A.M. Best Co. released ratings updates. The following are some of the most recent:
Allianz Insurance plc
A.M. Best Co. affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit rating (ICR) of “aa” of Allianz Insurance plc (AZI). The outlook on both ratings remains stable.
Allianz Holdings plc, AZI’s immediate holding company in the UK, is expected to maintain excellent consolidated risk-adjusted capitalization during 2009 and 2010, despite likely dividend payments to its parent company, Allianz Societas Europaea (Allianz SE). AZI’s ratings continue to reflect reinsurance support provided by Allianz group subsidiaries and financial flexibility provided by Allianz SE, which maintains superior risk-adjusted capitalization.
A.M. Best anticipates a solid combined ratio in 2009 toward the upper end of the 95% to 100% range (2008: 99.7%), taking into account weak rating conditions for AZI’s core commercial lines of business. The company’s underwriting profit at year-end 2009 is likely to be supported by prior year reserve releases, albeit at a lower level than in 2008 (GBP 201 million). A solid net investment yield is anticipated at a comparable level to the 5% achieved in 2008 (including realized and unrealized gains).
The rating agency revised the outlook to stable from positive for the ratings of Hannover Rueckversicherung AG (Hannover Re) and its rated subsidiaries. At the same time, A.M. Best has affirmed Hannover Re’s FSR of A (Excellent) and ICR of “a+” and the debt ratings either issued or guaranteed by Hannover Re.
A.M. Best expects Hannover Re’s consolidated risk-adjusted capitalization to remain excellent, underpinned by the company’s decision not to pay a dividend during 2009. The change in the rating outlook reflects A.M. Best’s view that the improvement in risk-adjusted capitalization that supported the positive outlook is unlikely to materialize in the current trading environment.
Manulife Financial Corp. and Its Subsidiaries
A.M. Best Co. downgraded the FSR to A+ (Superior) from A++ (Superior) and ICR to “aa” from “aa+” for The Manufacturers Life Insurance Co. (MLI), John Hancock Life Insurance Co. (JHLIC) and their affiliates. Additionally, A.M. Best has downgraded the ICR to “a” from “aa-” and all debt ratings of Manulife Financial Corp. as well as the enterprise. The outlook for all ratings has been revised to stable from negative.
The downgrading of the debt ratings reflects a revision to standard notching for the group in accordance with A.M. Best’s published debt rating methodology.
Munich Re and Its Subsidiaries
A.M. Best Co. affirmed the FSR of A+ (Superior) and ICR of “aa-” of Munich Reinsurance Co. (Munich Re) and its subsidiaries. Concurrently, the rating agency affirmed the debt ratings of “a+” on GBP 300 million 7.625% subordinated bonds, EUR 1.5 billion fixed/floating rate undated subordinated bonds and EUR 3 billion 6.75% subordinated eurobonds issued by Munich Re. The outlook for these ratings remains stable.
In addition, A.M. Best has affirmed the ICR and senior debt ratings of “bbb+” of Munich Re America Corp. The outlook for these ratings remains positive.
Munich Re’s risk-adjusted capitalization is likely to remain strong, despite a significant reduction in equity reserves in 2008. A.M. Best expects Munich Re to effectively manage the impact of the continuing uncertaint in the financial markets for the rest of 2009 as it shifts its investment portfolio towards lower risk fixed interest securities and loans. By year-end 2008, Munich Re had significantly reduced its dependency on the stock market through disposals or by means of suitable hedging instruments. In first quarter 2009, the company incurred additional reductions in equity reserves, but these were more than offset by an increase in foreign currency translation reserves.
Old Republic General Title Insurance Corp.
A.M. Best Co. has withdrawn the FSR of A (Excellent) and ICR of “a+” and assigned an NR-5 (Not Formally Followed) to the FSR and an “nr” to the ICR of Old Republic General Title Insurance Corp., a former affiliate of Old Republic National Title Insurance Co. (ORNTIC).
Effective second quarter of 2009, Old Republic General was merged into ORNTIC, which is a member of the Old Republic Title Insurance Group.
The Old Republic Title Insurance Group and its members have an FSR of A (Excellent) and ICRs of “a+”, and the ratings are unchanged. The outlook for the FSR is stable, while the outlook for the ICRs is negative.
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