5. MAPFRE’S SOCIAL DIMENSION · 5. MAPFRE’S SOCIAL DIMENSION I. MAPFRE AND ITS EMPLOYEES(2)...

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5. MAPFRE’S SOCIAL DIMENSION

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ANNUAL REPORT 2005 REPORT ON SOCIAL RESPONSIBILITY • MAPFRE’s social dimension

5. MAPFRE’S SOCIAL DIMENSION

I. MAPFRE AND ITS EMPLOYEES(2)

MAPFRE considers it employees to be its main asset and directly responsible for its growth. As

a result of this, the Group has a strong commitment to developing and training its employees,

as stated in the institutional principles.

STRUCTURE OF STAFF

The staff of the various entities of SISTEMA MAPFRE comprised 24,967 people from the follow-

ing geographical areas as of Dec. 31, 2005:

Geographical areasSISTEMA MAPFRE CORPORACION MAPFRE

2005 2004 Variation % 2005 2004 Variation %

Spain 14,412 10,358 39.1% 8,756 5,926 32.3%America 9,493 8,377 13.3% 9,281 8,377 10.3%Other countries 1,062 1,185 (10.4)% 784 720 8.2%

TOTALS 24,967 19,920 25.4% 18,821 15,023 25.3%

In Spain, the 39.1 percent increase in staff is due to the inclusion of the employees of MAPFRE

QUAVITAE, who were not reflected in the figures for 2004. Excluding this group, the percentage

variation would be 1.8 percent.

Of the total staff, 46.7 percent are men and 53.3 percent are women, with the following break-

down:

Geographicalareas

SISTEMA MAPFRE CORPORACION MAPFRE

Men Women Men Women

Number % Number % Number % Number %

Spain 6,121 42.5% 8,291 57.5% 2,598 29.7% 6,158 70.3%America 4,975 52.4% 4,518 47.6% 4,804 51.8% 4,477 48.2%Rest 560 52.7% 502 47.3% 395 50.4% 389 49.6%

TOTALS 11,656 46.7% 13,311 53.3% 7,797 41.4% 11,024 58.6%

The structure of the group’s staff by category is the following:

SISTEMA MAPFRE

Spain Number % Other countries Number %

Managers 1,337 9.3% Managers 331 3.1%Clerical staff 4,274 29.7% Clerical staff 854 8.1%Commercial staff 2,698 18.7% Commercial staff 2,974 28.2%Technicians/other 6,103 42.4% Technicians/other 6,396 60.6%

CORPORACION MAPFRE

Spain Number % Other countries Number %

Managers 767 8.8% Managers 315 3.1%Clerical staff 2,496 28.5% Clerical staff 834 8.3%Commercial staff 486 5.6% Commercial staff 2,793 27.8%Technicians/other 5,007 57.2% Technicians/other 6,123 60.8%

(2) Data for CORPORACION MAPFRE also include that of its subsidiaries.

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The average age of the staff is 35.9 years (35.4 in CORPORACION MAPFRE), with the following

breakdown:

CountriesSISTEMA MAPFRE CORPORACION MAPFRE

Average age Average age

Spain 37.3 37.2 America 33.5 33.5 Other countries 34.9 34.9

The average seniority of employees is 6.5 years (5.5 years in CORPORACION MAPFRE):

CountriesSISTEMA MAPFRE CORPORACION MAPFRE

Average seniority Average seniority

Spain 7.3 5.9 America 5.1 5.1 Other countries 5.5 5.5

HUMAN RESOURCES POLICY(3)

MAPFRE’S employment policy seeks to give workers permanent contracts rather than tempo-

rary ones. The percentage of permanent positions in Spain at the close of 2005 was 95 percent

of the total.

Net job creation SISTEMA MAPFRE CORPORACION MAPFRE

Variation 2005-2004 Variation 2005-2004

Spain 1.8% (17.5)%Rest 10.4% 10.6%

TOTAL 5.9% (0.5)%

The reduction in the number of jobs at CORPORACION MAPFRE is due to the fact that all MAPRE

commercial staff Spain were merged into MAPFRE MUTUALIDAD.

Norms on selection:

MAPFRE has Internal Norms on Personnel Selection, compliance with which is subjected to

periodic internal audits. These norms, which were updated in 2005, set criteria of rigor and

objectivity in processes for selecting personnel. The goals are the following:

° To incorporate into MAPFRE worthy candidates who will contribute to the continuous

improvement of the existing human potential.

° To limit as much as possible margins of error through application adequate selection proce-

dures.

° To consider selection as a critical phase with the human resources policy and a key aspect

for professional development of its teams.

With an eye to facilitating internal movement, in its Collective Bargaining Agreement MAPFRE

pledged to inform employees of insurance entities when a job becomes vacant or a new job is

created that might be filled by an existing staffer, giving information on the location, level and

jobs requirements. In 2005 in Spain, 243 such jobs were filled, 197 of them at CORPORACION

MAPFRE, in which 1,114 employees took part (771 from the staff at CORPORACION MAPFRE).

(3) All of the following data that refer to MAPFRE entities in Spain exclude MAPFRE QUAVITAE, unless otherwise stated specifically.

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Meeting these goals has a direct and immediate impact in two important ways:

° Greater satisfaction among the employees that join the Group, with adaptation between the

position and employees’ expectations and possibilities.

° Reduction in the time it takes employees to get used to their job and the Group.

Integration of people with disabilities

MAPFRE participates actively in the Businesses and Disability Program at the Business and

Society Foundation, the main goal of which is to incorporate the handicapped into the labour

market.

In Spain, MAPFRE has signed contracts with Special Employment Centres for services or goods

for a total of 41,242 euros.

Furthermore, it has made donations totalling 125,546 euros to FUNDACION MAPFRE MEDICINA

to develop training programs to help disabled people join the labour market.

Training and professional development

MAPFRE’s training model seeks continuous professional development, with which it hopes to

pass on the knowledge, skills and attitudes necessary for people to perform their jobs properly,

in order to achieve the following objectives:

° Enhance knowledge of MAPFRE culture and integration of groups with a different geographi-

cal and professional background.

° Boost training of employees in areas of knowledge that pertain to their jobs (mainly com-

mercial, technical, technological, safety and languages).

° Increase participation of MAPFRE experts in educational programs.

° Develop new channels of training.

Training in Spain

In 2005, a total of 414,340 hours of training were dedicated to managers and employees in Spain,

with an average of 39 hours per employee. The amount of money spent on this was equivalent

to 1.0 percent of all fixed and variable remuneration.

QUANTITATIVE DATA FOR 2005


Hours of training 414,340 129,957Number of people who attended(1) 12,587 6,771

(1) Number of participations in training activities. Some employees participated more than once.


Attendance Hours Attendance Hours

Commercial training 2,398 165,092 _ _Technical and operational training 7,957 109,987 5,873 75,246Corporate training 2,232 139,261 898 54,711

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° MAPFRE’S new model of commercial distribution has involved integrating a large number

of people with varying professional and geographical backgrounds, which in turn required

a major commercial training drive (165,092 hours) to provide them with the proper knowl-

edge for their new jobs (products and management tools, mainly).

° MAPFRE’s units manage and give technical and operative training in their respective lines

of business, passing on MAPFRE’S know-how, one of our main competitive advantages.

° MAPFRE’s International Executive Training Centre held 18 seminars in 2005, which were

attended by 306 people who received 7,832 hours of training. Worth pointing out is the par-

ticipation of 123 managers (76 from CORPORACION MAPFRE) at eight different seminars

at which 2,583 hours of training were given with the goal of integrating aspects related to

MAPFRE’S culture and management.

In the same line, the Horizon Project continues to develop. It is a gradual training program

for young employees with potential for advancement. In 2005 five modules were held,

involving 4,896 course hours with 97 participants (69 from CORPORACION MAPFRE), 72 of

them from Spain and 25 from companies in other countries.

° Training in new technologies and office automation continues to develop through e-learn-

ing techniques, with participation from 184 people (70 from CORPORACION MAPFRE),

5,496 course hours and excellent results.

Foreign language courses were particularly popular in 2005, as 642 employees (265 of

them from CORPORACION MAPFRE), received 65,076 hours of training.

Furthermore, 9,720 hours of training were used to provide 162 new employees with basic

programs on knowledge and functioning of the business.

° All personnel assigned with watching over and protecting MAPFRE’s premises received

their respective training courses from the Interior Ministry.

° In 2005 a new Internet platform was created to suit the needs and growing volume of

training. In 2006 it will serve as a new way to access training in several languages.

In Spain a new version of the Orientation Plan was developed to guide new employees as they

first get to know MAPFRE.

Acceptance of grant-holders and educational internships at MAPFRE companies in Spain is

done through the corresponding cooperation programs with schools. In 2005, 263 people with

grants did internships with SISTEMA MAPFRE in Spain (134 with CORPORACION MAPFRE).

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° The Training Centre held 11 seminars in Venezuela and El Salvador, with participation

from 226 managers who underwent a total of 3,871 hours of training. These seminars were

designed with help from people responsible for training in units and companies in the differ-

ent countries so as to adjust their content to local needs. The following chart shows the main

ratios of training in America.

