A.M. Best Affirms Ratings of HDI V.a.G. and Talanx AG

LONDON--(BUSINESS WIRE)-- A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit rating (ICR) of “a” of HDI Haftpflichtverband der Deutschen Industrie V.a.G. (HDI V.a.G.) (Germany), the ultimate mutual parent company of Talanx AG (Germany), which in turn is the intermediate management holding company for all HDI V.a.G. companies. A.M. Best has also affirmed the FSR of A (Excellent) and the ICR of “a” of HDI-Gerling Industrie Versicherung AG (HGI) (Germany), the leading non-life direct insurance operation within Talanx AG, and HDI-Gerling LebensversicherungAG (HG-LV), the leading life insurance operation within Talanx AG. The outlook for these ratings remains stable.

Concurrently, A.M. Best has affirmed the ICR of “bbb+” of Talanx AG and the debt rating of “bbb” on the EUR 350 million junior subordinated fixed to floating rate notes due 2025 issued by Talanx AG. The outlook for the ICR and debt rating of Talanx AG also remains stable. (See today’s related press releases on HGI and HG-LV.)

A.M. Best expects Talanx AG to maintain good consolidated risk-adjusted capitalisation in 2010 supported by solid earnings retention, albeit over 60% lower than 2009. Risk-adjusted capitalisation was further enhanced in November 2010 by the issue of EUR 300 million in subordinated debt to Japanese life insurer Meiji Yasuda Life. The debt has no final maturity and is convertible to shares at the market price at the time of a future Talanx initial public offering. These factors are partly offset by the group’s complex organisational structure.

A.M. Best expects 2010 consolidated earnings after tax and minorities to decrease to approximately EUR 180 million from EUR 545 million in 2009, primarily due to poorly performing German life insurance lines. The 2009 net profit of EUR 545 million incorporated an increase in the net investment result of 78% due to strengthening in equity markets.

Talanx AG benefits from an excellent business profile. The group restructured in 2010, forming divisions covering corporate and industrial lines, non-life and life reinsurance, and German and international life and non-life personal lines business. Overall premium growth of approximately 7% is expected in 2010, with growth primarily driven by international lines (in particular Brazil) and non-life insurance (due to rate increases and new business gains). The German non-life and life personal lines business is expected to grow in future years as the new structure encourages greater efficiency and cross-selling opportunities.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Universal BCAR”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; “Rating European Mutual Insurers”; and “A.M. Best’s Ratings & the Treatment of Debt”. Methodologies can be found at www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company.Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2010 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best
Sam Dobbyn, +(44) 20 7397 0264
Senior Financial Analyst
[email protected]
or
Miles Trotter, +(44) 20 7397 0274
General Manager
[email protected]
or
Rachelle Morrow, +1-908-439-2200, ext. 5378
Senior Manager, Public Relations
[email protected]
or
Jim Peavy, +1-908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company