Press Release - JULY 11, 2019

AM Best Affirms Credit Ratings of Munich Reinsurance Company and Its Subsidiaries; Assigns Credit Ratings to Other Subsidiaries


CONTACTS:
 Victoria Ohorodnyk
Senior Financial Analyst
+31 20 308 5432
victoria.ohorodnyk@ambest.com

Mathilde Jakobsen
Director, Analytics
+31 20 308 5427
mathilde.jakobsen@ambest.com

Mariza Costa
Senior Financial Analyst
+1 908 439 2200, ext. 5154
mariza.costa@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

AMSTERDAM - JULY 11, 2019
AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa” of Munich Reinsurance Company (Munich Re) (Germany) and its subsidiaries. AM Best has also affirmed the Long-Term ICR of “a” of Munich Re America Corporation (Munich Re America) (Princeton, NJ), along with the Long-Term Issue Credit Ratings (Long-Term IR) of Munich Re and Munich Re America. The outlook of these Credit Ratings (ratings) is stable. Concurrently, AM Best has assigned an FSR of A+ (Superior) and a Long-Term ICR of “aa” to Digital Advantage Insurance Company (Warwick, RI), Digital Affect Insurance Company (New York, NY), and Digital Edge Insurance Company (Wilmington, DE) (collectively referred to as Digital Partners), all of which are reinsured to Munich Re America. The outlook assigned to these ratings is stable. (See below for a detailed listing of the companies and ratings).

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

Munich Re’s balance sheet strength is underpinned by risk-adjusted capitalisation which, measured by Best’s Capital Adequacy Ratio, exceeds the level required to support the strongest assessment by a wide margin. AM Best expects risk-adjusted capitalisation to remain at the strongest level, despite the group’s exposure to potentially large losses and its record of substantial dividend payments and share buy-backs. In addition, the group’s financial leverage is relatively low and it benefits from excellent financial flexibility.

The group’s operating performance is strong, demonstrated by a 10-year weighted average return on equity of 9% (2009-2018). In 2018, Munich Re reported a net profit of EUR 2.28 billion (2017: EUR 392 million).The group’s property/casualty (P/C) reinsurance division reported a net profit of EUR 1.14 billion despite exposure to last year’s catastrophe events, while life & health (L&H) reinsurance and ERGO reported good net profits of EUR 729 million and EUR 412 million, respectively, demonstrating the benefits of the group’s good earnings diversification.

Munich Re is a leading global reinsurer and its business profile benefits from excellent diversification, with the performance of its various life, health, P/C operations largely uncorrelated. The group’s strong global franchise, superior access to clients and considerable expertise provide some insulation against intensely competitive conditions in the P/C reinsurance market.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa” have been affirmed with a stable outlook for Munich Reinsurance Company and its following subsidiaries:


  • Great Lakes Insurance SE

  • New Reinsurance Company Ltd.

  • Munich Reinsurance America, Inc.

  • The Princeton Excess and Surplus Lines Insurance Company

  • American Alternative Insurance Corporation

  • Munich American Reassurance Company

  • Munich Reinsurance Company of Canada

  • Temple Insurance Company

  • American Modern Surplus Lines Insurance Company

  • American Family Home Insurance Company

  • American Modern Home Insurance Company

  • American Modern Insurance Company of Florida, Inc.

  • American Modern Lloyds Insurance Company

  • American Modern Select Insurance Company

  • American Southern Home Insurance Company

  • American Western Home Insurance Company

  • American Modern Property and Casualty Insurance Company

  • Munich Re of Bermuda, Ltd.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa” have been assigned with a stable outlook for the following Munich Reinsurance Company subsidiaries:


  • Digital Edge Insurance Company

  • Digital Affect Insurance Company

  • Digital Advantage Insurance Company

The following Long-Term IRs have been affirmed with a stable outlook:

Munich Reinsurance Company—

— “a+” on EUR 1.0 billion 6.0% subordinated fixed to floating rate bonds, due 2041

— “a+” on EUR 900 million 6.25% subordinated fixed to floating rate bonds, due 2042

— “a+” on GBP 450 million 6.625% subordinated fixed to floating rate bonds, due 2042

Munich Re America Corporation—

— “a” on USD 500 million 7.45% senior unsecured notes, due 2026

American Alternative Insurance Corporation—

— “a+” on USD 92.5 million 5.0% surplus notes

The Princeton Excess and Surplus Lines Insurance Company—

— “a+” on USD 20.1 million 5.0% surplus notes

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 Understanding 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 rating agency and information provider with a unique focus on the insurance industry.


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