Countries Hours of training

ARGENTINA 50,300 (44 hours/employee).BRAZIL 94,975 (60 hours/employee).COLOMBIA 2,648 (6 hours/employee).CHILE 3,194 (8 hours/employee).EL SALVADOR 208 (2 hours/employee).MEXICO 86,267 (45 hours/employee).PARAGUAY 600 (12 hours/employee).PERU 42,000 (97 hours/employee).URUGUAY 622 (21 hours/employee).VENEZUELA 16,245 (14 hours/employee).PUERTO RICO 1,940 (3 hours/employee).

Group-employee relations

MAPFRE attaches great importance to respecting workers’ rights when it comes to unions and

collective bargaining, fulfilling the norms that must be applied in this area in each country, and

maintains mechanisms of permanent dialogue with union representatives. The data on union

membership(4) for 2005 are as follows:

° Percentage of staff represented by unions: 40 percent.

° Percentage representation of each union: CC.OO. 85.8 percent; UGT 10.7 percent; ELA 1.6

percent; others 1.9 percent.

In 2005, 48 union elections were held, of which 36 were for mandate renewals. These selection

processes proceded calmly and without conflict.

The following chart explains the channels of communication with the legal representatives of the

workers.

COMMITTEES THAT DERIVE FROM THE COLLECTIVE BARGAINING AGREEMENT

- Mixed Commission. Held four meetings in 2005.

- Training Commission. Met three times in 2005.

- Technical Commission for Monitoring Professional Classification. Held five meetings in 2005.

- Pension Plan Control Commission: held one meeting in 2005.

- Safety and Health Commitee: held four meetings in 2005.

Throughout the year numerous meetings were held with union representatives.

PERIODIC REPORTS TO THE LEGAL REPRESENTATIVES OF THE WORKERS, in line with rules in force.

To make it easier for union representatives to communicate, each Union Section has a public e-mail folder, which at the end of the year was replaced by a space on the intranet to post the announcements they deem fit, substituting for the physical bulletin board.

The UNION CREDIT was 56,811 hours in 2005, the union subsidy activities established in the collective bargaining agreement of MAPFRE Grupo Asegurador was the maximum 60,314 euros.

(4) Data correspond to union membership in Spain and refer to the Grupo Asegurador

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In 2005, a one-year collective bargaining agreement was signed for MAPFRE Grupo Asegurador,

and negotiations began for a multi-year agreement in 2006 and thereafter. The following agree-

ments were also reached with the legal representatives of the workers:

- Protocol for Integration of RED MAPFRE (June 24, 2005).

- Agreement for merging ENKEN Asistencia Sanitaria and ENKEN Servicios de Prevención into

the MAPFRE human resources management system. (Dec. 20, 2005).

Diversity and opportunities

Chapter II of the MAPFRE Grupo Asegurador collective bargaining agreement stipulates that all

necessary action will be taken so that within the organization, all workers’ legitimate rights will

always be respected and the laws and obligations that stem from them will be complied with.

In particular, MAPFRE will continue to encourage and support observance of the principles of

equal opportunity, non-discrimination, continuous professional training, managerial training,

balancing of work and family and protection of the dignity of women and men in the workplace.

In Spain, 69 percent of the people who joined MAPFRE in 2005 were women. Also, 20 percent

of the employees in the executive category are women (21.5% in CORPORACION MAPFRE) and

of the 25 members of the Board of Directors of MAPFRE MUTUALIDAD, two are women (8%).

Furthermore, MAPFRE has taken measures to help employees reconcile their jobs with their

family lives, including the following:

° Schedules: reduced workday; leaves of absence of up to three years to take care of a relative,

with job guaranteed upon return; early departure on Jan. 31 and Jan. 5.

° Leaves: three days a year or 21 hours to take care of personal business; three days during

Easter Week; 15 days in addition to maternity leave to substitute for hour of breastfeeding;

one day in addition to the one established in the Insurance Sector Agreement for change of

residence; special leaves for adoption of Spanish or foreign children.

° Economic: aid for day care, totaling 369,056 euros in the 2004-2005 school year; and subsi-

dies for 76 children of employees to go to summer camps.

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Employee assistance service

Technology is an important part of our business development, as it allows us to improve the effi-

ciency of management, processes and customer service. In this sense MAPFRE has promoted

the use of its Intranet as the main channel of communication with its employees. The number

of queries received via the Human Resources mailbox in Spain (6,378) exceeds the number of

queries received via e-mail (2,736).

Furthermore, we have tried to bring Human Resources information closer to employees, allow-

ing for self-management through the Employee Self-Assistance service, where employees can

obtain information on their salaries, discounts on their insurance policy premiums, the current

value of their life insurance policy, their contributions to pension plans and child assistance, in

addition to requesting health insurance and benefits from the employee assistance fund.

In 2005, MAPFRE employees made 21,150 queries through this service, an increase of 32.1

percent.

All employees receive the quarterly magazine “The World of MAPFRE” (“El Mundo de MAPFRE”),

with articles on the insurance business, news for employees, MAPFRE in the world and current

affairs.

Safety and health

In Spain, MAPFRE follows a policy of Workplace Risk Prevention, the goal of which is to provide

work settings that are safe and healthy, thus guaranteeing people’s right to see their health

protected.

The main element for managing safety and health in the workplace is the Joint Prevention Serv-

ice, which includes all the companies that belong to SISTEMA MAPFRE in Spain. This service is

part of the General Human Resources Department and covers such specialised areas as Health

Monitoring, Safety, Industrial Hygiene and Ergonomics and Applied Psycho-sociology, which are

handled by qualified personnel organised according in the following way:

CENTRAL SERVICES (MAJADAHONDA)

° Headquarters of the Prevention Service

° Coordinators of the Departments of Health Monitoring, Safety, Industrial Hygiene and Ergonomics

° Administration

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PERIPHERAL SERVICES – BASIC HEALTH UNITS (UNIDADES BÁSICAS DE SALUD (UBS)

° Madrid: Majadahonda, Recoletos, Azca

° Barcelona

° Valencia

In each province and corresponding central office, there is a person who works on prevention

without being part of the Joint Prevention Service.

MAPFRE’s prevention system has examined twice by outside auditors, as required by the rules

now in force, with a favourable result.

In compliance with currents norms and rules set by the Collective Bargaining Agreement in the

Insurance Sector and the MAPFRE Collective Bargaining Agreement, a MAPFRE State Com-

mitee for Safety and Health was created. It is comprised of eight members of the Board of Direc-

tors and eight employee representatives, and holds quarterly meetings. In 2005 the Commitee

reached the following agreements:

° An updating of workplace risks.

° A plan to apply laws on smoking.

° Criteria on how often to schedule overall evaluations and plan workplace visits.

° Procedure for reporting to prevention delegates.

In Spain, SISTEMA MAPFRE’s preventive action is planned and spelled out in the Overall Preven-

tion Plan. This is the basic document that is updated periodically and establishes procedures

and measures that must be used in the areas of Safety, Hygiene. Ergonomics and Health

Monitoring to achieve an optimum level of protection for MAPFRE employees against possible

workplace hazards. The most important data from 2005 on prevention activities are:

° The Basic Health Units answered more than 13,500 medical queries and carried out periodi-

cal or initial medical examinations of MAPFRE employees in Spain.

° Risk evaluations were done at newly opened work facilities, ones which were completely

refurbished or those acquired through business expansion. A total of 79 specific evaluations

of jobs and workplaces were also conducted.

° As part of a five-year industrial hygiene program to monitor air quality in offices, studies were

carried out at 15 work sites within MAPFRE.

° Specific ergonomic studies were done on 30 jobs and 18 offices, either because problems had

been detected or they were requested by the Group or its employees.

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In 2005, action plans were implemented in the different specialty areas of the Prevention Service:

EvaluationsTHREE-YEAR PLAN (2005-2007) TO UPDATE WORKPLACE RISKS

AT JOB SITES

Updating risks associated with each job:

- Automobile and maintenance experts

Health monitoring

PLAN TO REDUCE RISK OF CARDIOVASCULAR AILMENTS

Study of factors involved in cardiovascular risk

Plan to help people quit smoking

Proposed plan to avoid obesity and a sedentary lifestyle.

PREVENTION OF INFECTIOUS DISEASES

Vaccination campaigns:

- influenza (October/November)

- tetanus-diphtheria (April)

Specific vaccinations against hepatitis A and B.

PROTOCOL REVIEW Updating protocols for medical examinations: biological risk and maintenance jobs. (Approved Jan. 26, 2006).

Ergonomics and psycho-

sociologyPROTOCOL REVIEW

For obtaining chairs and disks, headsets, foot-rests, devices to raise computer screens and hand-rests.

Training

EMERGENCIES

Eight on-site emergency medical aid courses were given to 210 employees.

Information was given to new employees on how to prevent risks in their jobs.

