OCTOBER 22, 2015 09:47 AM (EDT)

A.M. Best Affirms Ratings of Munich Reinsurance Company and Its Subsidiaries


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 Tim Prince
Associate Director, Analytics
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Robert DeRose
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Christopher Sharkey
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Jim Peavy
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FOR IMMEDIATE RELEASE

LONDON - OCTOBER 22, 2015 09:47 AM (EDT)
A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit ratings of “aa-” of Munich Reinsurance Company (Munich Re) (Germany) and its subsidiaries. Concurrently, A.M. Best has affirmed the issue ratings of Munich Re. Additionally, A.M. Best has affirmed the ICR of “a-” and the issue rating of Munich Re America Corporation (Princeton, NJ). The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)

The ratings reflect Munich Re’s excellent risk-adjusted capitalisation, strong competitive market position, resilient operating performance and robust risk management framework.

Despite persistently low interest rates and challenging conditions across global reinsurance markets, Munich Re has performed well during the past year. A low incidence of natural catastrophe losses in the group’s property/casualty reinsurance division offset the negative impact of reducing and volatile interest rates and enabled it to generate an overall return on risk-adjusted capital comfortably in the double-digit range. Significant challenges lie ahead for Munich Re over the medium term in the form of low interest rates and soft reinsurance market conditions. Despite indications that reinsurance premium rate decline is slowing, there continues to be over-supply of capacity within the industry and no sign of hardening conditions. In addition, if natural catastrophe losses increase to a more normal level, there will be negative pressure on the company’s combined ratio. However, the excellent diversification within Munich Re’s (re)insurance portfolio, its solid distribution network and its conservative strategy place it in a strong position to withstand the aforementioned pressures. A.M. Best expects that Munich Re will maintain a resilient level of operating performance through the market cycle and emerge strongly as conditions improve.

Munich Re has an excellent level of risk-adjusted capitalisation that benefits from the group’s moderate underwriting leverage and conservative investment strategy. Munich Re’s adjusted available capital, assessed by A.M. Best, increased over the past year largely due to unrealised gains on its investment portfolio. The group is expected to maintain a considerable capital buffer above its economic capital requirements for the foreseeable future. Furthermore, the group has a proven record of strong internal capital generation and benefits from a sophisticated enterprise wide risk management framework that is adequate to manage its complex risk profile.

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


  • Great Lakes Reinsurance (UK) SE

  • New Reinsurance Company Ltd.

  • 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

  • American Modern Property and Casualty Insurance Company

The following issue ratings have been affirmed:

Munich Reinsurance Company—

“a+” on GBP 300 million 7.625% subordinated bonds, due 2028

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

“a” on EUR 1.5 billion 5.767% fixed to floating rate undated subordinated bonds

“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

Munich Re America Corporation—

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

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.

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


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