Credit Ratings Affirmation
AM Best has reaffirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) for Hannover Rück SE, based in Germany, as well as for its key subsidiaries.
In addition, the agency has confirmed the Long-Term Issue Credit Rating (Long-Term IR) for a specific debt instrument issued by Hannover Re, with all ratings reflecting a stable outlook.
These affirmations underscore Hannover Re’s robust financial stability, which AM Best classifies as “strongest” in terms of balance sheet strength.
This positive classification results from the company’s effective operational efficiency, favorable market conditions, and effective enterprise risk management.
Financial Strength and Performance
Support for Hannover Re’s financial strength comes primarily from its impressive risk-adjusted capitalization, notably exceeding the benchmarks for the highest rating tier, as reflected in the Best’s Capital Adequacy Ratio (BCAR).
AM Best expects the group to sustain this superior risk-adjusted capitalization due to its adept capital management and consistent organic capital generation from its diverse revenue sources.
Hannover Re demonstrates exceptional skill in managing assets and liabilities, ensuring liquidity, especially when facing market volatility, economic shifts, and rising claims costs.
The strong balance sheet is further bolstered by Hannover Re’s conservative reserving practices and a low-risk asset portfolio.
Its extensive retrocession strategy, which employs both traditional and collateralized alternative methods, plays a crucial role in mitigating capital volatility.
Further adding to the group’s strengths are its low financial leverage and notable financial flexibility.
Over the years, Hannover Re has shown a history of solid operational performance, supported by a diverse earnings model.
In 2023, the company posted impressive net income attributable to minority interests of EUR 1.83 billion under IFRS 17, a significant rise from the restated EUR 898 million in 2022.
The technical results for 2023 remained strong in both the property/casualty and life/health segments.
By the end of the third quarter of 2024, Hannover Re achieved a remarkable return-on-equity ratio of 22.9%, fueled by robust technical performance and investment returns.
The property/casualty reinsurance sector has experienced favorable conditions, leading to a commendable non-life combined ratio of 87.9% (discounted, IFRS 17) in alignment with anticipated budgeted large losses.
AM Best predicts that the group’s underwriting performance will continue to hold up over the business cycle, backed by manageable net catastrophe exposure, strict underwriting discipline, and efficient cost management.
Market Position and Outlook
As one of the largest composite reinsurers globally, Hannover Re enjoys a leading position in both property/casualty and life reinsurance markets.
This advantageous standing is bolstered by a well-established brand and extensive diversification across products and geographic regions.
The firm fosters strong relationships with stakeholders and benefits from an efficient operational structure, allowing it to seize forthcoming opportunities in the property/casualty reinsurance market.
In its announcement, AM Best confirmed the A+ (Superior) FSR and “aa” (Superior) Long-Term ICRs for Hannover Rück SE and several of its subsidiaries, all maintaining a stable outlook:
- 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.
Furthermore, AM Best has also confirmed a Long-Term IR with a stable outlook for Hannover Rück SE, specifically rating it “a+” (Excellent) for the EUR 500 million 3.375% undated junior subordinated fixed to floating rate bond.
This information is part of the Credit Ratings published on AM Best’s website.
For more detailed ratings and related disclosures, interested individuals can refer to their site.
Source: Ambest
