Management expenses 332.3 399.3 451.8 (16.8) (11.6) 15.0Claims 697.3 861.1 1,023.0 (19.0) (15.8) 15.8Net investment income 97.3 174.3 125.8 (44.2) 38.5 6.5Result before tax and minority interests 48.5 43.9 28.6 10.0 53.6 115.5Result after tax and minority interests 37.8 26.5 18.1 42.6 46.4 635.0


STAFF

Category 2003 2002 2001

Managers 310 284 187Clerical staff 1,612 1,636 1,672Commercial staff 1,011 805 812IT staff 827 705 874Other 1,344 1,308 843

TOTAL 5,104 4,738 4,388


In the Latin American economic context already described in the previous pages, MAPFRE

AMÉRICA VIDA closed a transitional year that has resulted in its full functional integration

within MAPFRE AMÉRICA.

MAPFRE AMÉRICA VIDA | pag. 237 ·242

GOVERNING BODIES

Consejo de Administración Executive Committee

ChairmanMr. Santiago Gayarre Bermejo Chairman

First Vice-Chairman Mr. Sebastián Homet Duprá

Second Vice-ChairmanMr. Rafael Beca Borrego

Second Vice-Chairman

Managing DirectorMr. Rafael Casas Gutiérrez First Vice-Chairman

Directors and General ManagersMr. Francisco Bravo GarcíaMr. Antonio Núñez Tovar

DirectorsDirectors

DirectorsMr. Ángel Alonso BatresMr. Antonio Eraso CampuzanoMr. José Mª García AlonsoMrs. Elena Gil GarcíaMr. Luis Mª González LlanoMr. Andrés Jiménez HerradónMr. Jaime Laffitte MesaMr. Rafael Márquez OsorioMr. Miguel Muñiz de las CuevasMr. Alfonso Rebuelta BadíasMr. Domingo Sugranyes BickelMr. Esteban Tejera MontalvoMr. Francesco Vanni D'Archirafi

Directors

Directors

DirectorsDirectors

Secretary (not a Director) Mr. Claudio Ramos Rodríguez Secretary

Head Office of MAPFRE PRAICO (PUERTO RICO)

* MAPFRE AMÉRICA VIDA is a holding company under which companies engaged primarily in direct Lifeinsurance in six countries of the American continent are grouped.





Net profit (2.7) (10.5) (3.7)Investments 183.7 165.6 209.7

External shareholders 19.2 33.7 55.9Participation by reinsurance in technical reserves 9.3 9.4 8.5 Technical reserves 167.2 139.6 148.9

Credits 33.3 32.7 42.5 Ceded reinsuranceDeposits received on 3.5 4.2 4.1




PROFIT AND LOSS

Item 2003 2002 2001

DIRECT INSURANCE AND ACCEPTED REINSURANCEPremiums earned 171.5 165.5 151.4Claims incurred (90.2) (95.7) (83.2)Other technical expenses (100.4) (97.2) (80.3)


CEDED AND RETROCEDED REINSURANCEPremiums and variations in the unearned premium reserves (15.6) (17.0) (16.7)Claims paid and variation in the outstanding claims reserve 11.9 15.1 11.2Variation in other technical reserves, commissions and participations 3.3 0.7 2.9




Result of the life and non-life technical accounts (0.6) (11.5) (4.2)

NON-TECHNICAL ACCOUNTNet investment income (1.9) (0.6) 3.1Amortisation of goodwill (6.2) (0.7) (0.4)Net other non-technical income/(expenses) 6.3 (1.2) (3.7)Net extraordinary income/(loss) (2.3) (0.8) (0.3)


Result before tax and minority interests (4.7) (14.8) (5.5)



KEY FIGURES

Balance sheet

› Consolidated assets amounted to _270.6 million, a 4.3% increase over the previous year.

This increase was achieved in spite of the sale of AFORE TEPEYAC, a Mexican subsidiary

company engaged in pension fund management, and the effect of the depreciation of the

region’s currencies against the Euro, as a result of the depreciation of the US dollar.

› Consolidated shareholders’ equity was _71.7 million, compared with _90.4 million at the

end of 2002. Of this figure, _19.2 million corresponded to minority shareholders.

› Technical reserves stood at _167.2 million, an increase of 19.8% on the figure of _139.6

million for the previous year.


› Consolidated premiums written reached _171.1 million, a 2.4% increase with respect to

2002. Such low growth was the result of the appreciation of the Euro against the US dollar

and other Latin American currencies. Additionally, investment income was obtained in the

amount of _21 million, an increase of 6%.

› The consolidated result before tax and minority interests was a loss of _4.7 million,

compared with a loss of _14.8 million in the previous year. The net results attributable to

MAPFRE AMÉRICA VIDA was a loss of _2.7 million, compared to a loss of _10.5 million in

2002. A significant portion of these results stems from the restructuring carried out in

MAPFRE PERÚ VIDA, which involved acquiring all the shares in CORPORACIÓN

FINISTERRE and the decision to amortise early all deferred assets and goodwill arising

from this transaction, for an amount of _7 million. Additional reserves of _1.6 million were

appropriated relating to the uncertain situation in Argentina.


During fiscal year 2003, the co-ordination and integration process of certain management

areas of the direct insurance subsidiaries of SISTEMA MAPFRE in each country

(Administration, Human Resources, Legal Affairs), as well as some IT functions, in order to

improve the service offered to policyholders, cut costs and exploit synergies in the

commercial activities of these companies was completed.

As far as insurance activities are concerned, sales of Personal Life insurance performance

were strongly influenced the evolution of financial markets, which in 2003 was better than in

the previous year. Premiums in this business line, which account for 8% of the total of

premiums written, maintained their growth pace, reflecting the experience that is gradually

being acquired by the distribution networks.

Group Life Insurance continued to be the main source of income, accounting for 60% of the

total premiums written, an increase of 7% on 2002.


Life Annuities Insurance accounted at the end of the year for 8% of total premiums written.

This clearly is a consolidating and growing business, considering the opportunities arising

from the structure of social security systems in Latin American countries.

Accident Insurance (both personal and work-related) went from 4% to 5% of premiums

written at the end of 2003. This business line is concentrated mainly in group insurance,

which is purchased essentially by small- and medium-sized companies, and by schools.

Health insurance has decreased its relative weight from 4% to 2% of premiums written,

following the decision to limit the sale of certain covers in Puerto Rico and Colombia.

Burial Insurance accounted for 9% of premiums written. Technically, this product is designed

as regular premiums term life insurance policy and it has performed very satisfactorily in our

subsidiaries, particularly in Peru.

OUTLOOK

According to the Strategic Plan of the Company and its subsidiaries, in 2004 its activity will

focus on consolidating the existing businesses and the management of its subsidiaries. The

possibility for some of them to enter new branches of business and new market niches will

be analysed.

While it is envisaged that exchange rate differences will continue to reduce the value of

premiums written expressed in euros, it is expected that the volume of revenues will increase

substantially and that results will continue to improve, through the likely satisfactory

performance of the subsidiaries.

INVESTMENTS


Real estate 4.4 4.5 3.9 4.4 5.6 6.2Fixed income securities 77.8 81.1 61.1 62.2 52.2 54.5Equities 6.0 6.0 10.9 10.7 20.2 20.3Investment fund holdings 72.5 72.5 42.9 42.9 65.7 65.7Cash 6.7 6.7 24.6 24.6 35.9 35.9Other investments 16.3 16.3 33.1 30.0 43.9 38.7TOTAL INVESTMENTS 183.7 187.1 176.5 174.8 223.6 221.4



year · 2001 |

year · 2002 |

year · 2003 |

180.4

146.9

151.1

134.6

188.3

161.2



2000 4000 6000 8000 10000 12000year · 2001 |

year · 2002 |

year · 2003 |

5.6

52.2

165.8

223.6

3.9

61.1

111.5

176.5

4.4

77.8

101.5

183.7



year · 2001 |

year · 2002 |

year · 2003 |

132.1

25.6

92.3

20.3

74.7

27.9


Solvency Margin

FUNDS ANDER MANAGEMENT

ITEM 2003 2002 2001

Insurance technical reserves 167.2 139.6 148.9Pension funds under management - 333.0 338.8

TOTAL 167.2 472.6 487.7





LIFERegular 133.9 127.0 111.9 5.4 13.5 25.5Single 27.4 28.2 29.8 (2.8) (5.4) 272.9Total life 161.3 155.2 141.7 3.9 9.5 21.4

NON LIFE Accidents 9.0 8.6 8.6 4.6 0.0 352.6Sickness 0.8 3.3 2.1 (75.8) 57.1 (72.0)Total non life 9.8 11.9 10.7 (17.7) 11.2 13.8

TOTAL 171.1 167.0 152.4 2.5 9.6 20.9




Management expenses 65.7 61.3 56.2 7.2 9.1 (2.8)Claims 90.2 95.7 83.2 (5.8) 15.0 26.4Net investment income 21.1 19.2 17.9 9.9 7.3 27.9Result before tax and minority interests (4.7) (14.8) (5.5) 68.2 (169.1) 58.3Result after tax and minority interests (2.7) (10.5) (3.7) 74.3 (183.8) 39.3


STAFF

Category 2003 2002 2001

Managers 38 60 62Clerical staff 495 546 540Commercial Staff 667 637 694IT Staff 40 54 57Others 81 164 140

TOTAL 1,321 1,461 1,493


SISTEMA INTERNACIONAL DE ASISTENCIA MAPFRE (SIAM), formed by MAPFRE ASISTENCIA

and its subsidiaries, had a direct presence in thirty-seven countries at the end of the year

through thirty-six service companies, a reinsurance company, an insurance broker, six

general agencies, four representative offices, five branches and one commercial office. This

structure is completed by travel agency VIAJES MAPFRE and its subsidiary VIAJES CITEREA,

and a minority shareholding in VIAJES TIVOLI, a travel wholesaler.

With a portfolio of over 900 corporate clients in fifty-four countries, including insurance

companies, car manufacturers, financial institutions, tour operators, airlines and large

corporations, the Unit reached a figure of 42.3 million insured clients, both under insurance

and reinsurance policies, and approximately 114 million beneficiaries, who were assisted on

more than 2.4 million occasions.

ASSISTANCE OPERATING UNIT | pag. 243 ·249

GOVERNING BODIES


Executive Chairman Mr. Primitivo de Vega Zamora Chairman

Vice-Chairman Mr. Pedro Unzueta Uzcanga Vice-Chairman

Director and General Manager Mr. Rafael Senén García Member

Chairman

DirectorsMr. Ángel Alonso BatresMr. Alberto Javier Álvarez OblancaMr. Luis Gómez de PabloMr. Gerardo Hernández de LugoMr. Augusto Huéscar MartínezMr. José Emilio Jimeno ChuecaMr. Juan Manuel López ChicheriMr. Alejandro Lorca CorronsMr. Antonio Núñez TovarMr. Juan Antonio Pardo OrtizMr. César de Santiago PoloMr. Domingo Sugranyes BickelMr. Esteban Tejera Montalvo

MemberMember

MemberMember

Member

Secretary (not a director) Mr. Félix Mansilla Arcos Secretary

Head office of MAPFRE ASISTENCIA(Madrid)

* This Operating Unit comprises MAPFRE ASISTENCIA and its subsidiaries, which specialize in insurance,assistance services and other services.


MAPFRE ASISTENCIA and its subsidiaries, branches and general agencies had 2,251

employees at the end of 2003, 614 of whom were employed in Spain.

Generally speaking, 2003 was a very positive year for the Company and its subsidiaries, which

managed to increase their revenues by 16% and their operating results by 37%, despite a

difficult economic environment in the countries in which the vast majority of their business is

carried out.

KEY FIGURES

Balance Sheet

› Consolidated shareholders’ equity, excluding minority shareholders, reached _65.9

million, a 35% increase with respect to 2002, primarily due to capital increases totalling _17

million, which were carried out to finance the Unit’s expansion. Minority shareholdings in

subsidiaries accounted for _0.7 million of the total capital and reserves.

› Technical reserves amounted to _52.2 million, against _37.4 million in 2002. These

reserves are primarily invested in cash and short-term investments.


› Total revenues reached _238.2 million in 2003, including revenues from equity-accounted

companies, a 16% increase with respect to 2002, despite the negative impact from the

depreciation of the US Dollar.

› The loss ratio was equal to 54.9% of total revenues, a slight increase with respect to fiscal

year 2002.

› Expenses, including claims handling expenses and excluding financial expenses,

amounted to _97.4 million, a 25% increase with respect to 2002, primarily due to the effect

of new acquisitions.

› Financial results (including exchange rate differences and the cost of debt) were positive

at _0.1 million, as a result of the negative impact from the depreciation of the US Dollar

and of other currencies within its area of influence.

› The insurance technical account recorded a profit of _10.7 million, a 20% increase with

respect to 2002.

› The consolidated profit, before amortisation of goodwill, tax and minority interests, was

_7.2 million, a 37% increase with respect to the previous year. The profit after tax and

minority interests was stable at _3.8 million, due to the amortisation of goodwill.





