AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of 'aa' of Hannover Rueck SE (Hannover Re) (Germany) and its main subsidiaries (see detailed list of companies below).
At the same time, AM Best has affirmed the Long-Term Issue Ratings (Long-Term IR) of the existing debt instruments issued by Hannover Re or by Hannover Finance (Luxembourg) S.A. (Luxembourg) and guaranteed by Hannover Re. The outlook of these Credit Ratings (ratings) is stable.
These ratings reflect Hannover Re's balance sheet strength, which AM Best categorises as strongest, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management (ERM).
AM Best expects Hannover Re's consolidated risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), to be maintained at the strongest level, underpinned by prudent capital management, as well as consistent and strong organic capital generation that supports the group's growth forecast. The balance sheet strength assessment also reflects Hannover Re's prudent reserving practices, as well as its low-risk and highly liquid asset portfolio. The group's comprehensive retrocession cover, which utilises a combination of traditional and collateral solutions, remains pivotal in limiting capital volatility. Financial flexibility is considered excellent due to the group's good access to capital markets, with financial leverage and coverage ratios remaining supportive of the balance sheet strength assessment despite an increase in the total amount of issued debt, following the placement of EUR 750 million of subordinated debt in October 2019.
Hannover Re has a track record of strong and stable operating performance, supported by its diversified earnings profile. The group produced a five-year weighted average non-life combined ratio of 96.3% and return-on-equity of 12.5% (2014-2018) (as calculated by AM Best). The performance of the group's life business has improved considerably, following corrective actions and rate increases to its legacy U.S. mortality portfolio. For the first nine months of 2019, Hannover Re reported an earnings before interest and taxes margin of 9.4% on its life and health book, compared with 3.3% reported over the same period of 2018.
As the third largest global reinsurer, as ranked by AM Best, Hannover Re benefits from its established brand and excellent diversification by product mix and geographic spread. The group has been able to take advantage of positive rate developments across some of its core operating segments due to its very favorable business profile, reflected by gross written premium income growth of 16% for the first nine months of 2019. In addition, the group's very strong ERM, combined with its prudent use of retrocession and low cost base, help it to mitigate operational volatility and provide some protection against risk with undue volatility.
The FSR of A+ (Superior) and the Long-Term ICR of 'aa' have been affirmed with stable outlooks for Hannover Rueck SE and the following subsidiaries:
E+S Rueckversicherung AG
Glencar Insurance Company
Hannover Re (Bermuda) Ltd
Hannover Re (Ireland) Designated Activity Company
Hannover Life Reassurance Bermuda Limited
Hannover Life Reassurance Company of America
Hannover Life Reassurance Company of America (Bermuda) Ltd.
In addition, the following Long-Term IRs have been affirmed with a stable outlook:
Hannover Finance (Luxembourg) S.A.-(guaranteed by Hannover Rueck SE)
'aa-' on the EUR 500 million 5.75% subordinated fixed to floating rate bond, due September 2040
'aa-' on the EUR 500 million 5.00% subordinated fixed to floating rate bond, due June 2043
Hannover Rueck SE-
'a+' 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 media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.
HANNOVER RE 