PUBLICATIONS

Articles on prevention in the magazine “The World of MAPFRE” and the Intranet: “Spring Asthenia”, “Computer Syndrome”, “Menopause” and “Vitamines and Minerales; is it good to take supplements?”

Coordination of business

activities

SUBCONTRACTORS AND TEMPORARY WORKERS

Implemention of protocols to establish measures of business coordination in the area of workplace risk prevention.

Statements PREVENTION POLICY

Overall principles of Workplace Risk Prevention were approved in order to guide the conduct of those with management responsibility in the Group, be they executi-ves or direct managers, as well as employees in general.

In 2005 there were 129 cases of medical leave because of workplace accidents in Spain, of which

48 corresponded to CORPORACIÓN MAPFRE. The resulting accident data are as follows:

SISTEMA MAPFRE. SPAIN Año 2005

AVERAGE DURATION 24.1 days

INCIDENCE INDEX 12.5

GRAVITY INDEX 0.2

FREQUENCY INDEX 7.3

The human resources departments of the companies included in the MAPFRE Joint Pre-

vention Service report accidents whether or not they involve a person taking medical leave,

supplying the corresponding data to the Delt@ program. The Prevention Service investigates

accidents that have taken place and proposes appropriate corrective measures.

In 2005, work days lost to absenteeism stemming from a non-workplace accident, common

illness or maternity totalled 131,105 among 2,693 employees.

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Remuneration and social benefits

In the fiscal year 2005, the entities of SISTEMA MAPFRE paid 758 million euros in remuneration.

Of this, 72.5% went to salaries, 16.5% to social security, 6.3% to social benefits and the remaining

4.7% to compensation and other payments. The entities of CORPORACION MAPFRE paid 466 mil-

lion euros in remuneration. Of this, 71.9% went to salaries, 15.8% to social security, 7.0% to social

benefits and the remaining 5.3% to compensation and other payments.

In Spain, the fixed elements of salary are revised in accordance with the applicable collective bar-

gaining agreements. In the case of the Agreement of MAPFRE Grupo Asegurador, which affects

87% of SISTEMA MAPFRE employees, it involves an annual increase equivalent to 115% of the

CPI.

MAPFRE has also established a wide range of social benefits for employees as a major component

of their remuneration, with special attention to pension- and health-related benefits. In Spain

these social benefits are the following:

° Life and accident insurance.

° Pension plan.

° Health insurance.

° Complementary assistance for temporary disability, maternity or risk during pregnancy.

° School aid for children of employees.

° Aid for children with disabilities.

° Aid for large families.

° Employee aid fund for special situations, usually stemming from health problems.

° Prize for seniority.

° Prize for weddings, birth of child/adoption.

° Grants for theoretical/practical training for children of employees.

° Discounts on insurance policies with MAPFRE.

° Loans for purchase or repair of home and for special expenses.

° Christmas basket.

In 2005 MAPFRE spent 48 million euros on social benefits, which amounted to 6.3% of total remu-

neration paid to employees.

MAPFRE pays special attention to its retirees and those who, through special circumstances, have

a right to financial support. In 2005 this support totaled 59,630 euros.

Program of social activities

The following activities were carried out with employees and their families in 2005.

° MAPFRE-FREMAP sports events, with participation by 1,646 employees and 39 children of

employees.

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° Participation by 85 employees in the Business Race (Carrera de las Empresas), held by Actu-

alidad Económica.

° Christmas parties for children of employees, attended by 3,170 people (employees, relatives

and children of employees). At these parties, the employees and their families can collaborate

with the ANAR Foundation (Aid to Children and Adolescents at Risk) by donating gifts.

The following were the main social activities carried out in America in 2005:

° In Argentina, the MAPFRE quality of life program aimed at developing personal skills based

on three pillars: healthy nutrition, exercise and healthy habits. The program boasts periodic

sports, training and cultural activities: yoga classes, theatre classes, football and paddle ball

tournaments and sports training. A photography contest was also held.

° In Brazil, the Listening and Conversation Program, the goal of which is to provide orientation,

support and personal and professional attention to employees and their families, who have spe-

cialists available 24 hours a day (psychologists, nutritionists, physical therapists and others).

° In Colombia, sports activities with 255 participants, and recreational activities for children of

contractors, with 570 children taking part.

° In Chile, the MAPFRE sports club and the MAPFRE folk music group.

° In Venezuela, recreational and sports activities for employees and their children, and a drug

prevention and awareness program.

Acknowledgements

° Spanish university students chose MAPFRE as one of the 50 best companies to work for and

develop their careers, according to an annual survey that the Know How Foundation carried

out for Executive Development (Desarrollo Directivo).

° CORPORACION MAPFRE is one of the Ibex companies that contributes the most with pro-

grams of social action, according to a report in the magazine Actualidad Económica.

° MAPFRE is one of the best companies to work for in Spain and was placed in the ‘excellent’

category, according to the ranking done by Actualidad Económica.

° MAPFRE SEGUROS GERAIS was chosen by the Great Place to Work Institute as the third-best

company to work for in Portugal.

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II. MAPFRE AND ITS CUSTOMERS

One of the main objectives of SISTEMA MAPFRE companies is to satify the needs of its more

than 10 million members and customers, offering them high quality services and appropriate

assistance. Proof of this commitment is seen in the effort made in 2005 to simplify the tra-

ditional model of distribution, broadening the joint supply of products and services from the

companies of MAPFRE, enhancing the professionalisation of the Network and increasing sig-

nificantly the number of offices and agents; indeed, the idea is to get closer to the customer.

At the close of 2005 SISTEMA MAPFRE’s total revenue was 12,484.9 million euros, an increase

of 12.8% from the previous year. As for the revenue of CORPORACION MAPFRE and its sub-

sidiaries, they posted an increase of 12.6% in 2005, closing the fiscal year with 9,048.6 million

euros.

SISTEMA MAPFRE’s revenue from premiums in 2005 totaled 10,110.1 million euros, a rise of

13.4% from the previous year, while premium revenue at CORPORACION MAPFRE and its sub-

sidiaries rose 13.2% to 7,260.3 million euros.

MAPFRE’s penetration in Spanish society stood at 15.5%, and 82.1% of its customers use only

MAPFRE. Customer loyalty is seen in the fact that 48.43% of them have had MAPFRE products

for more than six years(5).

The wide range of MAPFRE products means the profile of SISTEMA MAPFRE’s customers var-

ies greatly. Thus, the customers are both people and companies, and within the latter they can

be small and medium-size firms or self-employed people, or even large industrial or financial

groups.

PROFILE OF THE MAPFRE CUSTOMER/POLICYHOLDER

Nearly 5.7 million vehicles insured MOTOR

2.1 millIon homes insured HOME

2.7 million policyholders LIFE AND SAVINGS

725,000 people with health insurance HEALTH

60.6 million beneficiaries ASSISTANCE

94,243 small- and medium-size companies and 2,281 large companies COMMERCIAL

Ceding companies in 96 countries REINSURANCE

In the fiscal year 2005, the companies of SISTEMA MAPFRE paid out a total of 5,357.5 million

euros in claims, an increase of 5.2% compared to 2004, with the following breakdown:

UnitsClaims

2005 2004 Change (%)

MOTORAGROPECUARIAGENERAL INSURANCECOMMERCIAL LIFE CAJA SALUDASSISTANCEAMERICAOTHER COMPANIES

1,485,307115,059505,856409,772

1,574,045264,547

21,458930,972

50,468

1,352,16560,884

459,096502,313

1,637,803243,959

19,513765,838

51,650

9.889.010.2

(18.4)(3.9)

8.410.021.6(2.3)

TOTAL 5,357,484 5,093,221 5.2(Figures in thousands of euros)

Information refers to direct insurance.

(5) Data from September 2005.

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CUSTOMER SERVICE CHANNELS

MAPFRE has established the following channels which facilitate communication with its policy-

holders and customers:

° MAPFRE NETWORK, composed of 2,861 offices in Spain and 1,412 in other countries in which

it operates, provides personal and direct customer service.

In 2005, MAPFRE opened 461 new offices, 388 of them in Latin America, and plans to maintain

this expansion policy in order to improve its already extensive distribution network in Spain

and Latin America.

Furthermore, with the goal of accompanying Spanish firms in their international expansion,

in 2006 MAPFRE EMPRESAS plans to open offices on a freedom-to-operate basis in Paris,

Cologne and London.

The number of agents and contractors that MAPFRE has in Spain totals 22,330, which helps

keep the Group close to its customers.

° Highly qualified personnel serve a segment of customers with complex profiles requiring

specialised attention (industries and large industrial risks, the agricultural sector, savings

products, etc.), with the support of a select team in Central Services who have extensive

experience and knowledge of international markets.

° Telephone platforms with 24-hour service 365 days a year, which provide continuous serv-

ice, and allow clients to ask questions, conduct transactions pertaining to policies they have

purchased and other types of insurance offered by MAPFRE and obtain related services. The

following table provides details on existing platforms in Spain(6) and the services each one

provides.

