The board of Spain’s Mapfre Re has approved a capital injection of €250m in a bid to provide greater reinsurance capacity to its customers.

MAPFRE expects shareholdings in MAPFRE Re to grow up to 94.43% with the completion of the subscription period of new shares.

Internal sources emanating through excesses resulting from MAPFRE’s recent withdrawal from bancassurance pacts will provide financing for the capital raise.

This raise is said to offer more flexibility to structure its own reinsurance protections, optimising underwriting risk.

Commenting on the development, MAPFRE RE CEO Eduardo Pérez de Lema said: “We are going to have more capacity to provide coverage to our customers at a time when the presence of solvent operators with a vocation for long-term service is required, which will allow us to grow at a time of improved technical conditions in the market while maintaining our traditional prudent management of the business.”

MAPFRE RE has contributed post-tax accumulated earnings of over €1.7bn to its parent in the past 15 years, becoming the second largest contributor to the group’s earnings.

It has recorded an average ROE of nearly 11% and an average net combined ratio of 96% in this same period.

In August this year, MAPFRE RE received the regulatory clearance to launch a subsidiary in Beijing, which will have a working capital of CNY500m ($73.6m).