A.M. Best Affirms Rating of Hannover Ruckversicherung AG.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 4, 2002 A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Hannover Ruckversicherung AG (Hannover Re Hannover Re (FWB: HNRGn), in German Hannover Rückversicherung AG, with gross premium of around €9 billion in 2006, is one of the five largest reinsurance groups in the world. Its headquarters are in Hanover, Germany. ). At the same time, A.M. Best affirmed the "a" rating on the 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. 400 million 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". issued by Hannover Finance Inc. and guaranteed by Hannover Re and the USD 350 million subordinated debt issued by Hannover Finance S.A. and guaranteed by Hannover Re. The outlook on all ratings is negative. These rating actions reflect Hannover Re's strategic position within the 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 group, its excellent business position, very good 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. performance and excellent, albeit reduced, risk-adjusted capitalisation. An offsetting factor is Hannover Re's limited financial flexibility. Strategic importance to HDI--A.M. Best considers Hannover Re to be strategically important to its ultimate parent company, Haftpflichtverband der Deutschen Industrie V.a.G (HDI). Excellent business position--Through opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. underwriting, Hannover Re's consolidated property/casualty gross premiums grew by 74.3% in the first nine months of 2002, whilst maintaining underwriting discipline. In life 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. , where Hannover Re focused on financing new business, gross premiums remained unchanged during the first nine months of 2002, although A.M. Best expects an overall growth of 10% for 2002. Hannover Re is also one of the largest providers of program business in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. (gross premiums 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. 2 billion (USD 1.9 billion) during the first nine months of 2002) and is seeking to expand this business model in Europe. A.M. Best believes that recent withdrawals of capacity in the reinsurance market would offer further business opportunities for Hannover Re in 2003. Very good underwriting performance--During the first nine months of 2002, Hannover Re's profit before tax was EUR 306.9 million (USD 305.1 million). Controlled underwriting and substantial price increases (between 15% and 100%, depending upon line of business) led to very good underwriting results 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. Excellent risk-adjusted capitalisation--A.M. Best regards Hannover Re's consolidated risk-adjusted capitalisation, strengthened by EUR 150 million (USD 149.1 million) earlier this year, as commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with the current rating level. A.M. Best has given credit for Hannover Re's subordinated debt issues up to a 15% limit of total adjusted capital. However, further funds may be required to sustain growth in 2003 if Hannover Re is to take full advantage of the current hard market conditions. The negative outlook reflects A.M. Best's concerns that Hannover Re's access to further funds is limited. In addition, Hannover Re's financial leverage has increased to 24.6% in recent years. Expectations: -- The current rating is subject to the maintenance of an A+ (Superior) risk-adjusted capitalisation. -- A combined ratio of around 100% will be achieved for 2003 in property/casualty and program business. -- No deterioration of reserve levels, in particular for the World Trade Center claims and asbestos related claims. The financial strength ratings of A+ (Superior) of the following companies have been affirmed: -- E+S Rueckversicherungs-AG -- Hannover Reinsurance (Ireland) Limited -- E+S Reinsurance (Ireland) Ltd -- Insurance Corporation of Hannover -- The Hannover Life Reassurance (Ireland) Ltd 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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