A.M. Best Affirms Ratings of International Insurance Company of Hannover Limited

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit rating (ICR) of “a+” of International Insurance Company of Hannover Limited (Inter Hannover) (United Kingdom), a subsidiary of Hannover Rueckversicherung AG (Hannover Re). The outlook for both ratings remains stable.

In A.M. Best’s opinion, Inter Hannover’s stand-alone risk-adjusted capitalisation remains robust. Despite strong gross premium growth, underwriting risk has reduced in 2009 due to an increase in business ceded to Hannover Re, which now reinsures most of Inter Hannover’s business through quota share agreements. In addition to this reinsurance support, the ratings factor Inter Hannover’s importance to Hannover Re as a source of primary insurance business.

A positive pre tax profit is expected in 2009, albeit lower than the GBP 3.4 million reported in 2008, in part due to lower business retention. Despite reserve strengthening for Inter Hannover’s delegated authority business, the company’s combined ratio is likely to improve (2008: 97%) as a result of an increase in commission income in line with the increase in ceded business. Investment income from the company’s conservative investment portfolio is likely to be modest, reflecting the low interest rate environment.

Inter Hannover has a good business profile, supported by its links with Hannover Re.Underwriting at Inter Hannover is now integrated within Hannover Re’s business unit structure. The company writes large commercial single risks through its London and Scandinavian offices, as well as delegated authority business, which includes small commercial and personal lines business written primarily through European agencies and brokers.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at http://www.ambest.com/ratings/methodology.