AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "aa" of Hannover Rück SE (Hannover Re) (Germany) and its main subsidiaries (see detailed list of companies below). At the same time, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of the debt instruments issued by Hannover Re and by Hannover Finance (Luxembourg) S.A. (Luxembourg) and guaranteed by Hannover Re. The outlook of these Credit Ratings (ratings) is stable.
These ratings reflect Hannover Re's balance sheet strength, which AM Best categorises as strongest, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management (ERM).
Hannover Re's balance sheet strength is underpinned by risk-adjusted capitalisation that exceeds the level required to support the strongest assessment, as measured by Best's Capital Adequacy Ratio (BCAR). AM Best expects risk-adjusted capitalisation to remain at the strongest level, underpinned by prudent capital management, as well as sustainable organic capital generation at a good level, benefiting from diversified earnings. The balance sheet strength assessment also reflects Hannover Re's prudent reserving practices, as well as its low-risk and highly liquid asset portfolio. The group's comprehensive retrocession cover, which utilises a combination of traditional and collateralised alternative solutions, remains pivotal in limiting capital volatility. In addition, the group has relatively low financial leverage and benefits from excellent financial flexibility.
Hannover Re has a track record of strong and stable operating performance, demonstrated by a 10-year weighted average non-life combined ratio of 97% and return on equity of 13% (2010-2019), as calculated by AM Best. The group's resilient investment income continues to provide a strong source of income. During the first three quarters of 2020, Hannover Re reported a combined ratio of 101.4%, compared with 98.6% in the same prior-year period, as calculated by AM Best, with the deterioration in claims experience largely driven by the impact of the COVID-19 pandemic. However, underwriting performance is expected to remain strong over the cycle.
As the third largest global reinsurer, as ranked by AM Best, Hannover Re benefits from a defensible leading position in the global property/casualty and life reinsurance markets that is underpinned by its established brand and excellent diversification by product mix and geography. Hannover Re's long-standing good relationships with stakeholders and efficient infrastructure position it well to benefit from improving reinsurance market conditions and positive pricing momentum across some of its core operating segments.
The FSR of A+ (Superior) and the Long-Term ICR of "aa" have been affirmed with stable outlooks for Hannover Rück SE and the following subsidiaries:
- E+S Rückversicherung AG
- Glencar Insurance Company
- Hannover Re (Bermuda) Ltd.
- Hannover Re (Ireland) Designated Activity Company
- Hannover Life Reassurance Bermuda Limited
- Hannover Life Reassurance Company of America
- Hannover Life Reassurance Company of America (Bermuda) Ltd.
In addition, the following Long-Term IRs have been affirmed with a stable outlook:
Hannover Finance (Luxembourg) S.A.-(guaranteed by Hannover Rück SE)
-- "aa-" on the EUR 500 million 5.00% subordinated fixed to floating rate bond, due June 2043.
Hannover Rück SE-
-- "a+" on the EUR 500 million 3.375% undated junior subordinated fixed to floating rate bond.
This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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