A.M. Best Co announced that it has assigned a rating of “bbb” to the forthcoming perpetual subordinated bond issued by Hannover Finance (Luxembourg) S.A. and guaranteed by Hannover Rueckversicherung-AG (Hannover Re) with a stable outlook.
“All existing debt and financial strength ratings remain unchanged,” said Best.
Hannover Re announced that it would raise additional capital, In part to replace existing debt obligations, with a new 350 million euro ($440 million) “hybrid capital” issue last week when it published its Q1 2005 earnings report (See IJ Website May12). Standard & Poors assigned an “A” rating to the hybrid securities.
Best noted that the “subordinated bond issue is junior to all other subordinated debt and will be callable after 10 years. It has equity characteristics according to A.M. Best guidelines. (See Best’s Rating Methodology http://www.ambest.com/ratings/methodology.asp.) The proceeds will be treated as equity in the quantitative assessment of Hannover Re’s consolidated risk-based capital in line with A.M. Best’s tolerance level.”
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