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

July 13, 2018

LONDON--(BUSINESS WIRE)--Jul 13, 2018--A.M. Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa” of Munich Reinsurance Company (Munich Re) (Germany) and its subsidiaries. Concurrently, A.M. Best has affirmed the Long-Term ICR of “a” of Munich Re America Corporation (Munich Re America) (Princeton, NJ), along with 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 the companies and ratings).

The ratings reflect Munich Re’s balance sheet strength, which A.M. Best categorises as strongest, its very favorable business profile, strong operating performance and very strong enterprise risk management (ERM).

Munich Re’s balance sheet strength is underpinned by risk-adjusted capitalisation which, measured by Best’s Capital Adequacy Ratio, exceeds the level required to support the strongest assessment. A.M. Best expects risk-adjusted capitalisation to be maintained at the strongest level, despite the group’s exposure to potentially large losses and its record of substantial dividend payments and share buy-backs. Underwriting and market risks drive Munich Re’s economic capital requirements. In A.M. Best’s opinion, these risks are managed appropriately, supported by a sophisticated ERM framework and an embedded risk culture.

The group’s operating performance is strong, demonstrated by a five-year average return on equity of 8.5% (2013-2017). In 2017, Munich Re reported a profit of EUR 392 million (2016: EUR 2.6 billion), despite significant losses from natural catastrophes in the Americas. Profits from life reinsurance and primary business partly offset losses in property/casualty (P/C) reinsurance, demonstrating the benefits of the group’s good earnings diversification.

Munich Re is a leading global reinsurer. Its business profile benefits from excellent diversification, with the performance of its various life, health, P/C operations largely uncorrelated. The group’s strong global franchise, superior access to clients and considerable expertise provide some insulation against intensely competitive conditions in the P/C reinsurance market.

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

Great Lakes Insurance 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 Munich Re of Bermuda, Ltd.

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

Munich Reinsurance Company —

— “aa-” on GBP 300 million 7.625% subordinated bonds, due 2028

— “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

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

Munich Re America Corporation —

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

American Alternative Insurance Corporation —

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

The Princeton Excess & Surplus Lines Insurance Company —

— “a+” on USD 20.1 million 5.0% surplus notes

This press release relates to Credit Ratings 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 see A.M. Best’s web page. For additional information regarding the use and limitations of Credit Rating opinions, please view . For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view .

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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PUB: 07/13/2018 08:47 AM/DISC: 07/13/2018 08:47 AM


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