Investments 45.4 32.1 26.3 Net result 3.8 3.8 2.8

Credits 55.3 47.3 53.4 External shareholders 0.7 0.8 1.0

Other assets 43.8 27.3 38.3 Technical reserves 52.2 37.4 37.0

Other liabilities 62.5 30.9 38.2




Item 2003 2002 2001





OTHER TECHNICAL RESULTSNet investment income 0.1 (4.7) (0.7)Net other technical income/(expenses) (2.9) (3.8) (3.2)

Other technical results (2.8) (8.5) (3.9)


NON-TECHNICAL ACCOUNTNet investment income (2.6) (1.0) (0.7)Amortisation of goodwill (1.4) (0.2) (0.1)Net other non-technical income/(expenses) (0.8) (2.2) (0.3)Net extraordinary income/(loss) (0.1) (0.4) 0.5





INVESTMENTS


Real estate investments 0.7 0.7 0.8 0.8 1.3 1.3Investment fund holdings 4.4 4.4 0.0 0.0 0.0 0.0Cash 18.7 18.7 8.6 8.6 5.4 5.4Other investments 21.6 21.6 22.7 22.7 19.6 19.6



year · 2001 |

year · 2002 |

year · 2003 |

24.5

20.4

25.2

21.3

27.3

25.6



0 2000 4000 6000 8000 10000 12000year · 2001 |

year · 2002 |

year · 2003 |

1.3

0

5.4

19.6

26.3

0.8

0

8.6

22.7

32.1

0.7

4.4

18.7

21.6

45.4

Real Estate Other investmentsMutual fundsCash

Total investments


year · 2001 |

year · 2002 |

year · 2003 |

51.2

9.2

48.5

9.5

66.0

9.0


Solvency Margin


MAIN ACTIVITIES

During 2003, the Company held its place as one of the largest international assistance

companies in the world. It increased the diversification of its business mix, securing

authorisation to operate in the following branches: 1 (Accident), 13 (General Third-party

Liability), 16 (General Pecuniary Losses) and 17 (Legal Defence). Likewise, the Company

continued to consolidate its position in the insurance lines in which it is a pioneer in the world:

home assistance; motor, household and health claims management; teleassistance;

adjustment of bodily injuries claims and cost containment services; telephone information

services; contact centres; telemarketing; travel sales; etc.

Other significant events that have shaped the development of the Company and its

subsidiaries during 2003 were as follows:

› Substantial international sales development, including winning new customers and selling

additional services to customers already in the portfolio. Among the various sales

initiatives carried out, it is worth highlighting: the expansion of the ‘Segurviaje’ programme

in Latin America; the consolidation of the airline services business; and the launch of

household assistance programmes in the United States.

› The expansion of the international network of assistance companies, with the acquisition

of the group of companies whose trade name is ROAD AMERICA MOTOR CLUB in the

United States, specialising in roadside assistance, and its integration into the existing

operations of MAPFRE ASISTENCIA in that country.

› The entry into the warranty extension insurance business with the acquisition of the NSA

group of companies, present in Italy, France, Ireland and Luxembourg, operating in the

distribution of warranties for used vehicles, and with the creation of a specialised unit

underwriting this type of risks in London. This has provided the technological, operating,

technical and commercial know-how, which will make it possible to launch this range of

products in other countries.

› The incorporation of MAPFRE ASISTENCIA ORO S.A., focussed on managing

comprehensive services for the elderly, including the creation of residential complexes.

This company will act as co-ordinator and service provider for the specific programmes

aimed at this sector of the population, which will be designed by the various Units of

SISTEMA MAPFRE.

› The consolidation of the travel division, with special attention to the development of the

incentives and conferences lines, as well as the growth of the network of sales offices in

Spain and the opening of an agency in Chile.

› The continued improvement of the international network of suppliers, especially in the Far

East and Africa, as well as the opening of the ‘Centro Médico Caribe Bávaro’ in the

Dominican Republic to provide better customer service in that tourist destination.


› The implementation of new IT tools in various countries, through SIAM CONSULTING,

which in its first year of operations installed the AMA application in Brazil and Greece and

took part in public tenders to sell this application on the back of the agreement with the

prestigious consultancy company Cap Gemini.

OUTLOOK

In Spain, sales initiatives will focus on products in lines of business other than Assistance,

and in particular on warranty programmes. The sale of travel insurance will be intensified and

a special effort will be made to launch MAPFRE ASISTENCIA ORO, with the opening of the first

residential centres and the widening of the current portfolio of services for the elderly with

products such as tele-assistance and assistance at home.

Overseas, the company will continue with its expansion policy in various countries of the

world, especially in Italy, the Middle East and China. The diversification policy will be extended

to include the new insurance branches for which authorisation has been secured. Special

attention will be given to increase the loyalty of corporate customers, improve the networks

of service providers and seek efficiency gains in the traditional business.

Within the framework of travel marketing, the expansion under way in Spain will continue, as

will the opening of new agencies abroad.

The improvement of the services provided to customers, an overriding objective of the

company, will draw significant support from the gradual introduction of new management

tools in all countries, especially the AMA application.




Management expenses 21.4 17.3 17.5 23.7 0.0 12.9Claims 96.7 93.5 118.3 3.4 (21.0) 18.3Net investment income 0.1 (4.7) (0.7) 102.1 (571.4) (177.8)Result before tax and minority interests 5.8 5.1 4.3 11.8 18.6 13.1Result after tax and minority interests 3.8 3.8 2.8 7.9 35.7 64.7


STAFF

Category 2003 2002 2001

Managers 136 137 110Clerical staff 813 874 900Commercial staff 51 37 45IT staff 36 76 66Other 1,203 730 702

TOTAL 2,239 1,854 1,823

INFORMATION ON CLAIMS MANAGEMENT

Item 2003 2002 2001

Number of reports processed 2,440,590 2,083,993 1,622,568Ratio of claimsto net premiums written 77.0 77.3 85.1Number of insured clients 42,386,415 35,311,874 32,025,704


At the close of 2003, the prospects for the reinsurance point to a continuation and

consolidation of the main positive aspects which characterised the preceding year.

Executive Committee Compliance Committee

Chairman

Vice-Chairman Chairman

Member

Member

Member

Member

Member

Member

MemberMemberMember

Board of DirectorsExecutive Chairman

Mr. Andrés Jiménez Herradón

Vice-ChairmanMr. Matías Salvá Bennasar

Secretary

* Includes appointments and re-elections to be submitted to the General Meeting.

DirectorsMr. Ángel Alonso BatresMr. Ricardo Blanco MartínezMr. Donald J. Duello (Shelter Mutual Insurance Company)Mr. Lorenzo Garagorri OlavarrietaMrs. María Luisa López CanoMr. Rolf Mehr (Vaudoise Assurances Holding)Mr. Juan Antonio Pardo OrtizMr. George A. Prescott (Ecclesiastical Insurance Office)Mr. Gregorio Robles MonchónMr. Agustín Rodríguez GarcíaMr. Francisco Ruiz RisueñoSocietá Cattólica di Assicurazione (Represented by Mr. Ezio Paolo Reggia)Mr. Domingo Sugranyes BickelMr. Primitivo de Vega Zamora

Director and General Manager

Mr. Claudio Ramos Rodríguez

Mr. Pedro de Macedo Coutinho de Almeida

GOVERNING BODIES

REINSURANCE UNIT | pag. 251 ·257

Head office of MAPFRE RE (Madrid)

* This Operating Unit is formed by parent company MAPFRE RE and its subsidiaries MAPFREREINSURANCE CORPORATION (USA), CAJA REASEGURADORA DE CHILE, CIAR (Belgium) and MAPLUXRE (Luxembourg).


Generally speaking, in 2003 business conditions continued at the sufficient level observed in

2002. The technical results of reinsurance operations maintained their positive development,

confirming the expectations of a recovery in results compared to previous years. The change

of trends which occurred in 2002 and the stability reflected by the market in 2003 underpin

the continuance of these expectations for 2004 as well.

A number of significant natural catastrophes occurred in 2003, such as hurricane Isabel and

tornados in the United States, flooding in southeast France, the heat wave in Europe and the

Bam earthquake in Iran. Nevertheless, their effects did not have a severe impact on

reinsurers’ results generally.

Interest rates continued at one of their lowest levels of the last few decades and the stock

markets continued their bullish trend, which allowed to obtain good realisation profits. The

Single European Currency continued to appreciate against the US Dollar and other

currencies, which limited business growth in markets tied to those currencies.

In 2003, rating agencies have continued to apply pressure to the reinsurance sector by

maintaining a cautious stance, mainly because of the inability of some reinsurers to generate

sufficient profits to remunerate their shareholders and increase their equity organically, even

in spite of an environment characterised by positive technical results. Rating changes over

the last two years were so significant that in 2004 only limited further adjustments can be

expected. The insurance companies have continued basing their reinsurance placement

decisions on the financial strength ratings of reinsurers.

The weak profitability of certain reinsurers has been due mainly to upwards adjustments in

claims reserves, although in 2003 these adjustments have had a lesser impact on profit and

loss accounts. However, such reserve adjustments will continue in the future, especially for

companies whose portfolios contain a greater component of third-party liability risk.

These circumstances are producing a redistribution of market shares in the reinsurance

sector, leading to a loss of importance for some reinsurers in favour of other reinsurers,

which, for various reasons, have been able to maintain appropriate results and financial

strength ratings.

MAPFRE RE ended fiscal year 2003 satisfactorily, both in terms of increased turnover and

results, as well as in terms of its solvency, which was highly regarded in the market. Having

not suffered stock market capital losses, and maintaining an adequate levels of reserves, it

has been able to seize the growth opportunities offered by a much more stable market with

sound expectations of positive technical results, in which the improvement in its financial

strength rating has made it stand out favourably.




Intangible assets 4.2 4.5 5.4and start-up expenses Capital and reserves 296.5 244.3 269.1

Net profit 29.1 22.7 0.8

Investments 973.2 774.2 767.9 Deferred income 0.9 0.7 0.0

External shareholders 0.1 0.1 0.3Participation by reinsurance 245.3 258.3 259.7in technical reserves Technical reserves 889.7 799.3 822.5

Provisions for risks and expenses 2.7 1.6 0.8



Accruals 66.0 50.4 45.0 Accruals 26.0 19.3 14.2



PROFIT AND LOSS

Item 2003 2002 2001

Gross written and accepted premiums 866.4 760.1 687.9Net written and accepted premiums 579.6 475.7 450.8Net premiums earned 503.5 413.7 460.7Claims incurred (319.6) (262.5) (361.4)Commissions paid (148.2) (130.4) (120.6)Technical result 35.7 20.8 (21.3)

Management expenses (28.7) (29.0) (29.3)Net investment income 34.3 38.6 46.6Net extraordinary income/(loss) 0.3 (0.2) 1.7Result before tax and minority interests 41.6 30.2 (2.3)



INVESTMENTS

Item 2003 2002 2001

Real estate 76.5 52.6 65.8Investments in group companies 10.3 12.0 14.4Other financial investments 707.9 552.3 549.0Deposits established for accepted reinsurance 178.4 157.3 138.7Cash 17.0 62.1 73.6

TOTAL INVESTMENTS 990.1 836.3 841.5


0 2000 4000 6000 8000 10000 12000year · 2001 |

year · 2002 |

year · 2003 |

65.8

14.4

622.6

138.7

841.5

52.6

12

614.4

157.3

836.3

76.5

10.3

707.9

178.4

990.1

Real Estate Deposit established for accepted reinsuranceInvestments in group companies

Other financial investments Total investments


year · 2001 |

year · 2002 |

year · 2003 |

957.3

714.1

961.3

749.5

1,018.6

827.1




Balance Sheet

› Consolidated shareholders’ equity was _325.6 million, a 22% increase with respect to the

previous year, primarily due to the _60 million capital increase carried out in this year.

› Net technical reserves amounted to _644.4 million, a 19.1% increase with respect to the

previous year, and were equal to 111.2% of net premiums written.

› Investments totalled _973.2 million, which broke down into: real estate, _76.5 million;

financial investments, _886.3 million; and investments in Group companies, _10.3 million.

› Cash and other liquid assets amounted to _17.1 million.

› Total consolidated assets stood at _1,429.6 million, against _1,276.7 million the previous

year.


› Consolidated premiums written reached _866.4 million, a 14% increase over the previous

year. Net premiums written reached _579.6 million, a 21.8% increase over the previous

year.

› The combined ratio, calculated as a percentage of net premiums earned, was 92.5%, a

significant reduction with respect to the figure for the previous year, which was 98.3%.

› The loss ratio, calculated as a percentage of net premiums earned, was 63.5%, a slight

increase with respect to the figure for the previous year, which was 63.4%.

| 9% Facultative| 15% No proportional| 76% Proportional|

| 14% Latin America| 3% Row| 28% Europe| | 9% USA | 46% Spain

| 6% Marine and Transport| 7% Motor| 9% Other| | 8% Life and Accidents| 70% Property

Breakdown of the portfolio by type of business

Breakdown of the portfolio by region

Breakdown of the portfolioby branch of business


› As a percentage of net premiums written, commission and other acquisition expenses

stood at 25.6% and administrative expenses at 5%, both decreasing with respect to the

27.4% and 6.1%, respectively, recorded last year.