Claims by type of service

Motor unit General insurance unit Assistance unit Health unit

MAPFRE Motor line

CIS Tel. Platform

MAPFRE ASISTENCIA Plat.

MAPFRE CAJA SALUD Plat.

Requests for information 10.6% 3.7% 34% 29%Claims processing 76.1% 49.5% 66% 32%Changes of information 3% 3.3% 14%

Others 10.3% 56.5% 25%

° The MAPFRE Motor Line is a multichannel customer service (telephone and Internet) for trans-

actions related to automobiles. In the 2005 fiscal year, its ‘call centre’ in Madrid was enlarged

with two interconnnected platforms in Ávila.

° The Operations Area Customer Service Centre (C.I.S) is a service centre for everything related

to households, proprietor associations, burials, etc.

° The Elipse Canaries’ call centre platform is a territorial centre for services to Canary Islands

customers covering all types of insurance.

° The operations headquarters of MAPFRE ASISTENCIA is mainly dedicated to managing travel

assistance claims and services for the elderly.

° The call centre platform of MAPFRE CAJA SALUD is dedicated to services to policyholders,

distribution networks, health professionals contracted by telephone, fax, Internet and e-mail.

° The Teleseguros VIDA specialised platform and MAPFRE VIDA Centre for Portfolio Maintenance

provide services to bancassurance and agency channel customers, respectively.

(6) Data not included from Elipse Canaries telephone platform

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The following table gives information for the main telephone service platforms of SISTEMA

MAPFRE’s insurance companies outside Spain:

Calls by type of service MAPFRE BRAZIL

MAPFRE TEPEYAC

MAPFRE ARGENTINA

MAPFRE PUERTO RICO

Requests for information 23.3% 23% 28.6% 40%Claims processing 13.7% 43% 11.4% 35%Changes of information 25.1% - 23.9% 15%

Others 37.8% 34% 36.1% 10%

The network of telephone platforms of Sistema Internacional de Asistencia MAPFRE (SIAM) is

worth special mention. It comprises MAPFRE ASISTENCIA and its subsidiaries abroad, which

provide employment for 1,550 people and in 2005 handled 15,983,403 calls, an increase of 23.6

% over 2004. Of these, 66% (10,549,045) related to claims processing and the remaining 34%

(5,434,358) were requests for information. The following table provides information on the four

major SIAM platforms:

Calls by type of service Brazil USA Argentina Turkey

Requests for information 30.2% 8% 51% 63.4%Claims processing 69.8% 92% 49% 36.6%

The number of MAPFRE employees working in customer call centres totals 3,144, of whom 1,311

work in Spain and 1,833 in other countries.

° MAPFRE Portal and the MAPFRE Internet office. These channels, which are linked to SIS-

TEMA MAPFRE’s corporate portal, offer complementary possibilities for customers to inter-

act with MAPFRE, both in Spain and in the other countries in which it operates, although they

include differentiating elements in each country so as to adapt to the particularities of the

local insurance market and distribution networks.

° Bancassurance Channel. The important strategic alliance reached in 1998 with Grupo CAJA

MADRID allows for MAPFRE products to be distributed also through the savings bank’s 1,902

offices.

° New customer service tools. MAPFRE RE has launched a specific computer platform for ret-

rocessionary companies, while MAPFRE EMPRESAS has developed Clavemap, a tool which

centres on credit insurance.

OVERALL PRODUCT RANGE

One of MAPFRE’s business goals is to offer its customers a complete range of products and

services for the prevention and coverage of personal and corporate risk and to cater to their

personal and family savings needs. This range includes:

° Integrated advisory insurance services, both to individuals and companies, carried out by

MAPFRE experts in various business areas via its network of offices, call centre platforms

and professionals dealing with specialised risks, which facilitate an integrated response to

the customer’s needs in the motor, home, health, burial service, travel assistance, industry,

small and mid-size companies and agricultural sectors.

° Legal services for individuals (Informauto for the Motor sector and the Household Legal

Department); assistance, medical or psychological (in the accident insurance, emergency

medical services and mediphone telephone assistance areas of the health insurance sector,

and assistance managers in burial insurance); veterinary (provided in the animal insurance

39


area); and in savings and pension matters (consultants who specialise in strictly financial

products and services). MAPFRE also provides these types of services in other countries

(Argentina, Brazil, Mexico, Peru, Puerto Rico and Venezuela).

In the large Group area, these services are structured by sector of economic activity, which

allows for the provision of efficient, integrated and specialised services of high quality, includ-

ing multinational coverage via the extensive network of MAPFRE’s companies abroad, with a

presence in 38 countries.

° Claims processing services, including a large network of professionals for repairing claims-

related damage, as well as providing solutions to specific needs not derived from these.

° In-house medical centres with highly qualified personnel: 10 centres with rehabilitation units

to provide care to those injured in traffic accidents; seven centres for customer health care

services; two in the Caribbean (Mexico and the Dominican Republic) to assist policyholders

traveling there; and two for workplace accident rehabilitation in Argentina, which are the

property of MAPFRE ARGENTINA ART. In the health field, in 2006 early diagnosis and treat-

ment of deafness in children will be added, as well as psychological counseling through

MAPFRE CAJA SALUD.

° 102 specialist in-house motor claims assessment and quick payment centres with profes-

sionals trained in the newest technologies. There is a process underway to develop repair

garajes (MULTISERVICAR), two of which are already operating in Alcalá de Henares and

Ávila.

° Research and development centres for risk prevention systems in Motor insurance (CESVI-

MAP in Spain, Cesvi Argentina, Cesvi Mexico, Cesvi Brazil, Cesvi Colombia and Cesvi France),

whose research on equipment, tools, materials and products used in repairing vehicles is a

benchmark in maintaining safety.

° Development of traffic accident simulation programmes (RECONSTRUCTOR 98 by CESVI-

MAP) and with other preventative areas, such as those developed by ITSEMAP management

of emergencies (LINCE and EMERGEX2000) workplace injury risk (GESMAP).

° Translation and interpretation services in 27 languages for MAPFRE ASISTENCIA.

As a result of this continuous research on products and services, in the fiscal year 2005 the fol-

lowing products were launched onto the market:

40

NEW PRODUCTS AND SERVICES 2005*

LINE OF BUSINES

COUNTRY TYPES OF PRODUCTS AND/OR SERVICES

MOTOR

SPAIN

Including substitute vehicle guarantee for members of CLUB MAPFRE del Automóvil.

Extending travel assistance guarantee for CLUB MAPFRE del Automóvil members to include any vehicle they are travelling in.

BRAZILMAPFRE Automais Gold: aimed at owners of luxury cars.

MAPFRE AutoMais Camión: protection for lorries.

COLOMBIA

Policy for heavy vehicles: includes differential coverage for such things as lost pro-fit and travel assistance.

Policy for school vehicles: aimed at vehicles carrying students, offers civil liability insurance and travel assistance.

VENEZUELAThree new motor insurance plans that reach customers that are not eligible for fully insurance policies.

MEXICO

MAPFRE Elite Package: this contract offers attractive discounts in insurance against total theft and material damage.

Integrated coverage for occupants of private vehicles: covers civil liability for damage to passengers, including medical expenses.

Compensation benefit for immobilization: MAPFRE TEPEYAC grants an additional Benefit if damage-assessment or repair of a vehicle takes longer than the average length of time.

Financial deductible benefit: in the event of a claim that requires compensation under risks that are covered, the policyholder can reach a loan agreement with MAPFRE for the latter to pay the agency or garage directly.

Vehicle purchase loan protection: covers the debt outstanding in the loan at the time of the claim, up to the maximum stipulated in the policy.

Current value compensation: compensation for the vehicle’s value as stated in the EBC Guide at the time the policy is issued.

Sale price compensation: compensation for the sale price of the vehicle, including tax.

CHILE

Protected auto: broad policy with coverage of damage and civil liability, with pay-ments in set instalments.

International Civil Liability: insurance for privately owned vehicles that are used to travel abroad.

LIFE, INVESTMENT

AND SAVINGS

SPAIN

BaseVIDA.

FondMAPFRE Bolsa Garantizado.

FondMAPFRE Bolsa G IV.

FondMAPFRE Internacional Garantizado IGR.

MAPFRE Income (social planning).

MAPFRE Growth (social planning).

CHILE

Personal accident coverage, called “Protected child”, an agreement with Mutual de Seguridad: the policy covers 100% of surplus medical, pharmaceutical and hospital costs incurred directly because of an accident after resorting to one’s health insurance plan.

ARGENTINA Systematic Retirement Plan.

BRAZIL

MAPFRE Life Woman (Vida Mujer): life insurance geared toward women, with coverage against breast and uterine cancer.

Nossa Caixa Vida y Previsión: Nossa Caixa Vida, Nossa Caixa Especial Vida y Nossa Caixa Personal accident coverage.

COLOMBIA

Policy for teachers. Premium payment exoneration coverage for total and permanent disability, serious illness, assistance for emergency dentistry, diseases covered for school accidents, assistance for prolonged care, second medical opinion assistance, home medical care assistance, school assistance and integrated rehabilitation after school accidents.

