A.M. Best Assigns Ratings to Delvag Luftfahrtversicherungs-AG and Delvag Rueckversicherungs-AG.OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of B++ (Good) and an issuer credit rating of "bbb" to Delvag Luftfahrtversicherungs-AG (Delvag) (Germany) and its subsidiary, Delvag Rueckversicherungs-AG (Delvag Rueck). All ratings have been assigned a stable outlook. The ratings of Delvag and Delvag Rueck reflect their main role as the composite insurance captive of their ultimate parent, Lufthansa German Airlines (Lufthansa). Other rating factors include Delvag's adequate risk-adjusted 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 and excellent operating performance. The ratings of Delvag Rueck benefit from a partial rating enhancement from the profit and loss absorption agreement with Delvag, its immediate parent. Delvag and Delvag Rueck are Lufthansa's primary and 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. captives, whilst also accepting third-party business to diversify their portfolios. Delvag's captive portfolio (44% of gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. ) comprises mainly aviation fleet business, whereas its third-party business consists of marine, aviation and transport and short tail niche lines such as cash in transit and other valuables transportation. A.M. Best expects Delvag's gross premiums written to have remained stable at 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. 90 million (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. 120.3 million) as the cancellation of a larger cargo contract is compensated by a higher number of multiyear policies. Delvag Rueck is no longer reinsuring Delvag's aviation and marine risks, which will lead to a significant decline in gross premiums written (by approximately 45 % to EUR 25 million [USD 33.4 million]) in 2006. Prospectively, the company will focus mainly on business related to the Lufthansa group (including private lines business such as disability, health, life and other) but will also continue accepting third-party non-life reinsurance (such as transport and property). In A.M. Best's opinion, Delvag's risk-adjusted capitalisation is adequate, factoring the volatile nature of its aviation portfolio but also its strong dependence on reinsurance. A.M. Best expects Delvag's capitalisation to improve moderately in the next two years through transfers to the 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 a partial retention of earnings. In A.M. Best's opinion, Delvag Rueck's risk-adjusted capitalisation remains weaker than that of its parent company, despite the planned capital injections, increases in retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. and reduced dependence on retrocession RETROCESSION, civil law. When the assignee of heritable rights conveys his rights back to the cedent, it is called a retrocession. Erskine, Prin. B. 3, t. 5, n. 1; Dict. do Jur. h.t. . However, a profit and loss absorption agreement between Delvag and Lufthansa protects the balance sheet of Delvag, and consequently, that of Delvag Rueck. A.M. Best expects Delvag to maintain excellent pre-tax earnings of approximately EUR 17 million (USD 22.7 million) in 2006 supported by a very good underwriting income Underwriting income For an insurance company, the difference between the premiums earned and the costs of settling claims. and very strong investment returns. In A.M. Best's view, Delvag benefits from relatively low expense levels due to high reinsurance commissions but is also less affected by the pricing trends in aviation. In addition, investment returns are positively impacted by profit transfers from Albatros, Delvag's captive broker. Delvag Rueck's pre tax earnings are likely to remain positive in 2006 (approximately EUR 0.5 million [USD 0.7 million]) due to good investment income. Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
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