› The net operating result was a profit of _7 million, against a loss of _8.2 million the

previous year.

› Net financial income was a profit of _34.3 million, lower than the _38.6 million recorded

the previous year.

› The profit and loss account shows a profit of _41.6 million before tax and minority interests

and a profit of _29.1 million after tax and minority interests.

MAIN ACTIVITIES

The creation of the new Commercial Insurance Unit of SISTEMA MAPFRE was an

extraordinary development opportunity for ITSEMAP. Therefore, at its meeting held on 16

June 2003, the Board of Directors agreed the sale of 60% of the shares in that company to

MAPFRE INDUSTRIAL, the remaining 40% being retained by MAPFRE RE, which will continue

its policy of co-operating with ITSEMAP.

In its meeting of 3 December 2003, the Board of Directors approved a _150 million capital

increase aimed at strengthening the capital and reserves of MAPFRE RE and its subsidiary

MAPFRE REINSURANCE CORPORATION in order to support the growth in business volumes

expected for 2004. The new shares will be subscribed for in the first four months of 2004.

STAFF

2003 2002 2001

In Spain 131 137 131Abroad 191 182 180Total 322 319 311MAPFRE RE 253 252 255ITSEMAP 69 67 56


Item 2003 2002 2001

% retention rate 66.9 62.6 65.5% reserves to net premiums written 111.2 113.7 124.9% claims to net premiums earned (Non-life) 58.4 60.9 80.3% of commissions to net premiums earned (Non-life) 34.1 37.4 31.2% of management expenses to net premiums earned (Non-life) 92.5 98.3 111.5


The building housing the representative office of MAPFRE RE in Argentina was sold at the end

of 2003 and purchased by the Spanish State for its diplomatic service. The office referred to

above was transferred to a new building of high standing in the capital.

The relevant US authorities approved the transfer of the registered office of MAPFRE

REINSURANCE CORPORATION from the State of California to the State of New Jersey where

its head office is also located. The installation of the company’s SAP computerised accounts

administration module was also completed.

In 2003, an ambitious, detailed business plan to last until 2006 was drafted. This document

was prepared over several months with the contribution of the entire management team of

the company, both of the headquarters and of the overseas offices, and has been approved by

the Board of Directors. It covers the company’s scope of activity for the 2004-2006 period and

will provide a reference for the activities of MAPFRE RE over those years.

The implementation of new IT tools, both internally developed and acquired from third parties,

has continued in order to allow a better management of the business.

MAPFRE RE has continued to provide various services to its customers, directly and through

ITSEMAP, primarily risk inspections and training courses. Of the latter, 16 have been held in

11 countries and attended by 399 professionals.

TREBOL, MAPFRE RE’s quarterly magazine, has been redesigned and given a more attractive

layout. Although its content will not change significantly, topics will be tackled in a simpler

and more flexible manner.

OUTLOOK

In 2004, reinsurance companies will continue to need a positive technical result in order to

give shareholders an adequate return and to rebuild their reserves, which means that current

conditions can be expected to remain stable. The Bermuda market, which arose after 11

September 2001, is likely to experience a process of consolidation, which will lead it to win

market share and record balanced results. Therefore, current rates and business conditions

are likely to remain stable, except those which have experienced drastic increases over the

last two years, which could show a slight reduction.

Given this background, a stable year can be expected, in which it should be possible to achieve

adequate technical results and to obtain substantial increases in accepted premiums and

results, based on a prudent underwriting policy aimed at providing a satisfactory return to

shareholders. Subsidiary MAPFRE REINSURANCE CORPORATION (USA) is expected to make

a significant contribution to the achievement of these targets, in line with the market in which

it operates.


In 2003, MAPFRE INMUEBLES and its subsidiaries achieved a profit before tax of _9.1 million,

a 60% increase with respect to the previous year, and made further investments in Oviedo in

land intended for housing development and offices.


ChairmanMr. Fausto Rodríguez del Coso Chairman

Vice-Chairman Mr. Rafael Fontoira Suris Vice-Chairman

DirectorsMr. Ricardo Blanco MartínezMr. Juan Fernández-Layos RubioMr. Rafael Galarraga SoloresMr. José Manuel González PorroMr. Luis Leguina CebreirosMr. Miguel Lladó OliverMr. Antonio Miguel-Romero de OlanoMr. Oswaldo Román LorenteMr. Domingo Sugranyes Bickel

Member

Member

Member

Member

Secretary (not a director)Mr. Roberto Isaías Invernon Sacristán Member

General ManagerMr. Julián Salcedo Gómez

Includes appointments and re-elections to be submittedto the General Meeting.

GOVERNING BODIES

MAPFRE INMUEBLES | pag. 259 ·264

Residential development in Costa Ballena,(Cádiz)


KEY FIGURES

Balance Sheet

› Fixed assets amounted to _10.2 million, virtually the same as last year.

› Current assets stood at _97.7 million, a 33% increase.

› Shareholders’ equity reached _46.4 million, a 7% increase.

› Current liabilities amounted to _52.2 million, a 40% increase.


› Net earnings amounted to _49 million, a 43% increase.

› General expenses were _5.4 million, a 9% increase.

› Financial income amounted to _0.1 million and financial expenses _0.8 million.

› Consolidated profit before tax was _9.1 million, a 60% increase with respect to the previous

year, and comes virtually in its entirety from ordinary operations. Profit after tax was _5.8

million, a 64% increase.

MAIN ACTIVITIES

Property Development

› The sale of plots in sector 30-C Alcalá de Henares, an area in which the company has a

75% holding, has continued. At the end of the year, there remained only one plot available

be sold, and so this development can be considered to be completed. The leasing of two

blocks of modular buildings for logistical use has also continued; these consist of a total

of ten buildings, only one of which was still available at the end of the year.

› The leasing of the office block and commercial premises located in Oporto (Portugal), in

which the company has a 22.66% holding, as well as the car park for use as public parking,

has also continued. At the end of the year, 70 offices were leased, as were all the

commercial premises and 146 parking places.

› The properties comprising the second phase of the development of plot RO-RG-6 in Costa

Ballena (Cadiz) were completed and delivered to the purchasers. This is the fourth

constructed by the company in the said development, which has a total of 170 homes and

138 parking spaces.


› The second phase of the development of 37 homes and 37 parking spaces in Mataró

(Barcelona) has been concluded. The whole of the development has been sold and the

properties were delivered to purchasers in January 2004.

› Construction work has continued on a development of 30 homes, one shop and 39 parking

spaces in Barcelona (Calle Bilbao). At the end of the year, 27 homes and 27 parking spaces

had been sold. Completion and delivery is scheduled for the second quarter of 2004.




Investments 10.0 10.1 10.4 Net profit 5.8 3.5 11.6

Stocks 57.2 48.1 40.6 Credit institutions 23.3 11.1 0.0

Credits 21.3 23.7 15.8 Other debts 30.6 27.2 35.8




PROFIT AND LOSS

Item 2003 2002 2001

› Net turnover 49.0 34.1 56.9› Variation in stocks of current developments

and finished buildings 0.0 3.4 (2.2)› Stocks of current developments and finished buildings

included in fixed assets 0.0 0.0 2.5› Supplies (33.3) (26.8) (34.8)› Operating expenses (5.3) (4.9) (4.6)Operating profit 10.4 5.8 17.8› Investment income 0.1 0.2 0.4› Investment expenses (0.8) (0.4) (0.4)Net investment income (0.7) (0.2) 0.0› Extraordinary income and profit 0.1 0.2 0.2› Extraordinary expenses and losses (0.7) (0.1) (0.2)Net extraordinary result (0.6) 0.1 0.0Result before tax and minority interests 9.1 5.7 17.8



› Work has begun on another development in Barcelona (Calle Bac de Roda), which will have

a total of 55 homes, three shops and 85 parking spaces, the marketing of which began in

January 2004.

› The development work of the company INMOBILIARIA BRAVO UREÑA S.L., in which the

company has a 50% holding, is continuing in Sector V-2 of Las Rozas (Madrid). The

development has 70 homes and 119 parking spaces of which 55 homes and 95 parking

places were sold at the end of the year. Completion and delivery is scheduled for the

second quarter of 2004.

› Work has begun on the development in Madrid (Calle Gil Imón) which will have a total of 64

homes and 86 parking spaces, of which 35 homes and 47 parking spaces were reserved at

the end of the year). Completion and delivery is scheduled for the second quarter of 2005.

› The town planning work is under way on the plot which will accommodate a development

of 175 homes in ‘Calahonda’ (Malaga) which is due to be carried out in several stages. The

0 2000 4000 6000 8000 10000 12000year · 2001 |

year · 2002 |

year · 2003 |

10.6

34

16.1

60.7

10.5

38

0.6

49.1

10.6

47.5

18.9

77

Rental property Lands and sitesOther investments Total investments


INVESTMENTS

Item 2003 2002 2001

Rental property 10.6 10.5 10.6Land and sites 47.5 38.0 34.0Other investments 18.9 1.6 16.1

TOTAL INVESTMENTS 77.0 50.1 60.7



completion of the town planning work and the commencement of the marketing of the first

phase, consisting of 55 homes and 104 parking spaces, will take place in the first quarter

of 2004.

› A plot has been acquired in the ‘Monte Cerrao’ development in Oviedo, on which there will

be a property development comprising homes and an office block intended for the new

head office for the Asturias sub-centre of SISTEMA MAPFRE. The basic plans are now

available and planning permission for both developments has been applied for.

› Sales of available stocks from developments completed in previous years, mainly parking

spaces, is continuing. At the end of the year, four homes, one shop and 61 parking spaces

were awaiting sale, some of which were leased.

› The sound proofing work on the motorway and the construction of new accesses has been

completed in the Valle del Este Golf Complex (Almería). The golf course has been opened

and construction work on the hotel for this complex is continuing. The company has four

plots for the construction of 182 homes in the complex.

STAFF

Category 2003 2002 2001

Managers 13 13 12Clerical staff 17 16 11Others 17 18 32

TOTAL 47 47 55



Net turnoverSales 34.3 29.4 53.1 16.7 (44.6) 116.1Rental income 0.6 0.7 0.5 (14.3) 40.0 31.1Services 14.1 3.9 3.2 261.5 21.9 (2.2)

Operating expensesPersonnel 3.9 3.6 3.2 8.3 12.5 12.6Amortisation 0.2 0.1 0.2 100.0 (50.0) 14.6Other operating expenses 1.2 1.0 1.0 20.0 - (0.8)

Result before tax and minority interests 9.1 5.7 17.8 59.6 (68.0) 337.0Result after tax and minority interests 5.8 3.5 11.6 65.7 (69.8) 362.0



› Refurbishment work has commenced on a building in the Calle Compás, in Jerez de la

Frontera, intended for commercial premises and offices. The work is due to be completed

by the second quarter of 2004.

› Town planning negotiations are continuing on the plot located in the ‘Sector Llevant’ of

Palma de Mallorca, which already has final approval for the amendment to the Palma

Urban Development General Plan with total acknowledged space for building of 35,840 m2.

The new version of the Marbella Urban Development General Plan, which affects the ‘Coto

Chico’ property owned by the company, is also still awaited.

Property Services

› In 2003, the Engineering and Architecture Divisions have handled various projects for the

homes developed by the company and for the development of buildings intended for

SISTEMA MAPFRE.

› In 2003, works to the value of _16.5 million have been handled, outstanding among which

are the expansion of the head office of MAPFRE MUTUALIDAD in Majadahonda, the

construction of the Vehicle Processing Centre in Ávila and an office block in Las Palmas de

Gran Canaria, and the refurbishment of two buildings, one in Las Palmas and the other in

Valencia, as well as various building refitting works and the demolition of the existing

structure on the Fuencarral to Alcobendas road plot (Madrid) on which a business park

consisting of three office blocks is to be developed.

› The following services, primarily for companies in SISTEMA MAPFRE, have been carried

out in 2003 through subsidiary SERVICIOS INMOBILIARIOS MAPFRE:

- Commercial management of leased premises with leasing agreements signed for a total

of 92,031 m2.

- Property administration and maintenance.

In 2003, leasing revenues from the buildings managed by the company amounted to _57.5

million and maintenance costs to _13.7 million. Leased floor area represents a total of 281,013

m2, 3% more than the 272,879 m2 in the previous year. The most significant property

purchases and sales managed by the company for SISTEMA MAPFRE in the year include the

sale of the building at Avda. Diagonal No. 579 (Barcelona) and the acquisition of a plot of land

in Malaga, opposite the city’s Conference Centre.

OUTLOOK

The estimates contained in the company’s objectives plan foresee earnings and profits before

tax increasing to more than _110.2 and _10.3 million, respectively, by 2006.


2003 was the first full year of operation of the bank in its new role as holding company of

finance companies FINANMADRID and MADRID LEASING, in which its shareholding is virtually

100%, and BANCOFAR, in which it holds 51%. In October 2003 the bank’s shareholding in 4B

was sold, because the investment lacked strategic value in view of the company’s new focus.