EL SALVADOREducational planning: collective life insurance policy for parents so that in the event of death, their children can continue their studies through the university level via payment of yearly premiums.

MEXICOProvide for them Late in Life (Dotales a Edad Avanzada)

Burial services.

PERU MAPFRE PERU VIDA: burial insurance

* Does not include changes to or improvements of existing, marketed products.

41


LINE OF BUSINES

COUNTRY TYPES OF PRODUCTS AND/OR SERVICES

GENERAL INSURANCE

SPAIN

Home Selection (Hogar Selección): aimed at upper income levels.

Payment protection: guarantees income in event of unemployment or disability.

Mortgage Protection Insurance: guarantees payment of mortgage in the event of unemployment or discapacity reducing monthly income.

Caravan insurance: covers damages to caravans and mobile homes.

CHILESuperprotected Home: Household insurance that covers physical damage (building and contents) and offers home assistance.

BRAZIL

MAPFRE Esurance: unprecedented insurance in Brazil for risks associated with computer theft.

MAPFRE Cellular: covers theft of cell phones.

MAPFRE Business failure (Quiebra del consorcio): guarantees the policyholder (landlord of the building) compensation for monthly unpaid rent.

MEXICOSafe Home (Hogar Bien Seguro): policy that protects the home, offering coverage and services.

PERULow-price home insurance (Seguro Hogar Económico): offers basic coverag for low-income families.

COMMERCIAL

SPAIN Insurance for photovoltaic facilities.

EL SALVADORMulti-risk business insurance: policy for small and very small businesses, with coverage against fire, lost profit, civil liability and even personal accident insurance for the owner and their employees.

CREDIT BRAZIL MAPFRE Internal Credit Insurance.

HEALTH

BRAZILMAPFRE Odonto: dental insurance with coverage for children, surgery, radiology, diagnosis, etc.

PERU Clover Basic Health: Economic health insurance, with basic coverage.

MEXICOMAPFRE La Paz, MAPFRE Exel and MAPFRE del Carmen: products that cover costs in these hospitals.

VENEZUELAHealth Savings Plan: covers up to 85% of costs with a Premium less expensive than the traditional one.

ASSISTANCE

SPAIN

Neoplus: comprehensive product for vehicles driven less than 100,000 kilometers.

Neolíder: specifically for vehicles with less than 200,000 kms and less than 10 years old.

ITALY Evolution: mechanical breakdown insurance.

GUATEMALA

HONDURAS

EL SALVADOR

BRAZIL

Legal defence.

HUNGARY

COLOMBIA

BOLIVIA

PANAMA

Launch of insurance for mechanical breakdown of second-hand vehicles.

UNITED KINGDOM Travel insurance.

BRAZIL Domestic appliance insurance.

AGROPECUARIO

SPAIN

Coverage of losses and civil liability for farm machinery.

Insurance for livestock ranches.

Veterinary assistance as part of policies for pets.

Insurance covering lost income for farmers who have accidents.

BRAZIL MAPFRE Aeronaves Agrícolas.

MEXICOHorse insurance: covers death of animal and forced slaughter in event of enzootic disease.

PROPERTY BRAZILMAPFRE Property Consortium: offers a variety of letters of credit for purchases of new or used buildings.

42

COMPLAINTS

SISTEMA MAPFRE relies on a Central Department which handles grievances and complaints

from all finance service users. It also uses the Committee for the Defence of the Policyholder,

an institution created in 1984 in order to, acting free of charge and independently from SISTEMA

MAPFRE’s governing bodies, resolve complaints made by persons and proprietor associations

who are policyholders, insured persons or beneficiaries of insurance policies from the various

constituent companies and the participants or beneficiaries of individual pension plans managed

or custodied by MAPFRE’s companies as well as their successors.

In the fiscal year 2005, the Complaints Department handled a total of 3,516 grievances and

4,348 complaints, with an average of 650 per month. Sixty-five percent of the grievances and

complaints (5,122) correspond to CORPORACIÓN MAPFRE and its subsidiaries.

A total of 55% of the grievances and complaints received during the year had true financial

content and included a specific demand, and the remaining 45% reflected mere operating inci-

dences in the processing of claims and policies, which are submitted to the appropriate depart-

ments for suitable handling. Of the total, 533 were reviewed and approved by the Committee for

the Defence of the Policyholder, which examined 1,023, of which 403 correspond to the fiscal

year 2005.

In its activity report on 2005, the committee made several recommendations which have been

implemented to improve the performance of SISTEMA MAPFRE’s companies. The measures

include the following:

° Need to speed up mechanism for resolving claims.

° Better coordination between the definitions of situations of disability and disablement estab-

lished in policies and those used by the laws of the social security system.

° Mandatory preparation of reports signed by legal advisers to back up decisions denying legal

defence coverage on grounds the claim is inviable.

° Clearer communication with policyholders on reductions in coverage amounts for legal

assistance.

° Not equating the keys of a vehicle to the automatic opening device used by disabled people to

gain access to their vehicles.

° Extension of coverage not just to mechanical damage to a refrigerator but to damage result-

ing from food which has gone rotten.

° Regularisation of contractual documents of policyholders from other companies that recently

joined SISTEMA MAPFRE.

° Individualisation of the different companies that make up SISTEMA MAPFRE when it comes

to using forms and stationery in correspondence with policyholders.

° Correct application of the excess agreed in the compensation insurance when it comes to the

date for payment of the agreed compensation.

° Study of possible discounts in theft policy premiums for those vehicles equipped with special

devices that help to locate them.

° Swift and efficient compliance with the resolutions of the Committee for the Defence of the

Policyholder.

43


QUALITY AT MAPFRE

MAPFRE’s companies consistently work to achieve high standards of quality in policyholder and

customer service, with special attention to the prompt, efficient and fair attention and payment

of claims. The following table shows the number of employees dedicated to quality monitoring

and control at MAPFRE:

Employees dedicated to quality at MAPFRE

In Spain 86

Abroad 74

Call centre platforms specially monitor the quality of service by surveying customers, measuring

the degree of resolution of customers’ requests, the perceived quality and the quality offered as

measured in terms of how they are greeted, oral expression, use of language, handling of calls,

resolution at first contact, knowledge and operators’ ability to adapt to the situations at hand.

All quality evaluations performed are analysed and processed daily to adopt corresponding and

personalised corrective actions, establishing concrete training programs in job-related and

technical skills. The most significant are the following:

° Customer focus ° MAPFRE products

° Customer service techniques ° Internal procedures (collection

management, claims management,

complaints management, IT support

programs).

° Telephone sales strategies

° Handling conflicts

° Interpersonal communication

The following table includes a selection of data used to evaluate the evolution of quality of

service in Spain:

Parameters

Motor General insurance ASsistance Health

MAPFRE motor line CIS

MAPFRE asistance plataform

MAPFRE caja salud plataform

2005 2005 2005 2005

Number of calls (handled) 8,000,356 5,727,385 15,983,403 1,187,180Average waiting time (in seconds) 14 20 20 17Average number of calls waiting (%) 20% 44% 14.3% N.A.Number of waivers (%) 3% 7.3% 6.2% 6.7%

The following table sets out the same information for the main subsidiaries operating in direct

insurance abroad:

ParametersMAPFREBRAZIL

MAPFRETEPEYAC

MAPFREARGENTINA

MAPFREPUERTO RICO

2005 2005 2005 2005

Number of calls 1,935,825 1,166,649 1,134,204 401,053Average waiting time (in seconds) 41 38 10 9Average number of calls waiting (%) N.A. N.A. N.A. 2%Number of waivers (%) 4.8% 7.2% 3% 5.2%

44

In the main platforms of the Assistance Unit, the most significant information is the following:

ParametersBrazil USA Argentina Turkey

2005 2005 2005 2005

Number of calls 2,260,122 1,786,967 1,714,869 2,139,186Average waiting time (in seconds) 12 33 41 12Average number of calls waiting (%) 17.4% 29% 28% 15.7%Number of waivers 3.3% 6.8% 14% 4.9%

In addition to internal quality monitoring systems, MAPFRE uses those established by the differ-

ent accredited bodies in the sector, such as the Policyholders’ Satisfaction Survey of MAPFRE

MUTUALIDAD and MAPFRE SEGUROS GENERALES, carried out by ICEA. It yielded the following

conclusions on customers’ general level of satisfaction after using their insurance:

Level of satisfactionMotor insurance 2005 Home insurance 2005

% %

Satisfied or very satisfied 84.7% 76.6%Low level of satisfaction 10.5% 16.5%Unsatisfied 4.8% 6.9%

Source: ICEA Policyholders Satisfaction Survey for MAPFRE MUTUALIDAD, 2005 and Policyholders Quarterly Questionnaire for MAPFRE Household Insurance, 2005. Customer portfolio with claims.

At the same time, internal management controls are carried out to evaluate response time and

monitor incidences and complaints. Quality-control visits are done by repair team leaders.

