A.M. Best Assigns Rating to HDI-Gerling Welt Service AG

LONDON--(BUSINESS WIRE)-- A.M. Best Europe – Rating Services Limited has assigned a financial strength rating of A (Excellent) and an issuer credit rating of “a” to HDI-Gerling Welt Service AG(HGWS) (Germany). The outlook for both ratings is stable. (See today’s related press releases on HDI-Gerling Industrie Versicherung AG(HGI), HDI Haftpflichtverband de Deutschen Industrie V.a.G. and Talanx AG).

HGWS is a holding company for non-European subsidiaries, a special purpose vehicle for some reinsurance contracts and a reinsurance platform for HGI’s international business.

The ratings of HGWS reflect its adequate risk-adjusted capitalisation, stable operating performance and excellent business profile as a reinsurance platform for international business written within Talanx. The rating also reflects support from HGWS’s immediate parent company, HGI, and its ultimate parent holding company, Talanx AG.

The ratings also consider A.M. Best's expectation that HGWS’s risk-adjusted capitalisation is likely to remain stable in 2010. In addition, the ratings acknowledge both explicit and implicit support from HGI. The implicit support derives from the integral part HGWS plays in HGI’s international business. The explicit support from HGI comprises a profit and loss absorption agreement, although this agreement limits HGWS's ability to retain earnings.

As a reinsurance platform, HGWS cedes 100% of written premium and earns reinsurance commissions to cover administrative expenses, so that the overall operating performance should be neutral. However, the company achieved an operating profit of EUR 4.4 million in 2009, primarily as a result of a one-off dividend and repatriation of capital from a subsidiary. HGWS is likely to achieve a profit of approximately EUR 0.5 million in 2010, comprising a small contribution from investment income as well as reinsurance commissions. The company is integral to HGI’s international business as a reinsurance hub facilitating issuance of local policies for multi-national companies operating in different countries around the world. The company is expected to increase gross premium in 2010 to approximately EUR 160 million from EUR 146 million in 2009, as HGI continues to expand this business.

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”; and “Rating European Mutual Insurers”. 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 CompanySam Dobbyn, +(44) 20 7397 0264
Senior Financial Analyst
[email protected]
orMiles Trotter, +(44) 20 7397 0274
General Manager
[email protected]
orRachelle Morrow, +(1) 908 439 2200, ext. 5378
Senior Manager, Public Relations
[email protected]
orJim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company