The performance of the companies in 2003 was generally very satisfactory, both in respect of

production and results. The growing contribution of the territorial structure of SISTEMA

MAPFRE to the distribution of the products of FINANMADRID and MADRID LEASING,

especially car loans, is worthy of mention.


ChairmanMr. Ramón Ferraz Ricarte Chairman

Vice-Chairman Mr. Santiago Gayarre Bermejo Vice-Chairman

Managing DirectorMr. José Mª García Alonso Member

DirectorsMr. Matías Amat RocaMr. Carlos Llaneza AllerMr. Alberto Manzano MartosMr. Mariano Pérez ClaverMr. Alfonso Rebuelta BadíasMr. Ildefonso Sánchez Barcoj

Member

Member

Secretary (not a Director) Mr. Salvador Escribano Guzmán Secretary

Vice-Secretary (not a Director)Mr. Claudio Ramos Rodríguez

GOVERNING BODIES

BANCO DE SERVICIOS FINANCIEROS CAJA MADRID-MAPFRE | pag. 265 ·268

Banco de Servicios Financieros CAJAMADRID-MAPFRE




Real estate 10.0 11.9 5.2 Capital and reserves 214.8 229.8 223.1

Credit 2,132.2 1,791.3 2,453.8 Special funds 51.6 41.9 49.2

Doubtful assets 26.7 26.6 37.7 Profit/loss for the year 6.5 11.1 6.9

Other assets 135.5 114.4 96.3 Payables 203.2 157.4 788.6

Other liabilities 1,828.3 1,504.0 1,525.3



PROFIT AND LOSS

Item 2003 2002 2001

Financial revenues 117.2 128.0 169.2Financial expenses (59.7) (64.9) (97.6)Dividends - - 0.1

Net interest income 57.5 63.1 71.7Fees received 5.9 6.1 9.4Fees paid (9.8) (8.2) (8.1)Net trading income - 0.1

Ordinary income 53.6 61.1 73.2Other operating income 0.2 0.1 0.1Administration expenses (26.4) (33.9) (48.1)Depreciation and amortisation (2.3) (2.9) (3.5)Other operating expenses (0.2) (0.3) (0.8)

Operating profit 24.9 24.1 20.8Amortisation of goodwill (2.9) (2.7) (2.6)Write-offs and provisions for bad debts (12.6) 0.8 (6.8)Write-downs of financial investments 1.3 - (0.1)Appropriation to the fund for general banking risk - - (0.1)Net extraordinary income/(loss) 0.6 (7.2) 0.5

Results before tax and minority interests 11.3 15.1 11.7



BANCO DE SERVICIOS FINANCIEROS CAJA MADRID-MAPFRE and its subsidiaries closed 2003

with consolidated investments of _2,132.2 million, a 19% increase over 2002. Borrowings

amounted to _203.2 million, a 29.1% increase. With regard to the Profit and Loss account,

ordinary income was _53.6 million, a fall of 12.3%, whereas operating expenses amounted to

_28.9 million, a reduction of 22.1%. Consolidated profit was _6.5 million, a drop of 41.4%

compared with fiscal year 2002.

It should be noted that any comparison with 2002 is distorted by the fact that the figures for

that year included five months’ operations of the old direct banking business of BANCO DE

SERVICIOS FINANCIEROS CAJA MADRID-MAPFRE.

FINANMADRID

The main products sold by this company are car loans and financing through factoring and

confirming.

The production of car loans amounted to _276.7 million, a 28.1% increase over 2002. It is worth

noting the significant growth of the business originated through the MAPFRE network, with a

volume of _70.2 million.

The production of factoring and confirming operations amounted to _1,046.3 million, a 72.8%

increase over the previous year. It should be noted that CAJA MADRID contributed 92.5% of the

amounts relating to these products, equal to a 73% increase over the previous year.

Total income reached _30.7 million, with a year-on-year variation of 21.5%. Operating expenses

amounted to _15 million (10.9% more than in 2002). The operating profit was _12.4 million, an

increase of 28.9%, and the pre-tax profit was _6.4 million, 29.5% more than in the previous

year.

MADRID LEASING

This company’s new business amounted to _365.6 million, up by 27.7% on the previous year.

the ordinary income reached _12 million, an increase of 0.2% on 2002. Operating expenses

were _5.4 million, a reduction of 13%. The pre-tax profit was _3.9 million, a 9.2% increase over

the previous year.


BANCOFAR

The customer loans of this company reached _415.1 million, an increase of 34.3%. In particular,

mortgage loans stood out, having grown by 31.9% and representing 64.9% of the loan portfolio.

Customer funds on the balance sheet reached a volume of _203.2 million, 29.1% up on the

figure for 2002. Off-balance sheet funds, investment funds and pension plans, fell by 7.2% to

_59 million.

Ordinary income was _11.2 million, an increase of 17.9%. Operating expenses were down by

0.5%. The pre-tax profit was _2.6 million, up 41.7% on 2002.

The efficiency ratio went from 66.3% in 2002 to 55.9% in 2003. The non-performing loans ratio

remained stable at 0.1%, the lowest in the entire financial sector with a coverage level of

3,974%.

OUTLOOK

During 2004 new projects of considerable importance for the development of the subsidiaries

of BANCO DE SERVICIOS FINANCIEROS CAJA MADRID-MAPFRE will be put in motion, such as

the software application for car loans, a wider range of personal loans, the outsourcing of loan

recovery operations, the strengthening the distribution network, and specialisation by

FINANMADRID and MADRID LEASING in corporate and consumer products, respectively. All

these projects aim to achieve sustained growth in turnover and results in the coming years.

The MAPFRE network will play a key role in this future growth, both by extending the

distribution of loans to a larger number of agents and delegates, and through the increased

number of operations that can be processed with the new IT tools, which will speed up

handling times.

Corporate Governance


MAPFRE MUTUALIDAD de Seguros y Reaseguros a Prima Fija (hereinafter, MAPFRE MUTU-

ALIDAD) is a private insurance company which has the purpose of offering its members or

mutualists, whether private individuals or companies, coverage against the insured risks by

way of payment of a fixed premium payable at the commencement of the risk period. Status

as a mutualist is inseparable from that of a policyholder. As a result, all policyholders who

are in full compliance with their obligations have the same rights and duties.

MAPFRE MUTUALIDAD is governed by its by-laws, the Regulation and Supervision of Private

Insurance Act 30/1995, dated November 8th (‘Ley de Ordenación y Supervisión del Seguro Pri-

vado, 30/1995’), and its implementing provisions, which regulate the basic rules arising from

its special legal nature. The Companies Act is applicable on a subsidiary basis to Act 30/1995

and the by-laws, in all matters which are not incompatible with its nature as a mutual com-

pany.

MAPFRE MUTUALIDAD, which specialises in Motor Insurance in Spain, is the parent compa-

ny of SISTEMA MAPFRE. SISTEMA MAPFRE is an independent Spanish business group which

carries on insurance, re-insurance, financial, real estate, and service activities in Spain and

in a further thirty-six countries.

MANAGEMENT STRUCTURE OF THE COMPANY

1) Board of Directors

The Board of Directors as at December 31st 2003 is composed as follows:

MAPFRE MUTUALIDAD and SISTEMA MAPFRE |

EXECUTIVE BOARD MEMBERS

Name Position

MR. JOSE MANUEL MARTÍNEZ MARTÍNEZ Chairman

MR. FILOMENO MIRA CANDEL First Vice Chairman

MR. ALBERTO MANZANO MARTOS Third Vice Chairman

MR. SANTIAGO GAYARRE BERMEJO Managing Director

MR. SEBASTIÁN HOMET DUPRÁ Member

MR. ANDRÉS JIMÉNEZ HERRADÓN Member

MR. DOMINGO SUGRANYES BICKEL Member

MR. PRIMITIVO DE VEGA ZAMORA Member

INDEPENDENT EXTERNAL BOARD MEMBERS

Name Position

MR. FRANCISCO RUIZ RISUEÑO Second Vice Chairman

MR. RAFAEL BECA BORREGO Member

MR. JUAN FERNÁNDEZ LAYOS RUBIO Member

MR. RAFAEL FONTOIRA SURIS Member

MR. PEDRO GUILLÉN GARCÍA Member

MR. LUIS HERNANDO DE LARRAMENDI MARTÍNEZ Member

MR. RAFAEL MÁRQUEZ OSORIO Member

MRS. FRANCISCA MARTÍN TABERNERO Member

MR. ANTONIO MIGUEL-ROMERO DE OLANO Member

MR. ALFONSO REBUELTA BADÍAS Member

MR. AGUSTÍN RODRÍGUEZ GARCÍA Member

MR. MATÍAS SALVÁ BENNASAR Member

MR. PEDRO UNZUETA UZCANGA Member

MR. FRANCISCO VALLEJO VALLEJO Member

CORPORATE GOVERNANCE | pag. 273


NON-INDEPENDENT EXTERNAL BOARD MEMBERS

Name Position

MR. RAFAEL GALARRAGA SOLORES Member

MR. LUIS LEGUINA CEBREIROS Member

BOARD MEMBERS NOMINATED BY THE EMPLOYEES

Name Position

MRS. Ma. TERESA MUTILOA LECUMBERRI Member

MR. JUAN IGNACIO PÉREZ ÍÑIGUEZ Member

SECRETARY (NOT A DIRECTOR)

Name Position

MR. JOSÉ MANUEL GONZÁLEZ PORRO Secretary

2) Powers of the Board of Directors

Pursuant to the legal provisions and to the Company by-laws, the Board of Directors is the HIGH-

EST REPRESENTATIVE, GOVERNING, AND MANAGEMENT BODY of MAPFRE MUTUALIDAD.

Therefore, it has all powers of representation, disposal, and management which are not reserved

by law or pursuant to the by-laws for the General Meeting or for other bodies of the company.

It is the HIGHEST SUPERVISORY AND DECISION-MAKING BODY of MAPFRE MUTUALIDAD

and the HIGHEST SUPERVISORY BODY of the whole of SISTEMA MAPFRE, whilst manage-

ment is carried out by the management and executive bodies of MAPFRE MUTUALIDAD and

by the corresponding corporate bodies of the subsidiary companies.

It may delegate such powers as it deems appropriate, except for those which may not be del-

egated by law or by the Company by-laws, and such powers as are necessary in order to prop-

erly perform its general supervisory duty.

The board members do not have delegated powers. Some of them have limited powers of

attorney.

3) Remuneration of members of the Board of Directors

Pursuant to the provisions of Article 26 of the Company By-laws, board members receive the

following remuneration:

› The basic remuneration of external board members is an allowance for attendance at

board meetings, which in 2003 stood at ¤2,090. Furthermore, they benefit from life insu-

rance in the event of death, with an insured capital of ¤150,253.03, and they enjoy some of

the benefits accorded to staff, such as health insurance.


External board members who are members of Delegated Committees also receive a fixed

annual amount for their committee membership, which in 2003 stood at ¤13,225 for the

Management Committee and the Institutional Control Committee, and ¤9,940 for the Dele-

gated Committees.

› Executive board members receive the remuneration stipulated in their employment con-

tracts, which includes a fixed amount, incentives of a variable amount linked to results, life

and disability insurance, and other consideration laid down in general terms for the staff

of the various entities of SISTEMA MAPFRE. In addition, they are granted certain pension

facilities in the event of retirement which are externalised by way of life insurance, all of

which falls within the remuneration policy established by SISTEMA MAPFRE for Senior

Managers, whether or not they are board members.

Executive board members, however, do not receive the remuneration laid down for exter-

nal board members, except for the fixed amount established for membership of the Mana-

gement Committee of SISTEMA MAPFRE.

The basic remuneration for external board members is contained in a proposal made by the

Board of Directors and submitted for approval to the General Meeting, following a report by

the Appointments and Remuneration Committee of SISTEMA MAPFRE and the Institutional

Control Committee. The remuneration of executive board members and the fixed amounts of

the external members of the Delegated Committees are approved by the Board of Directors

following a report by the said Committee.

Pursuant to Article 6 of the Company by-laws, in the event that the Company is dissolved or

transformed, the Board Members, Managers, and Employees may not reserve any participa-

tion or preferred right over the tangible or intangible assets of MAPFRE MUTUALIDAD, with-

out prejudice to what they may be entitled to by virtue of their condition as policyholder.

The Report containing the Annual Accounts provides the relevant information concerning the

amount of the remunerations referred to at the above paragraphs received during fiscal year

2003 by the members of the Board of Directors.

4) Procedure for the appointment, re-election, and removal of board members

Those persons who are offered the position of board member of MAPFRE MUTUALIDAD or of

a subsidiary Company should make a prior statement that is truthful and complete of their

relevant personal, family, professional, or business circumstances, and in particular of those

which may give rise to a situation of incompatibility in accordance with the laws, the Compa-

ny by-laws, and the provisions of the Code of Good Governance, or a situation of conflict of

interest. The said statement shall be made using the form which SISTEMA MAPFRE provides

for this purpose.

