AM Best Affirms Credit Ratings of Hannover Rück SE and Its Main Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "aa" (Superior) of Hannover Rück SE (Hannover Re) (Germany) and its main subsidiaries. AM Best has also affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of the debt instruments issued by Hannover Re and by Hannover Finance (Luxembourg) S.A. (Luxembourg) and guaranteed by Hannover Re. The outlook of these Credit Ratings (ratings) is stable. See below for a detailed listing of all companies and ratings.

These ratings reflect Hannover 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.

Hannover 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 the company's risk-adjusted capitalisation to remain at the strongest level, supported by effective capital management, as well as sustainable organic capital generation. The balance sheet strength assessment also reflects Hannover Re's prudent reserving practices and its low-risk and highly liquid asset portfolio. The group's comprehensive retrocession cover, which utilises a combination of traditional and collateralised alternative solutions, is pivotal in limiting capital volatility. In addition, the group has relatively low financial leverage and benefits from excellent financial flexibility.

The group's operating performance is strong, demonstrated by a five-year weighted average return-on-equity ratio of 11.4% and a non-life combined ratio of 98.7% (2016-2020), as calculated by AM Best. Additionally, the group's resilient investment income provides a strong source of earnings. At the end of the third quarter of 2021, Hannover Re reported a combined ratio of 97.9% for its non-life book (compared with 101.4% in the same prior-year period), benefiting from robust underwriting discipline. The company's non-life net loss reserve estimate with regard to COVID-19 losses remained unchanged in 2021. AM Best expects the company's underwriting performance to remain strong over the cycle, supported by moderate net catastrophe exposure, stringent underwriting discipline and effective expense management.

As the third largest global reinsurer, as ranked by AM Best, Hannover Re benefits from its leading position in the global property/casualty (P/C) and life reinsurance markets that is underpinned by its established brand and excellent diversification by product mix and geography. Hannover Re's long-standing good relationships with stakeholders and efficient infrastructure position mean it is well-positioned to benefit from improved P/C reinsurance market conditions.

The FSR of A+ (Superior) and the Long-Term ICR of "aa" (Superior) have been affirmed with stable outlooks for Hannover Rück SE and the following subsidiaries:

• E+S Rückversicherung AG
• Glencar Insurance Company
• Hannover Re (Bermuda) Ltd.
• Hannover Re (Ireland) Designated Activity Company
• Hannover Life Reassurance Company of America
• Hannover Life Reassurance Company of America (Bermuda) Ltd.

In addition, the following Long-Term IRs have been affirmed with a stable outlook:

Hannover Finance (Luxembourg) S.A.?(guaranteed by Hannover Rück SE)
-- "aa-" (Superior) on the EUR 500 million 5.00% subordinated fixed to floating rate bond, due June 2043.

Hannover Rück SE?
-- "a+" (Excellent) on the EUR 500 million 3.375% undated junior subordinated fixed to floating rate bond.

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 Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

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