Best Upgrades Hannover Re (Bermuda) Credit Rating; Affirms ‘A’ Financial Rating

A.M. Best Co. has upgraded the issuer credit rating (ICR) to “a+” from “a” and affirmed the financial strength rating (FSR) of ‘A’ (Excellent) of Hannover Re (Bermuda) Ltd. with stable outlooks on both ratings.

Hannover Re Bermuda’s ICR has been upgraded to reflect “the strategic importance of the company to its parent,” Germany’s Hannover Rueckversicherung AG (Hannover Re), as the “main property catastrophe excess of loss carrier and as the center of excellence for catastrophe business within Hannover Re. Hannover Re Bermuda’s ratings also reflect its excellent stand-alone risk-adjusted capitalization as well as the benefit of comprehensive reinsurance protection provided by its parent.”

Best added that it believes that the company “continues to manage its risk profile effectively, achieving technical profitability even in years with major catastrophes. In 2008, Hannover Re Bermuda’s net income decreased to €86 million [$128.6 million] from €139 million [$207.8 million] in 2007, due to a drop in investment income and a worse year for catastrophe claims, particularly Hurricane Ike and windstorm Emma. The company still achieved a very low combined ratio of 49.6 percent, albeit a deterioration from 43.1 percent the previous year.”

Best also indicated that it acknowledges the “geographic diversification of Hannover Re Bermuda’s book of business, although the diversification across lines of business remains limited with over 90 percent of premiums written in property catastrophe excess of loss lines. The balance is written in US workers’ compensation catastrophe, terrorism and personal accident catastrophe lines. Gross premiums written contracted marginally to €337 million [$503.8 million] in 2008 from €348 million [$520.3 million] in 2007.”

Source: A.M. Best = www.ambest.com