Hannover Re unit placed ‘under review with negative implications’ by AM Best

AM Best has placed under review with negative implications the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa” of International Insurance Company of Hannover SE (Inter Hannover) (Germany), a wholly owned subsidiary of Hannover Re.

The Credit Rating (rating) actions follow the announcement on May 11, 2018, by Hannover Re and HDI Global SE of the establishment of a new joint venture, HDI Global Specialty SE, using Inter Hannover as the main carrier to focus on growth in specialty lines insurance. The transaction will entail HDI Global SE acquiring the majority of the shares in Inter Hannover (approximately 50.2 percent), leaving Hannover Re with a non-controlling stake in the entity. Consequently, Inter Hannover may no longer be considered as strategically important to Hannover Re post sale.

The negative implications reflect AM Best’s expectation that, upon completion of the transaction, support for the entity would likely arise from HDI Haftpflichtverband der Deutschen Industrie, (the ultimate parent company of HDI Global SE), which currently maintains a Long-Term ICR of “a+”, with a stable outlook.