The formulation of candidatures by the Board of Directors for submission to the General

Meeting, and the decisions taken by the General Meeting with regard to the appointment of

board members shall be preceded by the proposals of the Appointments and Remunerations

Committee of SISTEMA MAPFRE, and by the Report of the Institutional Control Committee.


Proposals for the re-election of board members are subject to a process which necessarily

includes a report issued by the said Appointments and Remunerations Committee, assessing

the quality of the work carried out and the dedication to the position which the nominees have

shown during their preceding terms.

Where a board member holds a position on the Board of Directors (Chairman, Vice Chairman,

or Secretary), the report includes an assessment of how the said position has been per-

formed, so that the Board of Directors may express its opinion on whether the board mem-

ber should continue in the position.

Should the Board of Directors differ from the Committee’s proposal, it should give reasons

for its decision and record these in the corresponding minutes.

5) Circumstances under which board members are under a duty to resign

Pursuant to the provisions of the Company by-laws and the Code of Good Governance of SIS-

TEMA MAPFRE, all members of the Board of Directors shall cease to hold office upon reach-

ing the age of 70. Senior executives shall retire at the age of 65, but may continue as board

members.

Board members shall place their position at the disposal of the Board of Directors, and where

appropriate in the opinion of the said Board, submit their resignation, under the following cir-

cumstances:

› Where they cease to hold the executive position to which their appointment as a board

member is linked.

› Where they should fall within any circumstances of incompatibility or prohibition provided

for by law.

› Where they are charged with an alleged criminal offence or are the subject of disciplinary

proceedings for a serious or very serious offence commenced by the supervisory authori-

ties.

› Where they are severely reprimanded by the Compliance Committee for having breached

their duties as board members.

› Where the continued membership of the Board may put the interests of the Entity at risk,

and where the reasons for which they were appointed – where these expressly exist – cease

to exist.

6) Maximum and minimum numbers of board members provided for in the by-laws

The maximum number of board members is 30, and the minimum number is 10.

7) Requirements in order to be appointed as a board member

7.1. Legal requirements and requirements of the by-laws


a) Professional qualification

› Título universitario o cinco años de experiencia en funciones de alta administración, direc-

ción, control o asesoramiento de entidades financieras sometidas a ordenación y supervi-

sión de solvencia por la Administración o funciones de similar responsabilidad en otras

entidades públicas o privadas de dimensiones y exigencias análogas a las de la Sociedad.

b) Personal and professional integrity

› No previous convictions for crimes involving dishonesty, breach of confidentiality, disclo-

sure and leaking of secrets against the Public Tax Authorities or the Social Security,

misappropriation of public funds, or any other crimes against property.

› Personal career showing respect for business legislation and other laws regulating econo-

mic and business activities, as well as proper commercial, financial, and insurance practice.

› Not to be disqualified from holding public office, or administrative or managerial positions

at financial, insurance, or insurance brokerage institutions.

› Not to be an un-reinstated bankrupt, except where, subject to a judicially-approved agre-

ement, such person is permitted to conduct business.

c) Capacity and compatibility

› Not to be subject to any incapacity, prohibition, or incompatibility provided for by law.

d) Age

› Not to have reached the age of 70.

7.2 Requirements laid down in the Code of Good Governance of SISTEMA MAPFRE

a) For all board members

› To be of renowned solvency, propriety, competence, and experience, in addition to being a

policyholder.

› Not to be subject to circumstances which may give rise to his participation on the Board

amounting to a risk for the interests of the Company.

› To have made a prior truthful and complete statement of his personal, family, professio-

nal, or business circumstances and in particular regarding anything which may give rise to

incompatibility in accordance with the law, the Company by-laws, and the provisions of the

Code of Good Governance, or any conflict of interest.

› Not to have a significant interest in insurance institutions or institutions belonging to other

financial groups, or to be a board member, manager, or employee of any such institution,

except where the appointment as board member is in representation of financial institu-

tions which have a holding which entitles them to such appointment.

Notwithstanding, the board member may be excused from this requirement in the event that

he is a candidate proposed by the Board itself; however, the number of board members to

which this circumstance applies may not exceed 15% of the Board of Directors as a whole.


› To accept the Code of Good Governance of SISTEMA MAPFRE, and to undertake to abide

by the rules therein in the performance of his position.

b) For independent board members

› Not to hold, or to have held within the last two years, any managerial position within SIS-

TEMA MAPFRE.

› Not to be related by kin or affinity up to the second degree, with executive board members

or managers of SISTEMA MAPFRE.

› Not to have made or received any significant payments from the Company which may

directly or indirectly affect his independence.

› Not to have other contractual, professional, or business relations with the Company which, by

reason of their significant nature, may restrict his independence to act as a board member.

For the purposes of the two preceding sections, payments or relationships which involve the

receipt of amounts which represent more than 5% of the person’s – or the Company’s – total

income, as the case may be, shall be deemed to be significant.

8) Approval of resolutions

The Board of Directors shall be quorate on first call when those in attendance, either in per-

son or by proxy, represent one half plus one of the members thereof, and the Chairman or one

of the Vice Chairmen is in attendance, or the Chairman has given his express consent, and on

second call one hour thereafter, irrespective of the number of members in attendance. Reso-

lutions are approved by way of a simple majority of votes cast, and the person chairing the

meeting shall have a casting vote.

COMMITTEES OF THE BOARD OF DIRECTORS

1) Composition of the Delegated Committees of the Board of Directors

INSTITUTIONAL CONTROL COMMITTEE

Name Position

MR. JOSÉ MANUEL MARTÍNEZ MARTÍNEZ Chairman




MR. JUAN FERNÁNDEZ-LAYOS RUBIO Member





MR. PEDRO UNZUETA UZCANGA Member


MANAGEMENT COMMITTEE

Name Position





MR. SANTIAGO GAYARRE BERMEJO Member


MR. SEBASTIÁN HOMET DUPRÁ Member

MR. ANDRÉS JIMÉNEZ HERRADÓN Member

MR. DOMINGO SUGRANYES BICKEL Member

MR. PRIMITIVO DE VEGA ZAMORA Member

AUDIT COMMITTEE

Name Position


MR. FRANCISCO RUIZ RISUEÑO Vice Chairman


MR. MATÍAS SALVÁ BENASSAR Member


MR. ALBERTO MANZANO MARTOS Member – Secretary

APPOINTMENTS AND REMUNERATION COMMITTEE

Name Position


MR. FRANCISCO RUIZ RISUEÑO Vice Chairman



MR. MATÍAS SALVÁ BENASSAR Member


MR. ALBERTO MANZANO MARTOS Member – Secretary

COMPLIANCE COMMITTEE

Name Position

MR. FRANCISCO RUIZ RISUEÑO Chairman


MRS. FRANCISCA MARTÍN TABERNERO Member



2) Organisational and operational rules

The basic functions, competence, composition, meetings schedule, and procedure for approv-

ing resolutions of the delegated bodies of the Board of Directors are regulated by the by-laws

and the Code of Good Governance of SISTEMA MAPFRE, which may be consulted at the official

public registries, as well as on the Company website, www.mapfre.com.


GENERAL MEETING OF POLICYHOLDERS

1) Configuratio

Pursuant to the provisions of the Company by-laws, the General Meeting is the supreme body

for the expression of the will of MAPFRE MUTUALIDAD. It comprises all those policyholders

who attend the meeting, whether in person or by proxy. The Chairman and Secretary of the

General Meeting are the same as for the Board of Directors, even where this position is held

on a temporary basis.

2. Requirements to attend the General Meeting

In order to attend the General Meeting, the right to participate must be proven and the appro-

priate attendance card must be obtained, which shall be made available by the Board of

Directors to all policyholders who request it, up to five days before the General Meeting is

held.

Those policyholders who have proven their right to attend in the manner set forth in the pre-

vious paragraph may be represented by proxy at the General Meeting by anyone who has a

valid policy and who resides in the same province. The proxy must be expressly set forth in

writing before each General Meeting, on the reverse of the corresponding attendance card

and it must be recorded at the registered office of MAPFRE MUTUALIDAD at least forty-eight

hours in advance of when the General Meeting is to be held.

A proxy shall not be conferred upon anyone who is in the paid service of MAPFRE MUTUALI-

DAD or anyone who has been its Delegate or Agent in the preceding three years, or anyone

who has acted as intermediary in the subscription of the principal’s policy of insurance, or to

other insurance or financial institutions or those that belong to business groups unrelated to

SISTEMA MAPFRE, or the board members or managers of said institutions or persons who

act at their service or on their behalf. No policyholder may accumulate more than one hun-

dred proxy votes.

3. Quorum

The General Meeting shall be quorate on first call when more than one half of Policyholders

with the right to participate at the meeting are in attendance either in person or by proxy. If

this requirement is not met, the General Meeting shall be quorate on a second call in the

same place, one hour later, irrespective of the number of policyholders in attendance.

4. Approval of Resolutions

All policyholders who are in full compliance with their duties with MAPFRE MUTUALIDAD

have the right to one vote. Resolutions are approved by simple majority and the Chairman

shall have a casting vote in the event of a tie. By way of exception, resolutions on amendments

to by-laws, mergers, demergers, transformations or dissolutions of MAPFRE MUTUALIDAD

must be approved with the votes in favour of at least two-thirds of the policyholders in atten-

dance, whether in person or by proxy.

5. Matters reserved for the Extraordinary General Meeting

The Extraordinary General Meeting has the power to deliberate and decide on the matters set

forth in the call for the meeting, and the exclusive non-transferable power to resolve on the

following:


› The transfer of the registered office to another location outside the present municipal

area.

› The refund of contributions to the Mutual Fund.

› The removal of Board Members before the expiry of the terms for which they were appoin-

ted.

› To claim liability against the members of the Board of Directors.

› The amendment of these by-laws.

› The merger, demerger, or temporary association of MAPFRE MUTUALIDAD with any other

institution.

› The alienation or transfer of the business of any one or more insurance areas under any

licit manner.

› The dissolution of MAPFRE MUTUALIDAD or the transformation of its legal status.

6. Resolutions approved at General Assemblies held in 2003

At the Extraordinary and General Assemblies held on March 29th 2003, the following resolu-

tions were unanimously approved.

› To approve the Management Report and the Annual Accounts of MAPFRE MUTUALIDAD

relating to fiscal year 2002, as well as the distribution of profits proposed by the Board of

Directors.

› To approve the 2002 Management Report and 2002 Consolidated Annual Accounts of MAP-

FRE MUTUALIDAD and its subsidiaries and affiliate companies.

› To approve the management of the Board of Directors in 2002.

› To donate the following amounts, set forth in the proposal for the distribution of profits, to

the Foundations promoted by MAPFRE:

FUNDACIÓN MAPFRE 10,750,000 Euros

FUNDACIÓN MAPFRE ESTUDIOS 1,680,000 Euros

FUNDACIÓN MAPFRE MEDICINA 1,110,000 Euros

FUNDACIÓN CULTURAL MAPFRE VIDA 110,000 Euros

FUNDACIÓN HISTÓRICA TAVERA 660,000 Euros

› To re-elect for a period of four years the following Board Members: Mr. Luis Hernando de

Larramendi Martínez, Mr. Alberto Manzano Martos, Mr. José Manuel Martínez Martínez,

Mr. Antonio Miguel Romero de Olano, Mr. Filomeno Mira Candel, and Mr. Alfonso Rebuel-

ta Badías.

› To extend the appointment of Ernst & Young S.L. as the Auditors of MAPFRE MUTUALIDAD

both for the individual Annual Accounts as well as for the Consolidated Accounts for a fur-


ther period of one year, i.e. the 2003 fiscal year. The said appointment may be revoked by

the General Meeting prior to the expiry of the said period with just cause.

› To delegate the fullest of powers of attorney to the Chairman of the Board of Directors, Mr.

José Manuel Martínez Martínez, the first Vice Chairman, Mr. Filomeno Mira Candel, and

the Secretary, Mr. José Manuel González Porro, so that any of them may execute the above

resolutions and formalise them in a public deed where necessary, and to make any neces-

sary amendments following observations by the Commercial Registry which ought to be

accepted in the opinion of the agents.

› To thank the Policyholders, Agents, Managers, and Employees for their loyal support in

this 70th year of MAPFRE MUTUALIDAD.

› To approve the merger between MAPFRE MUTALIDAD DE SEGUROS Y REASEGUROS A

PRIMA FIJA and MAPFRE AGROPECUARIA, MUTUALIDAD DE SEGUROS Y REASEGUROS A

PRIMA FIJA by way of the takeover of the latter by the former pursuant to the terms set

forth in the Merger Plan, filed at the Commercial Registry of Madrid. After reading and

approval of said Merger Plan, it shall be included in the minutes of the meeting and form

a part of it.

› To approve the merger balance sheet closed on December 31st 2002.

› To delegate the fullest of powers of attorney to the Chairman of the Board of Directors, Mr.

José Manuel Martínez Martínez, the First Vice Chairman, Mr. Filomeno Mira Candel, the

Third Vice Chairman, Mr. Alberto Manzano Martos, and the Secretary, Mr. José Manuel

González Porro so that any one of them may execute the above resolutions and formalise

them in a public deed where necessary, and to make any necessary amendments following

observations by the Commercial Registry which ought to be accepted in the opinion of the

agents.