Customer satisfaction surveys and sectorial studies are also carried out to analyse the quality

and perception that MAPRE customers have of their satisfaction level. MAPFRE also does audits

of the quality of management processes and periodically engages in telephone follow-up of poli-

cies and a study of the causes of non-payment. All of these allows the company to do a periodic

monitoring of cancelations and client portfolios, and engage in specific actions to recover lost

customers.

A commitment to quality is a constant in all the companies and countries in which MAPFRE oper-

ates. One example in the companies abroad is the introduction in 2006 of a computerised tool

called Pivotal, which measures service quality and customer response in MAPFRE PARAGUAY.

Within Spain, another example is the implementation in 2006 of a quality control plan for users

of the MAPFRE CAJA SALUD web page.

MAPFRE is aware of the importance of keeping its customers data confidential, and for this

reason it has the procedures necessary to achieve the essential protection of the personal data

it possesses.

MAPFRE has qualified staff in all of its offices, and in the rest of the channels through which it

distributes its products, in order to be able to provide any information on them and advise as

which services best suit the needs of each of its customers.

Throughout 2005 MAPFRE took an active part in working groups on advertising and transparency

that were organised by UNESPA to promote self-regulation of the insurance sector in these areas

that have been mentioned.

45


The following awards and acknowledgements speak for the quality of the service provided by

MAPFRE:

° ITIC award to MAPFRE ASISTENCIA as the best assistance company in the world in 2005.

° Company most highly rated in the insurance sector in the MERCO report for the second

straight year.

° Eighth-most admired company in Spain, according to a ranking done by the newspaper Expan-

sión, auditor PricewaterhouseCoopers and the Financial Times.

° BUPE RSC award (Communicative Social Responsibility) to MAPFRE ARGENTINA in recogni-

tion of its code of ethics and values.

° Prestigio Seguros 2005 award to MAPFRE ARGENTINA, granted by the Centre for Studies of

Public Opinion (CEOP) and the company Comunica.

° Award for social responsibility in a business to CESVI ARGENTINA, given by the Franco-Argen-

tine Chamber of Commere and Industry.

° “Estrella Empresarial Diamante” prize to MAPFRE EL SALVADOR, given by the country’s

Chamber of Commerce and Industry.

° Award for the Best Insurance Company in Puerto Rico, given by the International Association

of Men and Women Business Leaders (AIHME) to MAPFRE PUERTO RICO.

° Ranking of MAPFRE BRASIL in second place among insurance companies with the best social

and environmental management, and in third place among insurance companies that most

innovate, according to the magazine Istoé Dinheiro.

° TOP Social award from the Association and Sales and Marketing Directors of Brazil (ADVB) to

the MAPFRE Road Safety Institute of MAPFRE BRASIL, for the third time in a row.

° Insurance and Risk Trophy given to MAPFRE BRASIL by the Nacional Academy of Insurance

and Planning in that country.

Meanwhile, several companies from SISTEMA MAPFRE have obtained quality certificates. In

order to keep them they must uphold the required quality standards. This makes for a guarantee

of service for policyholders and customers:

° The Customer Service Centre of the Operations Department of MAPFRE SEGUROS GEN-

ERALES has the certification ISO 9001: 2000.

° MAPFRE CAUCIÓN Y CRÉDITO has the AENOR certification ISO 9001:2000 for its activities as

a whole.

° MAPFRE ASISTENCIA has the certification “ISO 9001:2000” from Bureau Veritas.

° The MAPFRE Testing and Road Safety Centre (CESVIMAP) has the certification ISO

9000:2000.

° VIAJES MAPFRE received a “Q” for Tourism Quality from the Spanish Tourism Quality Institute

(ICTE).

° The MAPFRE QUAVITAE Villa Sacramento de San Sebastián residence and day centre has the

certification ISO 9001:2000.

46

° BRASIL ASISTENCIA, a subsidiary of MAPFRE ASISTENCIA, has the certification “ISO 9001:

2000”.

° ANDIASISTENCIA also has the certification “ISO 9001:2000” certified by the Bureau Veritas.

° MAPFRE COLOMBIA has the quality management certificate ISO 9001:2000; and certification

for its Life services from ICONTEC-IQNet.

In 2006, MAPFRE Motor Line is expected to receive the CRC certificate (Customer Relation Cen-

tres), which is given out by the independent certifying agency SGS (Societé Générale de Surveil-

lance).

47


III. MAPFRE AND ITS SHAREHOLDERS

CORPORACIÓN MAPFRE, holding company of SISTEMA MAPFRE whose shares are listed on

stock exhanges, carried out activities in accordance with SISTEMA MAPFRE’s principles of good

governance and social responsibility. In 2005 Corporación made new efforts to increase the

frequency of publication, quality and transparency of its public information.

CORPORACIÓN MAPFRE SHARES

The following table gives basic information on CORPORACIÓN MAPFRE shares:

Number of shares in circulation 238,900,706, totally subscribed and fully paid up.

Face value of each share 0.5 euros.

Kind of shareOrdinary, represented by an accounting entry. All the shares in circulation have the same political and economic rights.

Markets where they are traded

Stock markets of Madrid and Barcelona.

It is also possible to acquire CORPORACIÓN MAPFRE shares in the U.S. through a programme of Level-1 ADRs (American Depositary Receipts). These receipts are traded outside the official stock market, in the so-called “over-the-counter market” (OTC). The program does not include an obligation to prepare financial reports in line with U.S. accounting principles, nor to provide periodic financial information and relevant information according to the laws of the market in that country.

Stock indices that include the shares

– Dow Jones Stoxx Insurance;– MSCI Spain, and as a result of its presence in this index, it is also

included in other MSCI indices with insurance companies and Spanish companies;

– FTSE All-World Developed Europe Index.

ISIN code ES0124244C36

COMPOSITION OF THE SHAREHOLDER BASE

At the close of fiscal year 2005, the Corporación had a total of 34,011 shareholders. Of these,

33,085 were small shareholders living in Spain, a figure that represents a 43.9% increase from

the previous year. A total of 74.3% of the Corporación’s shareholders are residents of Spain, and

25.7% are held by shareholders in other countries.

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VALUE AND PERFORMANCE OF CORPORACIÓN MAPFRE SHARES

Developing CORPORACIÓN MAPFRE and increasing share value are among the main objectives

of SISTEMA MAPFRE. The means for achieving these goals are profitable growth in its various

operating units and companies and investment in new products that add value.

48

In the past five years, the growth in value of CORPORACIÓN MAPFRE shares has clearly out-

performed the two main indices in which they are included, the IBEX 35 and the Dow Jones (DJ)

Stoxx Insurance, as seen in the table below.

1 year 3 year 5 year

CORPORACIÓN MAPFRE 28.7% 88.0% 114.8%IBEX 35 18.2% 77.8% 17.8%DJ Stoxx Insurance 30.5% 55.5% (47.3)%

During the same period, the earnings per share (EPS) of CORPORACIÓN MAPFRE have evolved

as follows:

PGC/PCEA(1) IFRS(2)

2001 2002 2003 2004 2004 2005

EPS 0,5 0.6 0.8 0.8 0.9 1.1Increase 4.1% 17.7% 25.0% 8.0% - 12.9

(1) Figures calculated with accounting rules generally accepted in Spain and established in the Nacional Accounting Plan (PGC) and the Accounting Plan for Insurance Companies (PCEA).

(2) Figures calculated in line with International Financial Reporting Standards, adopted in 2005 by all the companies listed on European Union stock markets.

The evolution of the dividend and the estimated yield based on the average share price has been

as follows:

2001 2002 2003 2204 2005

Dividend 0.2 0.2 0.2 0.2 0.3Dividend yield 2.4% 2.5% 2.1% 2.4% 2.3%

The earnings and dividend per share have been calculated using an adjustment factor and the

weighted average number of shares, in accordance with NIC 33 to take into account the capital

increase of 500.5 million euros that was carried out in April 2004. To this effect it should be

pointed out that the increases in both indicators are especially relevant as they were calculated

with larger average number of shares than in the previous period (238,900,706 shares compared

to 224,849,373 in 2004).

The interim dividend paid in November 2005 increased by 13.3% on the previous year. The total

expenditure on dividends for the year was 69 million euros, an increase of 28.3% with respect

to 2004.

PUBLIC INFORMATION

CORPORACIÓN MAPFRE is continuously expanding and enhancing the information it makes avail-

able to its investors by regularly publishing the following documents:

Frequency Kind of information

Quarterly – Information in the requisite format of the Spanish National Securities Market Commission (CNMV).

Bi-annually – Release of results.

Annually – Individual and consolidated annual reports.– Embedded value of the Life and Savings

business of MAPFRE VIDA and its subsidiaries.– General presentations by the Corporación.

49


Additionally, documents are also prepared for each year’s specific reporting requirements.

Among such documents prepared for 2005, these are highlights:

° A presentation designed to explain the adoption of IFRS rules, their effects on reporting of

accounting and financial information, and changes brought about in the principle compo-

nents of net profit and net worth.

