A.M. Best Affirms Rating of Haftpflichtverband der Deutschen Industrie V.a.G. and HDI Reinsurance Ireland Ltd.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 4, 2002 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A+ (Superior) of Haftpflichtverband der Deutschen Industrie V.a.G. (HDI HDI Human Development Index (UNDP yardstick of human welfare) HDI Help Desk Institute HDI Humpty Dumpty Institute (New York, New York) HDI High Density Interconnect ) and HDI Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Ireland Ltd. The outlook is negative. The rating reflects HDI's strong business position in industrial insurance and excellent consolidated capitalisation n. 1. same as capitalization. Noun 1. capitalisation - writing in capital letters capitalization writing - letters or symbols that are written or imprinted on a surface to represent the sounds or words of a language; "he turned the paper . 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. Strong business position--HDI is the third-largest industrial insurer in Germany, benefiting from strong direct relationships with its clients. A.M. Best believes that HDI's business position in the industrial segment has been further enhanced by the current shortage of capacity and favourable underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. conditions. Life business has also grown significantly in recent years, positioning HDI as one of the leaders in the private pension (Riester-products) and unit-linked segment. For 2002, A.M. Best expects a strong premium growth of approximately 10% from the sales of pension products. However, demand for unit-linked products will be negatively impacted by weak equity markets. Excellent capitalisation -- A.M. Best regards HDI's consolidated risk-adjusted capitalisation as excellent, although declining, mainly due to strong growth in reinsurance and weak equity markets. A.M. Best has given credit for HDI's significant equalisation Noun 1. equalisation - the act of making equal or uniform equalization, leveling human action, human activity, act, deed - something that people do or cause to happen reserves and for the group's subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". issues up to 15% of total capital. A.M. Best believes that HDI may require additional capital in order to finance its expected overall growth in industrial, life and reinsurance in 2003. Weak but improving earnings -- 2002 non-life technical results are improving as a consequence of significant rate increases and stricter policy terms in industrial insurance and reinsurance. HDI is also capitalising on reduced market capacity in these segments. However, investment returns are likely to be severely reduced by weak equity markets. In 2001, HDI recorded an after tax loss of EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 23.9 million in 2001 (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 23.7 million) from its exposure to the events of September 11, weaker investment returns and new business strain from its life insurance operations. Inadequate pricing in industrial insurance has historically led to unsatisfactory underwriting results. The negative outlook reflects A.M. Best's concerns about HDI's limited financial flexibility. HDI had intended to partially float its intermediate holding company, Talanx AG, in order to finance further growth. However, weak capital markets have made this more difficult than previously anticipated. Consolidated financial leverage has also increased to 28.9 at year-end 2001. A.M. Best will closely monitor the outcome of the merger discussions with Gerling and the potential impact on HDI's rating. Expectations: - A.M. Best expects HDI's risk-adjusted capitalisation to remain commensurate with an A+ (Superior) rating. - A combined ratio of below 100% will be achieved for HDI's non-life and reinsurance portfolio in 2003. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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