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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 16, 2013 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a” of HDI-Gerling America Insurance Company (HDI-GAIC) (Chicago, IL). The outlook for the ICR is positive, while the outlook for the FSR is stable.
The ratings of HDI-GAIC largely reflect its strong 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), and the immediate parent of HG-WS, HDI-Gerling Industrie Versicherung AG (HG-I) , via significant facultative cessions and 95% quota share treaties. These treaties have been in effect since July 1, 2008 and January 1, 2000, respectively.
The ratings also acknowledge the 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, in addition to 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.
The positive outlook on the ICR mirrors the positive outlook on the ICRs of HG-WS and HG-I, reflecting the improved financial flexibility of Talanx AG following its October 2012 initial public offering (IPO) and the successful conversion of the EUR 300 million convertible bond into equity. Talanx AG is the intermediate management holding company owned by the ultimate mutual parent company, HDI Haftpflichtverband der Deutschen Industrie V.a.G.
Given the substantial explicit support HDI-GAIC has in place with HG-WS and HG-I, any upward or downward movement on 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 ensue.
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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.