AM Best Information Services




JULY 27, 2022 12:47 PM (EDT)

AM Best Affirms Credit Ratings of Munich Reinsurance Company and Its Subsidiaries


CONTACTS:
 Victoria Ohorodnyk
Associate Director, Analytics
+31 20 308 5432
victoria.ohorodnyk@ambest.com

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

Gregory Dickerson
Associate Director
+1 908 439 2200, ext. 5161
gregory.dickerson@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
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Jeff Mango
Managing Director, Strategy & Communications
+1 908 439 2200, ext. 5204
jeffrey.mango@ambest.com

FOR IMMEDIATE RELEASE

AMSTERDAM - JULY 27, 2022 12:47 PM (EDT)
AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) of Munich Reinsurance Company (Munich Re) (Germany) and its subsidiaries. AM Best also has affirmed the Long-Term ICR of “a” (Excellent) of Munich Re America Corporation (Munich Re America) (Princeton, NJ) and associated Long-Term Issue Credit Ratings (Long-Term IR). The outlook of these Credit Ratings (ratings) is stable. See below for a detailed listing of all companies and ratings.

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

Munich Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation that exceeds the level required to support the strongest assessment, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects Munich Re’s 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 buybacks. In addition, the group benefits from excellent financial flexibility and a relatively low financial leverage with a robust coverage ratio.

The group’s operating performance is strong, demonstrated by a 10-year weighted average return on equity of 8.7% (2012-2021) (as calculated by AM Best). In 2021, Munich Re reported a net profit of EUR 2.9 billion (2020: EUR 1.2 billion). The group’s property/casualty (P/C) reinsurance division reported a net profit of EUR 2 billion despite exposure to substantial natural catastrophe and man-made losses totalling EUR 4.3 billion. Life & Health (L&H) reinsurance and ERGO reported net profits of EUR 325 million and EUR 605 million, respectively, demonstrating the benefits of the group’s good earnings diversification. The L&H segment was impacted by COVID-19-related losses totalling EUR 785 million, stemming mainly from North American mortality business. The group has budgeted a further EUR 300 million for pandemic-related mortality losses for 2022.

Munich Re’s direct exposure to the Russian-Ukraine war is expected to be limited. The group set up reserves totalling approximately EUR 100 million in first quarter 2022, relating to some specialty lines of business. On the investment side, the group recorded impairment losses totalling EUR 700 million (EUR 370 million net) on Russia and Ukraine bonds.

Munich Re is a leading global reinsurer and its business profile benefits from excellent diversification, with the performance of its various life, health and P/C operations largely uncorrelated. Given its global market presence and excellent brand, the group is well-positioned to benefit from improved reinsurance market conditions.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa” (Superior) have been affirmed with stable outlooks 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

  • Bridgeway Insurance Company

  • Munich American Reassurance Company

  • Munich Reinsurance Company of Canada

  • Temple 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.

  • Digital Advantage Insurance Company

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

Munich Re America Corporation—

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

American Alternative Insurance Corporation—

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

The Princeton Excess and Surplus Lines Insurance Company—

— “a+” (Excellent) 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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.


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