JULY 08, 2021 10:20 AM (EDT)
AM Best Affirms Credit Ratings of Munich Reinsurance Company and Its Subsidiaries
|Victoria Ohorodnyk |
Associate Director, Analytics
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Manager, Public Relations
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FOR IMMEDIATE RELEASE
AMSTERDAM - JULY 08, 2021 10:20 AM (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 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. 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 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 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 ratio of 8.1% (2011-2020). In 2020, Munich Re reported a net profit of EUR 1.2 billion (2019: EUR 2.7 billion). The group’s property/casualty (P/C) reinsurance division reported a net profit of EUR 571 million despite exposure to substantial COVID-19 pandemic-related losses totalling approximately EUR 3 billion, as well as, to a lesser extent, natural catastrophe and man-made events. Life & Health (L&H) reinsurance and ERGO reported net profits of EUR 123 million and EUR 517 million, respectively, demonstrating the benefits of the group’s good earnings diversification. EUR 370 million in COVID-19-related losses was attributed to the L&H segment, stemming mainly from its North American mortality business. At ERGO, COVID-19-related losses totalled EUR 64 million.
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 P/C 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:
The following Long-Term IRs have been affirmed with stable outlooks:
Munich Reinsurance Company—
— “a+” (Excellent) on EUR 900 million 6.25% subordinated fixed to floating rate bonds, due 2042
— “a+” (Excellent) on GBP 450 million 6.625% subordinated fixed to floating rate bonds, due 2042
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 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 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.