A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Hannover Ruckversicherung AG (Hannover Re) and its parent company Haftpflichtverband der Deutschen Industrie V.a.G. (HDI) as well as HDI Reinsurance Ireland Ltd. The outlook on all of the ratings is negative.
HDI’s rating reflects its “strong business position in industrial insurance and excellent consolidated capitalisation, “said Best. “An offsetting factor is the weak, but improving consolidated earnings. The affirmation of the rating for HDI Reinsurance Ireland Ltd. reflects its core status within the HDI group,” it continued.
Best indicated that HDI occupied a “strong business position” as the third-largest industrial insurer in Germany and benefits “from strong direct relationships with its clients.” The report also said that its “buisness position in the industrial segment has been further enhanced by the current shortage of capacity and favourable underwriting conditions.”
Hannover Re’s rating reflects its “strategic position within the HDI group, its excellent business position, very good underwriting performance and excellent, albeit reduced, risk-adjusted capitalisation,” said Best. “An offsetting factor is Hannover Re’s limited financial flexibility.” Best considers Hannover Re to be “strategically important” to HDI.
the rating agency said it expects Hannover Re to record overall growth of 10% for 2002, and noted that it’s also “one of the largest providers of program business in the United States (gross premiums EUR 2 billion (USD 1.9 billion) during the first nine months of 2002) and is seeking to expand this business model in Europe.” It also indicated that “recent withdrawals of capacity in the reinsurance market would offer further business opportunities for Hannover Re in 2003.”
Hannover Re’s pretax profit for the first nine months of this year was 306.9 million Euros ($305.1 million), and it has good control of its underwriting said Best. It’s also profited from substantial price increases, between 15% and 100%, depending upon line of business.
Its combined P/C ratios “from its property/casualty and program book of business, where combined ratios improved to 95.1% and 92.9% from 124.4% and 94%, respectively,” said the announcement.
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