AM Best has affirmed the credit ratings of Germany-based Hannover Re and its main subsidiaries, including island-headquartered Hannover Re (Bermuda) Ltd and Hannover Life Reassurance Company of America (Bermuda) Ltd.
The ratings agency affirmed the financial strength rating of A+ (Superior) and the long-term issuer credit ratings of “aa” (Superior).
AM Best also affirmed the long-term issue credit rating of a debt instrument issued by Hannover Re.
The outlook of these credit ratings is stable.
The ratings reflect Hannover Re’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management.
Hannover Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation that exceeds the level required to support the strongest assessment, as measured by Best’s capital adequacy ratio.
AM Best said it expects the group’s risk-adjusted capitalisation to remain at the strongest level, supported by effective capital management, and sustainable strong organic capital generation from its diversified earnings profile.
It said the group’s robust asset-liability and liquidity management capabilities are expected to provide resilience to external pressures associated with capital market volatility, global economic uncertainty and high claims inflation pressures.
AM Best said the balance sheet strength assessment also reflects Hannover Re’s prudent reserving practices and its low-risk asset portfolio.
The agency said: “The group’s comprehensive retrocession cover, which utilises a combination of traditional and collateralised alternative solutions, is pivotal in limiting capital volatility. In addition, the group benefits from low financial leverage and excellent financial flexibility.
“The group has a track record of strong operating performance, supported by its diversified earnings profile. In 2023, Hannover Re reported a solid net income (including minority interests) of €1.83 billion (approximately $1.93 billion) under IFRS 17, up from €898 million (approx. $949 million) in 2022, restated under IFRS 17.
“Technical results remained strong through 2023, in both the property/casualty and the life/health segments. The return-on-equity ratio equalled 22.9 per cent at the end of the third quarter of 2024, as reported by Hannover Re, supported by robust technical performance and investment returns.
“Continued hard market conditions in the property/casualty (P/C) reinsurance segment and large losses in line with budget supported a non-life combined ratio of 87.9 per cent (IFRS 17 – discounted), as reported by the group.
“AM Best expects underwriting performance to remain strong over the cycle, supported by moderate net catastrophe exposure, stringent underwriting discipline and effective expense management.”
As one of the largest composite reinsurers globally, AM Best said, Hannover Re benefits from its leading position in the global P/C and life reinsurance markets, which is underpinned by its established brand and excellent diversification by product mix and geography.
It added that Hannover Re’s long-standing relationships with stakeholders and efficient infrastructure leaves it well-positioned to benefit from continued improved P/C reinsurance market conditions.
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Publish date : 2024-12-08 05:01:00
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