AM Best Information Services

NOVEMBER 20, 2013 12:00 AM (EST)

A.M. Best Affirms Ratings of Munich Reinsurance Company’s U.S. Property/Casualty Subsidiaries

Scott Mangan
Financial Analyst
(908) 439-2200, ext. 5593

Peter Dickey
Assistant Vice President
(908) 439-2200, ext. 5053

Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK, N.J. - NOVEMBER 20, 2013 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of the U.S.-domiciled property/casualty subsidiaries of Munich Reinsurance Company (Munich Re) (Munich, Germany), which also includes the members of American Modern Insurance Group (American Modern). A.M. Best also has affirmed the ICR of “a-” and the senior debt rating of “a-” of Munich Re America Corporation (Princeton, NJ). The outlook for all ratings is stable. (Please see below for a detailed listing of the companies and ratings.)

Munich Re’s U.S. domiciled reinsurance subsidiaries continue to show overall measured improvement in underwriting results and more than adequate levels of risk-adjusted capitalization. Additionally, the U.S. reinsurance subsidiaries serve as an important conduit for Munich Re’s access to the U.S. market. Year-to-date underwriting results show a marginal underwriting loss, exhibiting the effects of Munich Reinsurance America Inc.’s purchase of an additional adverse development cover from its parent. Continued underwriting discipline and a relatively conservative investment strategy remain at the core of the organization’s enterprise risk management.

The ratings for the members of American Modern reflect its strong risk-adjusted capitalization, solid five-year operating performance and continued strategy as a provider of diversified specialty personal lines insurance products.

These positive rating factors are derived from American Modern’s management’s disciplined and focused operating strategies, as it continues to address underwriting results in a number of key specialty product lines by re-underwriting and instituting rate increases, product redesigns and automation. As the group continues to offer specialty personal lines products with a niche market focus, it provides a significant competitive advantage, particularly in terms of pricing, claims adjusting and overall marketing strategies. In addition, the group markets its products through multi-faceted distribution channels, which include general agents, independent agents, dealers, lenders and financial institutions, while continuing to leverage its specialty role through strategic alliances with several carriers.

A.M. Best considers the overall group risk management program to be strong. Along with a formal risk management structure, the U.S. subsidiaries also dedicate a significant level of personnel to monitor risk in all operating segments. All group members also make extensive use of their proprietary capital model to analyze various stress scenarios.

Upward rating movement could occur if underwriting performance and risk-adjusted capitalization continue to remain at an excellent level and compare favorably to Munich Re’s peer group of global reinsurers. Downward rating movement could occur if the organization’s risk-adjusted capitalization or financial performance were to deteriorate substantially.

The FSR of A+ (Superior) and the ICRs of “aa-” have been affirmed for the following U.S.-domiciled subsidiaries of Munich Reinsurance Company:

· Munich Reinsurance America, Inc

· Princeton Excess and Surplus Lines Insurance Company

· American Alternative Insurance Corporation

· American Modern Surplus Lines Insurance Company

· American Family Home Insurance Company

· American Modern Home Insurance Company

· American Modern Insurance Company of Florida

· American Modern Lloyds Insurance Company

· American Modern Select Insurance Company

· American Southern Home Insurance Company

· American Western Home Insurance Company

· First Marine Insurance Company

Munich Re America Corporation—

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

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at

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