° A monographic presentation on MAPFRE AMÉRICA, designed to explain the markets where

it operates, its development in recent years, its current position in the market and its strat-

egy. As this documents was well received by investors, in this fiscal year and the following

ones CORPORACIÓN MAPFRE wants to publish other monographic documents that enhance

investor knowledge of the company’s dealings.

In response to suggestions from financial analysts and institucional investors, in the first half of

the year, we improved the presentation and level of detail in the tables contained in the quarterly

reports, giving data on the different Units and Companies and the consolidated figures.

COMMUNICATION WITH FINANCIAL MARKETS

The Finance and the Investor Relations departments of CORPORACION MAPFRE are in charge

of communicating with the financial markets. Their activities focus mainly on:

° Preparing public financial information.

° Releasing this information and explaining it to financial analysts and investors.

Communication with the financial markets is done mainly through the following channels:

° Previous filings with the CNMV of all information published, which can be seen at any time at

the regulatory body’s web site.

° Publication in the section of SISTEMA MAPFRE’s web site (www.mapfre.com) dedicated to

CORPORACIÓN MAPFRE shareholders. The documents on this site may be viewed in Spanish

and English. This is the main conduit for distributing information to investors, and it is now

composed of the following sections:

– Main data: contains general information on the company and its subsidiaries, as well as its

principal figures.

– Financial information: contains the annual reports and periodic financial information from

the last five years, as well as credit agency reports for the last two years.

– Presentations to investors: contains all the presentations from the last five years.

– MAPFRE share. Shareholders equity: contains information on the subscribed capital, the

evolution of the share price in quasi real time, dividends and substancial shareholders and

brochures for bond and share issues.

50

– General Shareholders’ Meeting: contains the regulations of the General Shareholders

Meeting and information on both most recent meetings and the next scheduled one.

– Corporate governance: contains SISTEMA MAPFRE’s Code of Good Governance, the lat-

est corporate governance report, the corporate by-laws, the internal code of conduct, the

regulations of the Board of Directors, the composition of the Board and its Delegated Com-

mittees.

– How to contact us: contains telephone numbers, postal and e-mail addresses for the Inves-

tor Relations Department.

– Relevant facts and other filings with the CNMV: contains relevant facts and other filings

submitted to the CNMV over the last five years.

– Investor agenda: includes the dates on which results are published during the year and the

date of the General Shareholders’ Meeting.

° Distribution by electronic mail to a database of nearly 600 pre-registered analysts, investors

and journalists.

° Meetings with financial analysts and investors in Spain and abroad. This is the main activity

of the Investor Relations Department and it is carried in the following ways:

– Presentation of CORPORACIÓN MAPFRE results to analysts and institutional investors.

In 2005, four meetings of this kind were held in Madrid and two in London. At all of them,

extensive complementary information was provided, which was first made available to the

public through the CNMV registry.

– Conference calls for analysts and institutional investors to analyse results on the day they

are released. In 2005 four of these conferences were held, all of them in English. The infor-

mation used for these conferences is the same used at presentations of results.

– Visits to institutional investors in Spain and abroad (known as “roadshows”). Each year, two

periods of approximately a month –in spring and fall– are dedicated to this kind of visit.

The goal is to enhance awareness of CORPORACIÓN MAPFRE and its activities by explain-

ing public information. Throughout the fiscal year direct contacts were maintained with

51 Spanish institutional investors and investment managers, and with 177 from Germany,

Canada, Denmark, the United States, France, Ireland, Italy, Portugal, the United Kingdom,

Sweden and Switzerland. The headquarters of CORPORACIÓN MAPFRE has also had

numerous visits from institutional investors from various countries. Meetings were also

held in London and Madrid to coincide with the publication of results and give investors the

opportunity to receive quarterly information on how the business is developing.

° Participation in special forums. In 2005, CORPORACIÓN MAPFRE participated in the following

conferences organized by securities brokers/dealers and banks in order to put listed compa-

nies in contact with institutional investors:

– “Seminar Barcelone”, organised by HSBC CCF bank in Barcelona in March.

– “European Financials Conference 2005”, organised by Goldman Sachs in Málaga in June.

– “2nd Iberian Conference”, organised by the Santander Group in New York in September.

– “Stock Picking in Europe Conference”, organised by HSBC CCF bank in Paris in October.

51


The presentations used at these conferences have been made available to the public through

the CNMV and MAPFRE’s web page.

° Response to queries by investors working with social responsibility investment criteria. This

activity is mainly done by completing questionnaires on non-financial information.

At the close of 2005, three Spanish and international investment banks had “buy” recommenda-

tions on the shares of CORPORACIÓN MAPFRE, while one recommended “to hold” and four “to

sell.” Furthermore, at request of CORPORACIÓN MAPFRE, the ratings agencies A.M. Best and

Standard & Poor’s assigned counterparty risk and bond ratings, while Fitch has also done so at

its own initiative.

Since 2001, a CORPORACIÓN MAPFRE representative has participated actively – alongside

representatives of nine other listed companies – in the Board of Directors of the Spanish Asso-

ciation for Investor Relations (Asociación Española para las Relaciones con Inversores or AERI)

whose goal is to promote initiatives to develop and advance relations with investors in Spain.

It is also possible to consult complementary information on Corporate Governance and the list

of investors in its Corporate Governance Annual Report and in the section “Shareholders and

Investors/Corporate Governance on the SISTEMA MAPFRE web site (www.mapfre.com).

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IV. MAPFRE AND ITS AGENTS

MAPFRE’s relationships with its agents are built on stability and permanence, allowing it to

rely on one of the most wide-ranging insurance networks in the business with strong link-

ages between the Group and its agents. This makes for a low level of rotation. These links are

strengthened by the wide-ranging nature of MAPFRE´s products which, besides constituting

one of the main differentiating factors in dealing with customers, also provides its agents with a

significant added value, allowing them to present each customer with an integral insurance or

financial product tailored to their specific needs.

RELATIONSHIP CHANNELS

MAPFRE’S relations with its agents are coordinated through various channels:

° The relationships with the representatives and agents forming MAPFRE’s NETWORK are

maintained by different means, among them periodic meetings with MAPFRE commercial

managers and scheduled visits to representatives’ offices. These face-to-face contacts are

complemented by use of print media (magazines, circulars and manuals) and contact via

telephone platforms with specific areas devoted to agents (for example OFITEL), where they

can make all type of inquiries and receive business and technical guidance.

° The Operating Units and Companies, which maintain strong relationships with brokers,

have developed specific ways to articulate these relationships, given the specific needs and

approach of this channel. In addition, various activities have been established depending on

the type of broker: service for general brokers are carried out by the MAPFRE Direct Office

closest to their place of business, while services for specialised brokers connected to finan-

cial companies are available in a “virtual office” in each sub-centre.

A project is now being developed to create an internal platform for specific services for all

brokers, who can perform the main functions related to their business (pricing, issuance,

billing, queries, document search, etc.)

Altogether MAPFRE provides its agents with a wide variety of tools such as the SIRED pro-

gramme, access to MAPRE’s intranet, Office 2000 for agents, the PDM IT platform exclusively

for delegates and the PC Web platform for brokers and other agents.

In 2005, MAPFRE provided offices with new applications and operations that facilitate and

improve existing mechanisms with the goal of offering customers better service.

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RECRUITMENT

MAPFRE has established a selection protocol which includes all the procedures which should

be followed for recruiting agents. In general, two series of psychometric tests are used to evalu-

ate, respectively, commercial efficiency and aspects of personality, such as aptitude for sales

and attitudes. On average the selection process includes two interviews, the first with the cor-

responding sales manager and the other with the MAPFRE network training managers who also

carry out psychometric tests.

When it comes to recruiting agents, MAPFRE chooses professionals and rules out filling jobs

with people looking for temporary positions. For this reason, the profile of the agents is one of

ability, potential and ethics in their conduct.

TRAINING

The differentiating factors of MAPFRE’s relation to its network of agents is the importance it

attaches to training. In this area, diverse activities have been carried out in Spain, among which

the following should be highlighted for their future impact:

° Initial courses for new agents across all sub-centres.

° Continuity in training for agents and delegates (centred on products, commercial aspects

and tools) with a total of 6,561 people receiving 25,980 hours of training in seven territorial

centres.

° Within the SIRED program, in 2005 MAPFRE developed the installation and use of the “Com-

mercial Management System” tool. In order to implement it training was given to 5,500

agents and staffers in delegate offices in their respective territorial centres.

° Eight courses in “Management and Leadership of a Delegate Office” with a total of 96 people

attending.

° Training given to brokers in contacting for Combined Agricultural Insurance.

To these activities we must add those aimed at training brokers, both full-fledged ones and the

sales staff. The content covered all lines of business and addressed both technical and business

issues.

These activities were channeled through the training department and were developed at MAP-

FRE broker offices (19 spread around territorial centres) and brokerage facilities.

Specific training courses were also held at the Business Unit on maritime, air and land trans-

port, civil liability within a company and marketing of credit insurance.

