A.M. Best Affirms Ratings of HDI-Gerling America Insurance Company

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of HDI-Gerling America Insurance Company (HDI-GAIC) (Chicago, IL). The outlook for both ratings is stable.

The ratings of HDI-GAIC largely reflect its solid risk-adjusted capitalization and the benefit of the explicit support provided through substantial internal reinsurance by its immediate parent, HDI-Gerling Welt Service AG (HG-WS) (Germany), and the immediate parent of HG-WS, HDI-Gerling Industrie Versicherung AG (HG-I) (Germany), via significant facultative cessions and 95% quota share treaties, which have been in effect since July 1, 2008 and January 1, 2000, respectively. The ratings also reflect additional support provided by a retroactive reinsurance cover with HG-I that covers any net adverse development on policies incepting prior to January 1, 2000, and the implied support of future parental commitment. HDI-GAIC principally markets global-linked commercial lines business to HG-I clients that have operations in the United States.

Given the substantial explicit support HDI-GAIC has in place with HG-WS and HG-I, any upward or downward movement in the ratings of either HG-WS or HG-I would influence HDI-GAIC’s ratings. In addition, if HDI-GAIC’s capitalization or operating performance falls markedly short of A.M. Best’s expectations, negative rating actions could occur.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Assessing Country Risk”, and “Rating Members of Insurance Groups.” Best’s Credit Rating Methodology can be found at http://www.ambest.com/ratings/methodology.