MAPFRE SA, the biggest insurer in Spain, is seeking to expand and may make acquisitions in Europe and the U.S., Chairman Antonio Huertas said.

The company isn’t constrained by regulators’ efforts to stiffen capital requirements for the insurance industry, Huertas, 50, said in a Bloomberg interview earlier this week at the company’s Madrid headquarters. Uncertainty about how much capital insurers will need and the economic contraction in Spain have weighed on the stock, he said.

“It is only a problem of opportunity,” he said. “We have great financing capabilities without needing to increase capital,” he said, declining to elaborate on what the firm might buy next.

Huertas, 50, is seeking to boost MAPFRE’s presence across more states in the U.S. and it plans to increase assets in Mexico, he said. In Europe, the company can add more businesses after spending 550 million euros ($685 million) on acquisitions in Germany and Italy this year.

Purchases over 10 years including in the U.S. and Turkey have reduced the insurer’s reliance on Spain and Portugal, which now account for about 45 percent of MAPFRE’s profit. The company in September bought Direct Line Insurance Group plc’s Italian and German units.

The insurance industry will probably consolidate, Huertas said, as new regulation will make it tougher for companies to survive independently. The European Union plans to introduce Solvency II starting in 2016. The rules specify how much capital firms must hold to meet future obligations and to safeguard customers’ money.

Spanish Recovery

“In Spain there are 160 insurance companies and that is not sustainable,” said Huertas, speaking in Spanish.

MAPFRE’s solvency ratio stood at 246 percent at the end of 2013, according to data compiled by Bloomberg. That compares with Prudential plc’s 280 percent, 212 percent for Axa SA and 182 percent at Allianz SE, the data show.

Excluding acquisitions, MAPFRE is counting on recovery in Spain, its biggest market, and on the strength of its Brazilian unit to boost profit.

While the group’s net income dropped 1.6 percent in the year through September to 673 million euros, earnings from Spain rose 18 percent in the third quarter and earnings from Brazil jumped 61 percent. MAPFRE employs 36,000 on five continents.

“Now Spain is not a nightmare for Europeans,” Huertas said.

Rates Challenge

MAPFRE’s shares fell 5.2 percent this year, lagging the 9.2 percent gain in the Bloomberg Europe 500 Insurance Index, which tracks 32 companies including MAPFRE. The insurer also lagged behind the 8.6 percent gain in the Spanish benchmark IBEX 35 Index.

The “underperformance could be explained by investor concerns regarding the profitability outlook in Spain, as higher economic activity normally implies higher claims frequency and a worsening of the combined ratio,” said Maria Paz Ojeda, analyst at JB Capital Markets SV SA.

MAPFRE’s combined ratio, or claims and costs as a proportion of premiums, was 95.1 percent as of June, compared with a 93.6 percent at Allianz and 95.8 percent at Axa, Bloomberg data show.

Price increases starting next year could boost MAPFRE’s profitability, she said.

Low interest rates pose a challenge due to lower returns earned from financial products, Huertas said.

“This scenario makes us more thorough with the technical management, that is back to basics, paying more attention to internal costs, controlling accident rates—be more efficient,” he said.