MAPFRE also provides significant resources for the training of agents and brokers in other

countries, to which it has dedicated more than 19,200 hours in courses attended by more than

6,100 people.

54

QUALITY

In order to improve the quality of services provided to the customer, MAPFRE has established

diverse control systems governing the actions agents. In particular, MAPFRE’s companies peri-

odically conduct surveys among their customers in order to evaluate the services provided by

their agents and monitor complaints, so that necessary corrective measures can be taken.

Operational reviews of offices are also carried out, with corresponding reports compiled, and

training plans are devised to integrate applications in the different platforms so as to achieve

maximum levels of quality.

At the same time MAPFRE companies also work both to improve the quality of the service and

to support their agents. In order to achieve this, periodic in-house assessments and surveys

are conducted by the companies and polls are conducted by the different bodies in the sector

in different countries. Examples of the type of indicators used are those of the biennial study

on service quality in insurance companies carried out by the Association of Spanish Insurance

Brokers (ADECOSE). In ADECOSE´s latest edition (2003), MAPFRE was the insurance company

cited most frequently by brokers as the one whose service they were most satisfied with. MAP-

FRE received an average score of 7.4 points in the general evaluation of quality of service, above

the sector average of 7.3 points. It received high scores in areas such as communication (7.6),

trust and experience (7.5) and modernity and dynamism (7.5).

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V. MAPFRE AND ITS SUPPLIERS

MAPFRE maintains relationships with its goods- and services providers on the basis of fairness

and their speed in fulfilling contractual obligations. These relationships are developed according

to the following lines of activity:

° Suppliers who provide general goods and services contact MAPFRE through the General

Services Departments of its various Operating Units and Companies, where purchasing man-

agement is centralised, with the aim of greater efficiency and cost reduction.

° The purchase of computer and communications equipment for companies in Spain is central-

ised in MAPFRE INFORMATION TECHNOLOGY SERVICES. MAPFRE companies in other coun-

tries also have managers in charge of purchasing computer equipment who are independent

from their General Service Departments.

There are also specific departments which handle relationships with providers of marketing

and advertising products.

° Each of the Operating Units and Companies handle their own relationships with suppliers

who provide services to their customers specifically related to their own operating activities,

especially with regard to areas such as repairs stemming from household claims, health

services, services related to Assistance coverage and repairs related to personal or property

damage concerning the Motor business branch.

In all of these areas there are formulas for coordinating the management of the suppliers

common to the various Operating Units and Companies, and activities are carried out relat-

ing to their selection, training and support in order to obtain an appropriate level of service

quality. In 2006 there are plans to introduce effective measures for increase this coordination,

reducing and concentrating management centres.

RELATIONSHIP CHANNELS AND SUPPORT SYSTEMS

Generally, contact with suppliers takes place mainly through MAPFRE’s own contracted tel-

ephone platforms and specific telephone lines, although Internet platforms are increasingly

being developed which allow for all types of rapid and secure operations. One such platform

is the one designed for towing-service providers, which allows more rapid communication

between these providers and the assistance supervisors located in the different local manage-

ment departments (sub-centres). There is also a platform for the professional group which pro-

vides home repairs services, www.infocol.com, through which they can receive job instructions,

submit invoices for repair work and view promotional campaigns, etc. As of the end of 2005,

2,600 professionals, out of a total of 3,600 who work with the company, were registered with and

operating via this platform.

MAPFRE also uses an SMS and GPRS data transmission platform from Telefónica Móviles

España, establishing another direct and secure communication channel between the company

and its suppliers and allowing faster precessing of service management. With this application,

the providers can receive daily job instructions via a short message and download all related

information as well as the information fields necessary for accounting. In addition, they can

inform the company when they have completed a job and are available for a new assignment.

Relations with health, medical centre and hospital service professionals are coordinated

through the Provincial Medical Assessors, who are also in charge of their selection and hiring.

They have at their disposal the WMSalud Internet platform from which they can download all

types of useful information for suppliers (manuals, conditions and health information) and send

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it to them via whatever means the supplier chooses (normally e-mail). There is also a Health

Professional Service Department which provides this group with a specific e-mail address for

suggestions, complaints or any questions which may not have been answered by the Provincial

Assessor. Furthermore, MAPFRE gives the possibility of automated billing by the professionals

for their services via the Internet using different management mechanisms available on the

Red Chip Card. At present a specific portal is being Developer for the health professional which

would expand the type of operations that could be performed through this channel.

In some specific lines of business – General Insurance and Motors – the use of digital billing is

expanding, speeding up administrative work.

SELECTION CRITERIA

Selection of suppliers is done on the basis of objective criteria, mainly through bids, which take

into account factors such as the price/quality ratio, the infrastructure they have, their recognition

in the market, and especially whether they belong to a group of collaborators of one of SISTEMA

MAPFRE’s companies and their service quality record.

Compliance with the standards in force in the various countries as well as the implementation

of security and hygiene measures, where applicable, are essential requirements for selection.

Other factors which are highly valued are response time, after-sales service, geographical cover-

age and the value added for MAPFRE policyholders and customers.

IT service providers have termination clauses in their contracts in case of lack of compliance. In

the case of equipment maintenance, agreements have been reached regarding levels of service

and they penalize suppliers who do not fulfil quality requirements.

Candidates who are not selected but meet the required criteria are included in a List of Potential

Suppliers so that at some point in the future they might be called on for their services.

Rotation among suppliers who work with MAPFRE companies is generally low. The most com-

mon reason for dismissals is failure to comply with obligations or the inability to adapt to service

requirements at a given moment.

Suppliers satisfaction level with MAPFRE is high. Swift payment is the most highly valued factor.

In addition, MAPFRE has developed specific loyalty programmes for its suppliers, including dis-

count campaigns with SISTEMA MAPFRE’s companies such as VIAJES MAPFRE or with partner

companies (Telefónica, Ford, etc.). An important promotional device is the Tourmap campaign

directed at the professional group of household claim repairmen, in which punctuality, quality of

work, treatment of clients, professional image, cleanliness and orderliness and uniformity in the

use of MAPFRE clothing are highly regarded. In order to measure these parameters, custom-

ers are asked to rate the work of the service provider in their home. Then, based on the results

obtained throughout the campaign, the provider receives various awards. In 2005, a total of 50

professionals were granted prizes.

TRAINING

MAPFRE has a strong commitment to training its suppliers as a means of improving service to

its customers and policyholders. With this goal in mind, suppliers receive general information

on MAPFRE’s culture and its philosophy of quality. Furthermore, each of the Operating Units

and Companies are responsible for developing training systems and materials directed at the

suppliers of services specifically related to their business. Among these, it is worth mentioning

the different manuals which contain procedures and standards related to the suppliers’ activi-

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ties, such as the Operating Manual and the Internal Regime for MAPFRE CAJA SALUD or its

equivalent for MAPFRE AGROPECUARIA veterinarians.

A major part of the training is given at the time suppliers begin working with MAPFRE. An exam-

ple of this is the programme for professional household repairmen, which addresses techni-

cal questions and operations related to transactions and to the provision of services, among

other topics. In 2005 a total of 300 professionals took part in this programme. Furthermore, 29

courses were given, involving a total of 109 hours of training with 188 suppliers participating,

in the Quality Objectives programme directed at managers in the Burial Assistance business,

centred on communication procedures and skills.

QUALITY

All the companies from MAPFRE monitor the quality of services provided by their suppliers,

mainly through surveys of their customers or by visiting the suppliers’ premises. An evalution is

also carried out which measures the degree of compliance with service standards, the length of

time it took to complete and the competitiveness of the suppliers´ fees. The evaluation system

is based on different channels:

° Incidents detected by operators.

° Visits, meetings and conventions with suppliers.

° Communication with customers.

° Internal and specific audits.

The main standards of quality evaluated are the following:

IN PROVISION OF SERVICES

Response time between communication of instruction to the supplier and contact with the policyholder.

Time spent in providing the service. In the case of medical/rehabilitation services: the treatment time.

Obtaining of quality certifications by the supplier.

Transparency in the management of the service performed by the supplier and the information provided to the company.

IN PURCHASE OF GOODS

Condition of delivered product (control of samples).

Alter-sales service:- Maintenance guarantee.- Replacement product in case of

repair.- Repair guarantee.

Adequate stock/supply capacity.

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The total cost of goods and services contracted by MAPFRE in Spain in the fiscal year 2005

exceeded 160 million euros. Of this total, more than 145 million euros corresponded to CORPO-

RACION MAPFRE and its subsidiaries.

With the different providers of goods and services with which it works, MAPFRE establishes both

mercantile contracts for services and collaboration agreements.

The criteria used for selecting suppliers are similar in the various countries in which MAPFRE

operates. In any case, the absolute-must criteria of the Group when it comes to selecting sup-

pliers are maximum quality and adequate provision of services.

5. MAPFRE’S SOCIAL DIMENSION · 5. MAPFRE’S SOCIAL DIMENSION I. MAPFRE AND ITS EMPLOYEES(2)...

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