AM Best Information Services

NOVEMBER 13, 2014 11:19 AM (EST)

A.M. Best Affirms Ratings of Munich Reinsurance Company's North American Subsidiaries

Scott Mangan––P/C
Senior Financial Analyst
(908) 439-2200, ext. 5593

Peter Dickey––P/C
Assistant Vice President
(908) 439-2200, ext. 5053

Kenneth Tappen––P/C
Senior Financial Analyst
(908) 439-2200, ext. 5248

Joan Sullivan––L/H
Senior Financial Analyst
(908) 439-2200, ext. 5144

Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

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


OLDWICK - NOVEMBER 13, 2014 11:19 AM (EST)
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa-" of the North American domiciled subsidiaries of Munich Reinsurance Company (Munich Re) (Munich, Germany), which includes Munich Reinsurance America, Inc and its direct subsidiaries; the members of American Modern Insurance Group (American Modern); Munich American Reassurance Company (MARC); Munich Reinsurance of Canada (MROC) and Temple Insurance Company (Temple).

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 improvement in underwriting results and maintain strong levels of risk-adjusted capitalization. Overall earnings have been robust, particularly in recent years and provide a solid contribution to the group. Additionally, the U.S. reinsurance subsidiaries serve as an important conduit for Munich Re's access to the U.S. market. The U.S. reinsurance subsidiaries successful implementation of the group enterprise risk management strategies is reflected in its underwriting discipline and conservative investment allocation. Year-to-date results continue to trend favorably and have benefited from relatively benign catastrophic activity.

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. 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.

MROC and Temple are managed through common executive management, and have solid brand name recognition under the Munich name. The ratings acknowledge the importance of MROC and Temple to Munich Re and the explicit and implicit support derived from this relationship. Furthermore, the ratings reflect the companies' continued strong operating performance and solid risk-adjusted capital position, as well as MROC's key underwriting role in Canada's reinsurance market. The ratings are partially offset by MROC and Temple's strong competition for market share and exposure to weather-related events across Canada.

The ratings of MARC reflect the company's role as a key global operating subsidiary of Munich Re, adequate risk-adjusted capital position and its strong market share positions within U.S. ordinary life, individual disability income and group life and excess long-term disability reinsurance markets. MARC is one of the largest life reinsurers in the United States, offering individual and group life and disability reinsurance to insurance companies throughout the United States, an important global market for Munich Re. In 2013, nearly 60% of Munich Re's life reinsurance premiums originated from North America. Offsetting rating factors include the ongoing volatility inherent in MARC's statutory operating performance and balance sheet metrics. MARC's capital and statutory results are supported by significant parental and affiliate retrocession. Furthermore, MARC's earning trends are reflective of the adverse experience in both its long term care and disability business lines.

Upward rating movement could occur if financial performance and risk-adjusted capitalization remain at an excellent level and compare favorably to Munich Re's peer group of global reinsurers. Downward rating movement could occur if 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 North American domiciled subsidiaries of Munich Reinsurance Company:

  • Munich Reinsurance America, Inc.

  • The Princeton Excess & 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

  • First Marine Insurance Company

The following debt rating has been affirmed:

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

Key insurance criteria reports utilized:

  • Risk Management and the Rating Process for Insurance Companies

  • Rating Members of Insurance Groups

  • Catastrophe Analysis in A.M. Best Ratings

  • Evaluating U.S. Surplus Notes

  • Insurance Holding Company and Debt Ratings

  • Understanding BCAR for Property/Casualty Insurers

  • Understanding BCAR for U.S. and Canadian Life/Health Insurers

  • Understanding BCAR for Canadian Property / Casualty Insurers

  • Analyzing Insurance Holding Company Liquidity

  • Equity Credit for Hybrid Securities

  • Understanding Universal BCAR

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

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