HANNOVER, Germany, March 25, 2003 (PRIMEZONE) -- The rating agency Moody's Investors Service, Inc. announced today that they have downgraded their insurance financial strength rating for Hannover Re from "A2" to "Baa1" with negative outlook. Moody's has justified this move, inter alia, by suggesting that Hannover Re's reinsurance recoverables were at a relatively high level, thus representing a considerable risk factor.
As stated by Hannover Re in a press release, the reinsurance recoverables actually do not represent any significant risk for the company as is also shown by previous experience. Furthermore, Hannover Re carefully analyses the strength of the reinsurance recoverables. 89% of the recoverables are due from companies rated by Standard & Poor's with "A" or higher, so that a loss is extremely improbable. According to Hannover Re, Moody's extremely pessimistic view obviously reflects their negative stance towards the entire insurance industry. Furthermore, Moody's relatively poor rating not only diverges significantly from the assessment of the other leading rating agencies, it is also based on an entirely different level of information and degree of insight.
The two leading rating agencies for the worldwide insurance and reinsurance industry, Standard & Poor's and A.M. Best, have each awarded Hannover Re their second-highest rating of AA ("Very Strong") and A+ ("Superior"), respectively, over a period of more than ten years.
Throughout all these years the ratings awarded have been based on detailed information; they represent a so-called "interactive rating," the company explained. Hannover Re's Executive Board and its senior management grant both agencies an in-depth insight into the company's net assets, financial position and results of operation; and usually they make information available that is normally confidential, such as business plans, strategic objectives and expectations regarding future developments, most notably the exceptionally high quality of the loss reserves and other provisions. This extensive insight, together with publicly available information, has formed the sound basis of Standard & Poor's and A.M. Best's evaluation of Hannover Re's financial strength, profitability and market position.
Moody's evaluation in comparison is based solely on publicly available information and quantitative assessments. Moody's does not have access to more extensive additional management information. Consequently, their rating is considerably less well-founded than the ratings awarded by Standard & Poor's and A.M. Best.
For further information, please contact Dr. Lutz Kohler (tel. +49/511/56 04-15 00; fax +49/511/56 04-16 48, e-mail lutz.koehler@hannover-re.com).
Hannover Re, with gross premiums of approx. EUR 12 bn., is the fifth-largest reinsurer in the world. It transacts all lines of property/casualty, life/health and financial/finite-risk reinsurance as well as program business. It maintains business relations with more than 2,000 insurance companies in over 100 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices in 19 countries. The American rating agencies Standard & Poor's and A.M. Best have awarded Hannover Re a rating of AA ("Very Strong") and A+ ("Superior"), respectively.