AM Best Affirms Credit Ratings of Hannover Rück SE and Its Main Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) of Hannover Rück SE (Hannover Re) (Germany) and its main subsidiaries. AM Best also has affirmed the Long-Term Issue Credit Rating (Long-Term IR) of a debt instrument issued by Hannover Re. The outlook of these Credit Ratings (ratings) is stable. See below for a detailed listing of all companies and ratings.

The ratings reflect Hannover Re’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management.

Hannover Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation that exceeds the level required to support the strongest assessment, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the group’s risk-adjusted capitalisation to remain at the strongest level, supported by effective capital management, and sustainable strong organic capital generation from its diversified earnings profile. The group’s robust asset-liability and liquidity management capabilities are expected to provide resilience to external pressures associated with capital market volatility, global economic uncertainty and high claims inflation pressures. The balance sheet strength assessment also reflects Hannover Re’s prudent reserving practices and its low-risk asset portfolio. The group’s comprehensive retrocession cover, which utilises a combination of traditional and collateralised alternative solutions, is pivotal in limiting capital volatility. In addition, the group benefits from low financial leverage and excellent financial flexibility.

The group’s strong operating performance is demonstrated by a five-year weighted average return-on-equity (ROE) ratio of 11.5% and a non-life combined ratio of 99.3% (2018-2022), as calculated by AM Best. Additionally, the group’s resilient investment income provides a substantial source of overall earnings. At the end of the third quarter of 2023, Hannover Re reported an ROE of 20%, which was supported by roust technical performance and stable investment return. Improved conditions in the property/casualty (P/C) reinsurance segment and the large loss exposure, which has been in line with Hannover Re’s large loss budget, supported a non-life combined ratio of 91.9% (IFRS 17 - discounted), as reported by the group. AM Best expects the company’s underwriting performance to remain strong over the cycle, supported by moderate net catastrophe exposure, stringent underwriting discipline and effective expense management.

As the third-largest global reinsurer, as ranked by AM Best, Hannover Re benefits from its leading position in the global P/C and life reinsurance markets, which is underpinned by its established brand and excellent diversification by product mix and geography. Hannover Re’s long-standing relationships with stakeholders and efficient infrastructure leaves it well-positioned to benefit from improved P/C reinsurance market conditions.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa” (Superior) have been affirmed with stable outlooks for Hannover Rück SE and the following subsidiaries:

• E+S Rückversicherung AG
• Glencar Insurance Company
• Hannover Re (Bermuda) Ltd.
• Hannover Re (Ireland) Designated Activity Company
• Hannover Life Reassurance Company of America
• Hannover Life Reassurance Company of America (Bermuda) Ltd.

In addition, the following Long-Term IR has been affirmed with a stable outlook:

Hannover Rück SE—

-- “a+” (Excellent) on the EUR 500 million 3.375% undated junior subordinated fixed to floating rate bond.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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