RISK MANAGEMENT

During fiscal year 2003, work has continued on the implementation of the Risk Management

System which began to be drawn up in December 2002. Its most representative objectives are:

› To provide a suitable tool for identifying and evaluating certain of the risks inherent in the

procedures, processes and operations of SISTEMA MAPFRE, on an individual company and

group basis.

› To improve the internal control and business management processes of each company

and operating unit by means of an ongoing evaluation of the control systems that have

been implemented.

› To be permanently aware of the global risk exposure and the levels of tolerance available

on minimum solvency level requirements.


› To provide an objective criteria for an efficient distribution of capital among operating

units, based on the risk versus reward principle, increasing the creation of value for the

policyholders and the shareholders of the institutions within SISTEMA MAPFRE.

The methodology for the implementation of the Risk Management System is based on the fol-

lowing stages:

› The identification of the types of risks and prioritisation of tasks.

› The development of a management model for operational risks (risk maps).

› The establishment of action plans for mitigating the priority risks.

› The establishment of a formal system for updating and managing risks on a continuous

basis.

The following four categories have been defined for risk identification:

› Operational risks: includes 25 types of risks grouped into nine areas: actuarial,

legal, information technology and communications, person-

nel, procedures, risk of fraud and protection of assets infor-

mation, and market risks.

› Financial Risks: includes interest rate, liquidity, exchange rate, investment and

credit risks.

› Insurance business risks: includes the risks from insufficient premiums, and insufficient

technical and reinsurance reserves, separately for Life and

Non-Life.

› Strategic and Corporate includes risks of business ethics and good corporate gover-

Governance Risks: nance, organisational structure, alliances, mergers and

acquisitions, regulatory environment and market and compe-

tition risks.

The planning, development and implementation of the Risk Management System are being

carried out on a centralised basis by the General Directorate for Internal Auditing, with a high

degree of involvement by the principal operating units and companies.

The Risk Management System is envisioned as a multi-institutional methodology that permits

both the collection of information in order to attain risk and solvency ceilings within SISTEMA

MAPFRE as a whole, and the compilation of individual information relating to each institution.

This permits and facilitates comparison between institutions and the establishment of com-

mon improvement plans that reduce the exposure to risk in similar processes within the dif-

ferent institutions of SISTEMA MAPFRE. Risk aggregation is analysed in the form of a pyra-

mid, starting with the operating units in order to attain SISTEMA MAPFRE’s exposure to risk


through the sub-groups existing in the MAPFRE structure. The centralisation of the risk man-

agement process likewise permits the MAPFRE management bodies to be the priority recip-

ients of this information for the supervision of SISTEMA MAPFRE solvency levels.

DEGREE OF COMPLIANCE WITH THE RECOMMENDATIONS ON GOOD GOVERNANCE

As previously mentioned, the governance of MAPFRE MUTUALIDAD and of all of its units and

subsidiaries is regulated, in addition to the Company by-laws of each specific company, by the

Code of Good Governance of SISTEMA MAPFRE, approved by the Board of Directors of

MAPFRE MUTUALIDAD at its meeting held on 20 March 2000, and accepted by the Board of

Directors and by the Board members and senior managers of all the entities in SISTEMA

MAPFRE.

The said Code represents a mandatory framework of reference for all the entities of SISTEMA

MAPFRE and its governing bodies. It sets out the RULES which govern the management

structure of SISTEMA MAPFRE, and the operating PRINCIPLES of the governing bodies of the

entities that make it up. It takes into account the progressive complexity of its corporate

structure and the incomplete legal regulation of business groups, thus ensuring that its activ-

ities are co-ordinated and transparent.

The drawing up of the Code of Good Governance of SISTEMA MAPFRE was a result of exten-

sive work carried out by a committee made up in equal proportions by external directors and

executive directors which, over a period of over fifteen months, carried out an in-depth review

of the structures and functioning of SISTEMA MAPFRE in the light of the publication of a

Report by the Special Committee for research into a Code of Ethics for Company Boards of

Directors (the so-called ‘Olivencia Committee’).

Although the recommendations contained in the ‘Olivencia Report’ were aimed at the large

companies listed on the Stock Exchange, the governing bodies of SISTEMA MAPFRE under-

stood that an isolated adjustment to the said recommendations on the part of CORPORACIÓN

MAPFRE (the listed company of SISTEMA MAPFRE) was not advisable, but instead a profound

review and updating of the entire management structure of SISTEMA MAPFRE should be car-

ried out in the light of the said recommendations.

At the present time, following the publication of the Aldama Report on January 8th 2003, and of

the Financial Act 44/2002, dated November 22nd, and the Transparency Act 26/2003, dated July

17th, a new working group has been set up, comprising four of the top MAPFRE executives, and

the Chairmen of the Compliance Committees of SISTEMA MAPFRE, who are all external direc-

tors, for the purpose of carrying out an in-depth review and update of the Code, taking into

account both the said recommendations and provisions, and MAPFRE’s own experience in the

application of the current Code. Furthermore, the purposes of this update, which will be

revealed in the current year 2004, include the increased co-ordination within SISTEMA MAPFRE

as a whole, and the simplification and streamlining of the decision-making processes.

In accordance with the said Code, compliance with the following corporate governance rec-

ommendations may be highlighted:


› The Boards of Directors of the various companies undertake, as their primary task, which

may not be delegated, the general function of supervision, and they have established a

catalogue of matters which are reserved for their knowledge alone, whereas the day-to-

day company management is carried out by the Executive Committee of each company.

The high supervision and general co-ordination of SISTEMA MAPFRE as a whole rests with

the Board of Directors of MAPFRE MUTUALIDAD and with the two delegated committees:

the Institutional Control Committee, and the Management Committee of SISTEMA MAPFRE.

› At the date of this report, the Board of Directors of MAPFRE MUTUALIDAD is made up of

twenty-six board members of which sixteen are external (fourteen independents and two

non-independent), two board members nominated by the employees, and the remaining

eight are the top executive managers of Units and Companies of SISTEMA MAPFRE. This

distribution differs slightly from what the Code considers desirable in order to ensure an

adequate representation of external, executive and board members nominated by the

employees, and a balanced representative presence thereon from a territorial point of view

(between twenty and twenty-five members).

The Institutional Control Committee which is responsible for the high supervision of SIS-

TEMA MAPFRE with regard to compliance with institutional and ethical principles, is com-

posed of seven external board members and three executive board members; the Mana-

gement Committee of SISTEMA MAPFRE which is responsible for the high supervision of

SISTEMA MAPFRE with regard to its operational and management aspects, is made up of

seven executive board members and two independent board members. This distribution

ensures a proper balance between external and executive board members.

On the boards of directors of the main subsidiaries there is generally a majority of exter-

nal board members (those appointed in representation of shareholder interests and inde-

pendents).

› The Chairman of the parent company, MAPFRE MUTUALIDAD, is the chief executive of SIS-

TEMA MAPFRE and chairs the delegated Committees of the Board of Directors, except for

the Compliance Committee. The chairmen of the main subsidiaries are usually their chief

executive officers. However, this is not viewed as an excessive concentration of power,

since decisions are taken collectively by the Board of Directors and their Committees.

On the Boards of Directors of the main companies of SISTEMA MAPFRE, the position of

Second Vice Chairman is held, as a rule, by an external director, who is also the chairman

of the Compliance Committee.

In MAPFRE MUTUALIDAD the position of Secretary of the Board is held by the General

Vice-Secretary of SISTEMA MAPFRE who has the appropriate position and means to ade-

quately carry out his function, which is to oversee the formal and actual compliance with

legal requirements of the activities of the Board of Directors.

› Both in the parent company and in its principal subsidiary (CORPORACIÓN MAPFRE, the

shares of which are listed on the Stock Exchange) there are Appointments and Remune-

ration Committees, Audit Committees, and Compliance Committees. At the main subsidia-


ries there is a Compliance Committee which is entrusted with ensuring that the rules of

the Good Governance Code are properly complied with at each entity.

The Compliance Committees are made up exclusively of external board members who also

constitute a majority on the Audit Committee and the Appointments and Remuneration

Committee.

› The directors receive in advance documents which have been specially prepared concer-

ning the main issues included on the Agenda, and have powers to request as much infor-

mation as they consider necessary in order to perform their duties properly.

Ordinary Board meetings are normally held five or six times a year and the Management

Committees generally hold one ordinary meeting per month, without prejudice to any

extraordinary meetings that may be necessary. The schedule of meetings of the Institutio-

nal Control Committee and the Delegated Committees is adjusted to meet the require-

ments of the issues which fall within their remit.

› The periodical information that is issued to the markets and media and the Annual

Accounts are drawn up using the same criteria, and are verified by the Audit Committee.

Said Committees likewise receive information on a regular basis concerning relations with

External Auditors and are aware of all the reports and recommendations that they formu-

late. They are also informed of the reports issued by the Internal Auditing Services and of

the degree of compliance with its recommendations.

The fees paid to the External Auditors by the MAPFRE MUTUALIDAD Group in 2003 for the

services corresponding to the auditing of the annual financial statements amounts to 2.26

million euros. In addition, 0.62 million euros has been earned for services related to

accounts auditing, and 0.14 million euros for other complementary services rendered. It is

considered that neither of these last two figures places the auditors’ independence at risk.

The institution has never presented accounts subject to qualifications in the audit report.

SISTEMA MAPFRE has an Internal Audit Department and a Legal Department which

supervise the different aspects of the annual accounts as well as the Audit Committees of

SISTEMA MAPFRE and CORPORACIÓN MAPFRE, set up for that purpose as delegated

bodies of the respective boards of directors and with powers of supervision in this regard

since fiscal year 2000.

› Both MAPFRE MUTUALIDAD with respect to its policyholders, as well as CORPORACIÓN

MAPFRE with respect to their shareholders and institutional investors provide ample infor-

mation regarding their business and results and those of their subsidiaries. CORPORA-

CIÓN MAPFRE, as a company listed on the Stock Exchange, releases extensive communi-

cations for its shareholders, institutional investors, and for market operators, as is detai-

led in the management report.


In compliance with the rules laid down in the Code, the Compliance Committees of the main

companies of SISTEMA MAPFRE regularly assess compliance with the Code by their respec-

tive companies, and the corresponding reports are submitted to their respective Boards of

Directors, and to the Institutional Control Committee of SISTEMA MAPFRE, which in turn sub-

mits a report on compliance with the Code throughout SISTEMA MAPFRE to the Board of

Directors of MAPFRE MUTUALIDAD.

All of the aforementioned reports for previous fiscal years value very positively the level of

compliance, and the highly ethical behaviour of the various entities regarding all aspects

examined, as well as the efficient supervisory and control functions carried out by the Boards

of Directors. However, some aspects were pointed out for improvement and recommenda-

tions were given to this effect. The process of assessing compliance during fiscal year 2003 is

currently underway.

All Board Members of the main companies of SISTEMA MAPFRE likewise carry out an annu-

al assessment of the quality and efficiency of their work by way of a detailed questionnaire

that was completed by each member sufficiently in advance, and the comments and sug-

gestions arising therefrom have been examined by each Board of Directors, and the appro-

priate measures have been put in place in order to improve the quality and efficiency of the

meetings.

Information regarding corporate governance can be found on the Company’s website(www.mapfre.com). Access is as follows: Sistema MAPFRE /Corporate Information.

Social responsibility


SOCIAL RESPONSIBILITY

The growing interest in the social responsibility of companies, which is beginning to be vie-

wed as an important part of their management, makes it advisable to include specific infor-

mation on its application by MAPFRE in this annual report.

The sense of social responsibility has been inseparable from MAPFRE for many years and forms

part of the institutional principles of action laid down in its Code of Good Governance, which esta-

blishes that ‘the activity of SISTEMA MAPFRE and all those who are involved in its management

at any level must be inspired by a sense of service to society in general, by way of recognition of

their duty and responsibility to the proper development and progress of the same.’

SISTEMA MAPFRE’s bodies consider, first and foremost, that this principle must be transla-

ted in the way in which the activities of a company are managed, so that the greatest contri-

bution made by the companies to society must be the generation of wealth, creation of

employment, equity in the relationships among all associated parties (employees, policyhol-

ders and customers, collaborators, suppliers etc.), strict compliance with the legal and fiscal

obligations which being part of society entail, and the maintenance of high ethical standards

in corporate management.

Furthermore, for more than thirty years MAPFRE has been allocating part of its revenues to

promoting and financing non-profit making activities of social interest through various foun-

dations, the first of which was set up in 1975.

Without going into an exhaustive analysis of how MAPFRE applies the principle of social res-

ponsibility, a few interesting points are highlighted below.

