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MarketScreener Homepage  >  Equities  >  Xetra  >  Hannover Rück SE    HNR1   DE0008402215

HANNOVER RÜCK SE

(HNR1)
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Hannover Rück : AM Best Assigns Credit Ratings to Compania Reaseguradora del Ecuador S.A.

11/12/2020 | 06:07am EST

AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of 'bbb+' to Compania Reaseguradora del Ecuador S.A. (Ecua Re) (Ecuador).

The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Ecua Re's balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The stable outlooks are based on the company's good growth prospects given its access to Ecuador's market through related companies.

Ecua Re was established in 1977 and is the only domestic reinsurer operating in Ecuador. The company provides reinsurance solutions for the country's domestic insurers. Its business portfolio is mostly comprised of property risks, mainly fire and auto, with a small component of casualty and life risks.

The company's largest shareholder is Hannover Re with a 30% ownership stake via its wholly owned subsidiary, FUNIS GmbH & Co. KG; eight local insurers hold 63% of the company. Ecuador's economy performed unfavorably during 2019 and 2020, but this did not affect insurance industry growth or profitability; however, AM Best will continue to assess the impact of economic conditions in the insurance market. Partially mitigating AM Best's concern over this economic environment is that Ecua Re's business profile benefits from its ownership, which provides access to quality business, while at the same time maintaining reinsurance capacity through its main shareholder.

Ecua Re's balance sheet strength is considered very strong, as risk-adjusted capitalization reflects the company's ability to manage its risk exposures, supported by a comprehensive reinsurance program led by Hannover Re. Furthermore, the company gains financial flexibility through an Ecuador law that requires shareholders with stakes higher than 12% to assume additional financial responsibility in the event of insufficient shareholders' funds.

Nevertheless, AM Best's view of the company's capitalization is limited given the volume of its capital and the substantial amount of dividends paid in relation to net income in past years. ERM practices are considered appropriate given the company's comprehensive and appropriate risk framework.

AM Best considers the company's operating performance as strong, given its consistent positive technical performance during the last five years. Additionally, its retrocession profile provides revenue from ceding commissions and mitigates claim costs, as experienced in the 2016 earthquake. As of August 2020, the company posted a return-on-premium of 14%.

Positive rating actions could take place if the company can increase its capital base in a stable manner while achieving the strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR). Negative rating actions could take place if the company's business growth or available surplus limits AM Best's view on capitalization, either through an abrupt business increase without capital contributions or a decline in equity either through payment of dividends or negative results. Negative rating actions could also take place if the company's operating performance deteriorates in a sustained manner due to constant losses from underwriting.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of AM Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

Evaluating Country Risk (Version Oct. 13, 2017)

Understanding Universal BCAR (Version Jun 11, 2020)

Catastrophe Analysis in AM Best Ratings (Version Oct. 13, 2017)

Available Capital & Holding Company Analysis (Version Oct. 13, 2017)

Scoring and Assessing Innovation (Mar 5, 2020)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Guide to Best's Credit Ratings.

Previous Rating Date: Not Rated.

Date Range of Financial Data Used: Dec. 31, 2014-Aug. 31, 2020.

This press release relates to rating(s) that have been published on AM Best's website. For additional 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.

AM Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company's financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.

AM Best's credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best's credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best's rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. 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 analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

(C) 2020 Electronic News Publishing, source ENP Newswire

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Financials
Sales 2020 24 439 M 29 755 M 29 755 M
Net income 2020 844 M 1 028 M 1 028 M
Net Debt 2020 3 200 M 3 896 M 3 896 M
P/E ratio 2020 18,9x
Yield 2020 3,49%
Capitalization 16 015 M 19 495 M 19 498 M
EV / Sales 2020 0,79x
EV / Sales 2021 0,67x
Nbr of Employees 3 083
Free-Float 49,8%
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Technical analysis trends HANNOVER RÜCK SE
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Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 21
Average target price 151,54 €
Last Close Price 132,80 €
Spread / Highest target 40,8%
Spread / Average Target 14,1%
Spread / Lowest Target -25,5%
EPS Revisions
Managers and Directors
NameTitle
Jean-Jacques Henchoz Chief Executive Officer
Torsten Leue Chairman-Supervisory Board
Clemens Jungsthöfel Chief Financial Officer
Herbert K. Haas Member-Supervisory Board
Erhard Walter Schipporeit Member-Supervisory Board
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