AM Best has downgraded the insurer financial strength rating of International insurance Company of Hannover (Inter-Hannover) from A (excellent) to A- (excellent).
Inter-Hannover is a UK-domiciled subsidiary of Hannover Re.
The rating outlook is stable.
AM Best said that although it continued to regard Inter-Hannover as strategically important to its parent company, it had factored a diminished level of support into the rating.
The ratings agency said: “As a program writer and fronting company for direct business, a significant proportion of business is ceded (70% of premium income likely in 2004).
“The high level of exposure to reinsurance recoverables (600% of shareholders' funds likely in 2004) continues to be a concern, although a substantial proportion (70%) relates to its parent.
”Premium development (35.6% reduction in net premium income in 2003) was below A.M. Best's original expectations due to the slower development of the company's program business in 2003 and the early part of 2004.
“However, this could be offset by the addition of new agents in the latter part of 2004 and 2005.”