1. CORPORATE ACTIVITY

› As detailed in the Corporate Governance Report, SISTEMA MAPFRE has set up the appro-

priate structures to ensure that its businesses are managed in accordance with high ethi-

cal standards, abiding all legal and fiscal obligations. To complement the content of that

report, the following aspects are worthy of special mention:

- In accordance with the provisions of Article 6 of the Articles of Association of MAPFRE

MUTUALIDAD, its Board of Directors and its Institutional Control Committee take spe-

cial care in ensuring that under no circumstances are the funds and assets that com-

prise the net worth of the SISTEMA MAPFRE companies directly or indirectly applied for

purposes outside their corporate objects, with the sole exception of the contributions to

the Foundations promoted by MAPFRE and the limited funds which, with the approval

of the Institutional Control Committee, are assigned to charitable or socially beneficial

purposes in accordance with its corporate dimension.

- The Institutional Control Committee and the Compliance Committees of the principal com-

panies in SISTEMA MAPFRE annually assess proper compliance with the Code of Good

Governance of SISTEMA MAPFRE and report their conclusions to the Board of Directors of

MAPFRE MUTUALIDAD and the Boards of Directors of the various companies, which take

the necessary measures to ensure compliance in the light of those conclusions.

SOCIAL RESPONSIBILITY | pag. 291

- The Institutional Control Committee and the Executive Committee of SISTEMA MAPFRE

receive regular information on any incident which may affect the companies in SISTE-

MA MAPFRE (inspection of supervisory or fiscal bodies, administrative proceedings,

legal actions etc.) and take appropriate measures if they reveal any situation which has

to be put right. The Executive Committees of the various Units receive the same infor-

mation with regard to their respective areas of responsibility.

- The Company Secretary and the Legal Affairs Unit, with the support of the Legal Depart-

ments of the various Units, supervise the activities of SISTEMA MAPFRE as a whole

from the point of view of compliance with its legal and fiscal obligations and issue the

appropriate instructions in that regard, compliance with which is supervised by the

Internal Auditing Unit through its wide-ranging activity, which is detailed in the Mana-

gement Report.

- The Audit Committees of SISTEMA MAPFRE and CORPORACIÓN MAPFRE receive infor-

mation on the results of the work of the Auditing Unit within their respective areas of

responsibility.

› The policy of SISTEMA MAPFRE concerning relations with people who provide their serv-

ices to it is inspired by the respect for their rights, by a non-discriminatory approach, and

by the desire to encourage a feeling of unity with MAPFRE and human relations based on

mutual respect and values such as tolerance, cordiality and solidarity.

The Management Report gives details of points of interest such as achievements in 2003

in terms of training and prevention and safety at work. By way of a supplement to that

information, the following are worthy of special mention:

- The Collective Bargaining Agreement of SISTEMA MAPFRE guarantees salary increas-

es higher than the rate of inflation.

- The number of employees has continued growing to reach a figure of 18,600, a 2%

increase with respect to the figure for the previous year.

- The percentage of permanent employees out of the total workforce in Spain is 96%, one

percentage point higher than last year. The level of undesired staff turnover is 2.7%.

More than 25% of the students who undertake a paid internship with MAPFRE continue

their career with the company.

- Flexible working hours have been promoted to facilitate reconciliation between work

and family life. Recommendations regarding stress and information on ‘mobbing’ have

been included in training programmes.

- SISTEMA MAPFRE employees have been encouraged to carry out voluntary work with

initiatives such as the ‘Voices for Peace’ CD, Red Cross Collaboration, ‘MAPFRE a sup-

portive voice’, financial incentives to employees for taking part in the 9th Road Safety

Campaign, and sponsorship of the ‘Book for Solidarity Day’ (‘Día del Libro Solidario’),

among others.


- The MAPFRE Net Plan, which allows employees to purchase computer equipment and

connect to the Internet from their homes, has been supplemented and expanded, and

now involves more than 5,600 employees.

- Special attention has been given to retired personnel in 2003 and a fund has been set

up to supplement the assistance services they receive with financial aid in the event of

inadequate income.

› A core operating principle of MAPFRE is to provide policyholders with a fast, efficient and

fair service, especially when dealing with claims, giving priority to removing all sorts of

legal disputes from claim settlement as far as possible.

The Management Report provides information about the activities of the Committee for the

Defence of the Policyholder, whose introduction in Spain was pioneered by MAPFRE, which

in 2003 dealt with and resolved a total of 1,642 complaints free of charge. This figure is indi-

cative of the important work carried out by the Committee for the Defence of the Policy-

holder, but is also, conversely, significantly low in a group which has more than 6.5 million

policyholders and customers in Spain.

The review, carried out in fiscal year 2003, of the systems for dealing with customer com-

plaints, which is also detailed in the Management Report, represents a significant advan-

ce towards the objective of facilitating the exercise of their right to complain and the pos-

sibility of obtaining a recognition of their rights quickly and fairly without having to resort

to the Courts.

› The contribution to the protection of the environment represented by the decontamination,

stripping and recovery of vehicle parts, being carried out by CESVIMAP, which with effect

from 2004 will be boosted by the dedicated new modern facilities in Avila, is also worthy of

special mention.


2. MAPFRE FOUNDATIONS

SISTEMA MAPFRE has six private foundations, the first of which was created in 1975, which

every year carry out an extensive programme of activities aimed, respectively, at:

› Promoting Safety, with particular attention to Road Safety;

› Supporting research, teaching and the dissemination of scientific knowledge in the field of

Health, and improving the quality of Medicine;

› Fostering the diffusion of the Arts and Literature;

› Promoting business training and research in the field of Insurance, Safety and Business

Administration;

› Supporting the research and spreading of knowledge of the common history of Spain, Por-

tugal and the countries with historical ties to them;

› Promoting the development and progress of the Canary Islands, by fostering their culture,

their welfare and the education of their people.

At the end of 2003, these foundations held assets worth ¤44.9 million. In 2003, the SISTEMA

MAPFRE companies made contributions to these foundations totalling ¤18.5 million, out of

the profits for 2002. The proposed total contribution for 2004 is ¤20.7 million, out of the pro-

fits for 2003, which will be equal to approximately 5% of net profits.

The amounts devoted by the six foundations to carrying out their activities in 2003 totalled ¤

17.5 million. Their budget for 2004 is ¤ 19.2 million. The following charts show a comparative

breakdown of the uses of their funds for the activities of the various foundations over the

course of 2002 and 2003:

Other: Grants, Concerts, Prizes, Documentation centres, etc.

| 26.8% Business administration| 25.9% Road safety| 17.7% Art and Culture| | 15.4% Safety and environment

| 4.2% Historical studies| 10.1% Medicine and health

| 26.1% Business administration| 27.1% Road safety| 16.6% Art and Culture| | 15.7% Safety and environment

| 4.7% Historical studies| 9.8% Medicine and health

Use of funds by area of activity(31.12.02)

Use of funds by area of activity(31.12.03)


Over the course of 2002 and 2003, the foundations’ activities covered the following:

ITEM 2002 2003

Seminars 1,263 1,313

Prizes, grants and competitions 351 416

Publications 130 110

Exhibitions 65 67

Road safety campaigns 52 62Concerts 23 26

Some of these activities take place in the Latin American countries in which MAPFRE has a

business presence and many of them take place – both in Spain and in other countries – in

co-operation with many public and private institutions. In 2003, 135 new co-operation agree-

ments were signed.

Of the activities of these foundations, the following are worthy of special mention because of

their importance:

› The 9th MAPFRE Road Safety Campaign, conducted in a pioneering manner via the Inter-

net and e-mail to raise the awareness of drivers about the causes of and ways of preven-

ting road accidents, using messages illustrated with the humour of cartoonist Forges. As

an incentive to extend the coverage of the campaign, surfers were invited to send humo-

rous postcards to their friends free of charge, with MAPFRE donating one cent for each

postcard to the Spanish Association for the Study of Spinal Injuries.

› 63 rehabilitation scholarships were awarded to handicapped persons, bringing to 608 the

number of handicapped people who have received occupational training in order to qualify

for paid employment since the beginning of the activities of this foundation.

› The organisation of the ‘Painted Women. The image of woman in Spain 1819-1914’ exhibi-

tion, which contributed to giving the general public a better understanding of the theme of

the woman as an essential image of the late 19th Century and early 20th Century Spanish

painting through more than 100 works including, canvasses, drawings and sculptures.

› The second donation campaign of the Tavera Classics Digital Library to Latin American

universities and research centres. The said library consists of 79 CD ROMS which contain

digital reproductions of about 1,800 books printed between the 16th and 19th Centuries,

which are considered essential for an understanding of the various themes and periods of

the history of the countries comprising the Latin American Cultural Community. This dona-

tion provides the receiving institutions with a bibliographic fund of exceptional value and

scientific utility.


› The award of twenty scholarships to professionals from Latin American countries within

the framework of the 16th Integral Safety Course and the 19th Individual Specialisation

Course, which enabled the said professionals to receive training in Spain, with an extensi-

ve exchange of experience within the companies and institutions which were involved in

developing the programmes.

› The financing of various social reintegration and re-education projects for marginalised

communities in the Canary Islands and sponsorship for medical research projects on the

dominant diseases in the population of these islands.

› The many teaching activities carried out in the fields of Safety, Insurance and Business

Administration, free access for the public to the MAPFRE Documentation Centre of the

FUNDACIÓN MAPFRE ESTUDIOS, which includes a computerised library specialising in

Insurance and Safety as well as other sections relating to Law, Economics and Business

Administration.

3. OTHER ASPECTS

› The Board of Directors of MAPFRE MUTUALIDAD, in its meeting held on 23 January 2004,

agreed to join officially the United Nations’ World Pact (Global Compact), an initiative which

encourages signatory companies to undertake to apply certain ethical principles in the

fields of human rights, employment regulations and the environment.

› Over the course of 2003, the Institutional Control Committee of SISTEMA MAPFRE has

approved various donations to foundations, associations and other organisations outside

SISTEMA MAPFRE to the value of ¤457,000, outstanding among which was the ¤300,000

contribution to the fund devoted to reversing the consequences of the ‘Prestige’ oil tanker

disaster.

Acknowledgements and Mentions


ACKNOWLEDGEMENTS

Since the date of the last report, 107 employees of SISTEMA MAPFRE, as well as the following

senior managers, have or are about to conclude their active working life:

› Mr. Lorenzo Garagorri Olavarrieta, who joined MAPFRE in 1972, and has held, among

others, the positions of Deputy General Manager of the Reinsurance Unit and Vice-Chair-

man of MAPFRE RE.

› Mr. Jaime Laffitte Mesa, who began his professional career with MAPFRE in 1967, and has

successively held the positions of Head of Claims in Valladolid, Santander Office Manager,

Provincial Director of Guipúzcoa, and Manager of the Northern sub-centre.

› Mr. Juan Palop Cardona, who joined MAPFRE in 1967, and has successively held the posi-

tions of Head of Claims in Alicante, Office Manager in Cáceres, Palma de Mallorca, Gero-

na and Lérida, Provincial Director of Gerona, Manager of the West Andalusia sub-centre

and Manager of the Catalonia II sub-centre.

› Mr. Juan Antonio Pardo Ortiz, who began his professional career in 1968 with MAPFRE, and

has held, among others, the positions of General Manager of EDITORIAL MAPFRE and suc-

cessively Deputy General Manager, General Manager of Operations and Managing Direc-

tor of MAPFRE RE.

› Mr. Antonio Estrada Roig who, since joining MAPFRE in 1972, has successively held posi-

tions of increasing responsibility including Deputy General Manager of Property Claims,

Deputy General Manager of MAPFRE MUTUALIDAD, and Chairman and General Manager

of CESVIMAP.

› Mr. Carlos Carballal Hernández, who joined MAPFRE in 1988 and who on retirement held the

position of General Manager of Technical Development of MAPFRE CAUCIÓN Y CRÉDITO.

Acknowledgements and mentions |

› Mr. Andrés Chaparro Kaufman, General Manager of CAJA REASEGURADORA de Chile, who

has been appointed as non-executive Chairman of the Board of Directors of the same com-

pany with effect from 1 April this year.

A further 2,262 employees have left as well as, at his own request, Mr. Juan Manuel Girone-

lla García, who joined MAPFRE in 1985 and has successively held the positions of General

Manager of MAPFRE GUANARTEME, General Manager and Executive Chairman of SEGUROS

TEPEYAC, and Vice-Chairman and Managing Director of the Commercial Insurance Unit.

In the first few months of 2004, the following have left, or will leave, the governing bodies of

SISTEMA MAPFRE due to reaching the established age limit: Mr. Felipe Rodrigo Zarzosa,

Member of the Board of Directors of CORPORACIÓN MAPFRE; Mr. Moncef Maaoui, Member

of the Board of Directors of MAPFRE ASISTENCIA; and Mr. Pedro Caba Martín, Member of the

Board of Directors of MAPFRE CAJA SALUD. Mr. Ramón Espinar Gallego has also ceased to

represent the CAJA MADRID Group in MAPFRE-CAJA MADRID HOLDING and MAPFRE VIDA.

The following regional directors have also resigned for various reasons: Mr. Mauricio Gonzá-

lez-Gordon y Lopez de Carrizosa and Mr. Manuel Gala Velasco (Andalusia); Mr. Arcadi Garau

Soler, Mr. Buenaventura González Guerrero, Mr. Rafael Lluis Gisbert, and Mr. Lluis Vinyes i

Jordá (Catalonia); Mr. David Alfonso Amaya and Mr. Domingo Contreras Gil (Extremadura);

Mr. Enrique Abad Virto (North central); and Mr. Matías Jesús Galindo Boix (Levante).

Furthermore, due to the fact that directors appointed from non-management personnel are

not eligible for re-election, the following will cease to hold their positions: Mr. Juan Ignacio

Pérez Íñiguez (MAPFRE MUTUALIDAD), Mr. Alberto Léndez Dompedro (MAPFRE VIDA), Mrs.

Blanca Nieves de Andrés Montalvo (MAPFRE SEGUROS GENERALES), Mr. Luis Miguel Fló-

rez-Estrada Vergara (MAPFRE CAUCIÓN Y CRÉDITO), Mr. Luis Charlo de Paul (MAPFRE ASIS-

TENCIA), and Mrs. María Luisa López Cano (MAPFRE RE).

MAPFRE would here like to express its thanks to all the above for their contribution. It also

wishes to express the thanks of SISTEMA MAPFRE to all directors, managers, employees,

representatives, agents and colleagues who have made the excellent results obtained in 2003

possible by their dedication and ability.

IN MEMORIAM

Since the preparation of the previous report, nine MAPFRE employees have passed away as

well as manager Mr. Juan Achurra Larrain, who held various positions in CAJA REASEGURA-

DORA de Chile and other companies in SISTEMA MAPFRE. MAPFRE wishes to express in this

report its regret, condolences and solidarity with their respective families.

ACKNOWLEDGEMENTS AND MENTIONS | pag. 299

This booklet contains the Consolidated Management Report and Consolidated Annual

Accounts together with the Auditors’ Report of CORPORACIÓN MAPFRE S.A., as well as mis-

cellaneous additional information. The company will make the Individual Management

Reports and Annual Accounts together with the corresponding Auditors’ Report available to

its shareholders and other interested parties.

web: www.mapfre.com


Key figures |

REVENUES AND RESULTSTotal revenues

ASSETS AND SHAREHOLDERS’ EQUITYTotal assets


2003 2002 2001Main itemsTotal revenues 9,250 9,305 8,933Direct and accepted premiums 7,589 7,741 7,632

› Life 1,877 2,446 2,797› Non-Life 5,712 5,296 4,835

Technical result 670 469 354› Life 109 73 78› Non-Life 561 396 276

Result before taxes and minority interests 606 440 316Net result 299 206 140

Management ratiosNon-life direct loss ratio (excl. equalisation reserves) 67.5% 69.9% 75.6%Non-life total expense ratio / premiums earned (before reinsurance) 21.1% 22.7% 23.0%Life operating expenses / life insurance reserves (before reinsurance) 1.7% 2.0% 2.0%Non-life combined ratio as a % of net premiums earned 92.6 96.2% 98.3%

Million euros

2000 | 6,920

2001 | 8,933

2002 | 9,305

2003 | 9,250

2000 | 13,285

2001 | 16,495

2002 | 18,110

2003 | 22,484

Results before taxes and minority interests Own funds

244

316

440

606

2.044

2.216

2.204

2.496

(Continúa en interior solapa)

ANN

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REP

OR

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003

(More information)

Evolution of Direct Isurance in Spain(1) |

Premiums Claims (2)

%% Number of Market

Year Amount Variation Proceedings Amount Share (3) Employees

1933 11 - - 1 0.51 n.a.

1934 22 97 11,627 13 0.97 n.a.

1935 30 35 14,309 16 1.31 n.a.

1940 34 11 21,272 22 0.92 n.a.

1945 82 142 23,824 50 1.10 n.a.

1950 125 54 35,681 84 0.81 n.a.

1955 199 59 29,644 149 0.76 106

1960 477 139 25,193 225 0.83 125

1965 1,958 311 37,204 795 1.45 309

1970 4,405 125 59,938 2,608 1.78 561

1975 17,772 303 106,357 7,386 2.95 894

1980 67,301 279 175,610 32,040 4.14 987

1985 188,940 181 313,627 92,297 5.92 1,591

1990 762,017 303 773,725 378,866 7.44 3,308

1995 1,717,025 125 1,478,690 892,485 9.75 5,031

1996 1,826,854 6 1,765,939 927,608 9.57 5,335

1997 1,887,232 3 2,082,761 978,880 9.67 5,436

1998 2,039,979 8 2,326,077 1,039,907 9.69 5,727

1999 2,321,722 14 2,704,864 1,209,206 9.77 5,948

2000 3,816,084 64 3,846,180 2,032,365 10.39 6,376

2001 5,390,719 41 5,025,035 3,274,425 13.00 7,039

2002 5,614,656 4 5,663,558 3,317,072 13.57 7,677

2003 (4) 5,819,615 4 6,411,566 4,054,456 14.02 8,230

Figues in thousands euros.

(1) Premiums and claims figures include those of the Workers’ Compensation branch up to and including fiscal year 1966,in which the Fundamental Law of Social Security (“Ley de Bases de la Seguridad Social”) established that joint-stockcompanies could no longer operate in this branch of business.(2) Includes risk insurance claims and life-saving insurance benefit payments.(3) Excludes single premiums.(4) Includes MUSINI Group.

Key figures | (continued)

BLANCE SHEET

2003 2002 2001Main itemsInvestment 17,057 13,765 12,144Cash 1,290 1,080 1,153Technical reserves 17,695 14,100 12,497Capital and Reserves 1,393 1,171 1,090Minority interests 1,103 1,033 1,126Funds under management 25,677 20,760 19.276Minimum amount of the solvency margin 2.4 2.4 2.6


BREAKDOWN AND PRESENCE OF BUSINESS ACTIVITIES

2003 2002 2001

Countries with presence 37 37 37Employees 18,605 18,230 16,756

› Spain 10,064 9,523 8,570› Abroad 8,541 8,707 8,186

Offices 3,529 3,230 2,945› Spain 2,725 2,637 2,422› Abroad 804 593 523

Geographical breakdown of business by premiums› Spain 73% 73% 71%› Other countries 27% 27% 29%

INVESTMENTS AND TECHNICAL RESERVES

2003 2002 2001InvestmentsReal Estate 1,068 1,034 1,042 Fixed income securities 13,890 10,739 8,936 Share in mutual funds 965 823 792 Investments in equities and in Group companies 619 527 559 Cash 1,290 1,080 1,153 Other* 515 641 814 Technical provisionsUnearned premiums reserves and unexpired risk reserves 2,553 2,151 2,017 Life insurance reserves 11,256 8,772 7,264 Outstanding claims reserves 3,008 2,310 2,276 Equalisation and other reserves 878 868 939 * It includes reinsurance deposits and investments relating to life insurance when investment risk is assumed by policy holders


Breakdown of investments

CORPORACIÓN MAPFRE SHARE PRICE EVOLUTION

2003 2002 2001

Capitalisation (Million ¤) 2,039 1,404 1,182PER 14 12.4 12.3EPS (euros) 0.78 0.62 0.53Price / Book value 1.87 1.19 1.08

MARKET SHARES

2003 2002 2001

Share of premiums in Spain› Non-life 17.3% 15.5% 15.1%› Life 10.0% 8.2% 11.2%› Total 14.0% 11.6% 13.0%

Share of Life technical reserves in Spain 11.3% 9.0% 9.7%Share of Non-life premiums n.d. 5.1% 4.5%

75.7% Fixed income securities3.4% Equities5.3% Mutual funds7.0% Cash2.8% Other5.8% Real estate

72.3% Fixed income securities3.6% Equities5.5% Mutual funds7.3% Cash4.3% Other7.0% Real estate

2002 2003

Corporación Mapfre - IBEX 35Share price evolution

Cotiz

acio

nes

(eur

os)

Títu

los

Neg

ocia

dos

(mile

s)

12 10,000

4,000

2,000

0

6

4

2001 2002 2003

2

6,0008

8,00010

Volumen Cormap

Corporación Mapfre

Ibex 35

RELEVANT FACTS IN THE DEVELOPMENT AND EXPANSION OF SISTEMA MAPFRE OVER THE LAST TEN YEARS

1994 The number of MAPFRE employees exceeds 10,000.Second issue of CORPORACION MAPFRE convertible debentures in the amount of ¤ 48 million.The comprehensive insurance management software "TRONADOR" designed by MAPFRE SOFT isintroduced in the Americas,The number of MAPFRE's direct and delegated offices in Spain exceeds 2,000 for the first time.The gross profit of SISTEMA MAPFRE exceeds ¤ 100 million.

1995 MAPFRE ASIAN in the Philippines is acquired.CORPORACIÓN MAPFRE's stock market capitalisation exceeds ¤ 1 billion.The 1st MAPFRE Road Safety Week is held.

1996 MARES is set up to insure special motor vehicle risks.CORPORACION MAPFRE issues convertible debentures for 96 million euros to finance its internationalexpansion.MAPFRE ASISTENCIA consolidates its position as the leader of its sector in Spain and extends its directcoverage to 29 countries.

1997 MAPFRE acquired SEGUROS LA SEGURIDAD in Venezuela and El SOL NACIONAL in Peru.SISTEMA MAPFRE's consolidated own funds exceeds ¤ 1 billion,Vehicles insured by MAPFRE in Spain exceed 3 million.

1998 The first business cooperation framework agreement is signed by MAPFRE and CAJA MADRID.Eight new external shareholders join MAPFRE AMERICA, taking a 20% stake in its share capital.MAPFRE AMERICA VIDA begins operating and the holding company MAPFRE AMERICA CAUCIÓN YCRÉDITO is created.Direct insurance premiums in Spain exceeds ¤ 2 billion.

1999 Entry into the North American reinsurance market through MAPFRE REINSURANCE CORPORATION.CENTRO AMERICANA is acquired in El Salvador.The International Centre for Management Training is created.MAPFRE Telephone Call Centres handle over 10 million calls.

2000 MAPFRE exceeds 10% market share in Spain.SISTEMA MAPFRE exceeds ¤ 10 billion in funds under managementThe strategic alliance with CAJA MADRID is established.SISTEMA MAPFRE'S consolidated net equity exceeds ¤ 2 billion.The Board of Directors of MAPFRE MUTUALIDAD approves the Code of Good Governance of SISTEMAMAPFRE:

2001 The acquisition of FINISTERRE reinforces the presence of MAPFRE in Burial Insurance in SpainJosé Manuel Martínez is appointed chairman of SISTEMA MAPFRE, replacing Julio Castelo.MAPFRE VIDA closes the year as the largest company in the insurance sector in terms of premiumvolume.Direct insurance premiums in Spain exceeds ¤ 5 billion,Vehicles insured by MAPFRE in Spain exceed 4 million.

2002 The first Collective Bargaining Agreement of the MAPFRE Insurance Group is signed for the 2002-2004period. A wide-ranging management restructuring is approved and the Business Insurance Department is created.SISTEMA MAPFRE exceeds ¤ 20 billion in funds under management.MAPFRE's Telephone Call Centres handle over 20 million calls.

2003 SEPI'S Board of Directors awards MUSINI and MUSINI VIDA to MAPFRE CAJA MADRID HOLDINGStandard & Poor's upgrades the rating of MAPFRE MUTUALIDAD to 'AA' and those of CORPORACIONMAPFRE and MAPFRE REINSURANCE to 'AA-'.CORPORACION MAPFRE's shares are included in the prestigious IBEX 35 and the Dow Jones StoxxInsurance equity indices.CORPORACION MAPFRE's share capitalisation exceeds ¤ 2 billion.MAPFRE ASISTENCIA ORO is created. SISTEMA MAPFRE'S gross profit exceeds ¤ 600 million

SISTEMA MAPFRE

Main Items Period 1992-2003

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Investments 2,847 3,344 4,066 4,762 5,524 5,881 6,597 10,358 13,297 14,844 18,347total assets 3,635 4,121 4,904 5,713 6,745 7,183 8,116 12,639 15,766 17,307 22,483

Capital and reserves 240 282 376 545 658 733 824 975 1,090 1,171 1,393minority interests 285 287 343 421 515 573 613 1,068 1,126 1,033 1,103total shareholders' equity 525 569 719 965 1,173 1,306 1,437 2,043 2,216 2,205 2,496

written premiums non-life 1,656 1,813 1,971 2,209 2,747 2,886 3,191 3,981 4,835 5,296 5,712written premiums life 349 406 541 617 671 726 719 1,816 2,797 2,446 1,877total premiums 2,005 2,218 2,512 2,826 3,418 3,612 3,910 5,798 7,632 7,741 7,589

result before tax and minorities 77 116 203 216 201 178 205 244 316 440 606net result 40 63 105 109 95 87 96 98 140 206 299

Million e

0

5000

10000

15000

20000

25000

20031993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Investments

Total assets

Primas emitidas

Evolution of Main Items IMillion e

0

500

1000

1500

2000

2500

Result before tax and minority interests

Total shareholders' equity

Evolution of Main Items IIMillions e

20031993 1994 1995 1996 1997 1998 1999 2000 2001 2002

EVOLUTION OF SISTEMA MAPFRE (1993-2003)

SISTEMA MAPFRE Main Items 1993-2003 |

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