LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Delvag Versicherungs-AG (Delvag) (Germany). The outlook of these Credit Ratings (ratings) remains stable.
Delvag is the captive insurer for Deutsche Lufthansa Aktiengesellschaft (Lufthansa), a global aviation group domiciled in Germany.
The ratings reflect Delvag’s balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Delvag’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and is supported by the company’s good liquidity profile and profit and loss absorption agreement with Lufthansa that provides balance sheet protection but limits the accumulation of earnings. A partly offsetting rating factor is Delvag’s dependence on reinsurance to protect its aviation fleet business. However, the associated credit risk is mitigated by the use of a financially strong and diverse reinsurance panel.
Delvag’s operating performance is strong, demonstrated by a five-year average operating ratio of 50% (2013-2017), which is supported by strong underwriting performance and good investment earnings. A.M. Best expects prospective underwriting results to remain at a strong level with a combined ratio similar to the 85% achieved in 2017.
Delvag’s profile is enhanced by its strategic importance to and integration within the Lufthansa group. In addition, it leverages its expertise in the aviation and transport sectors to write a book of third-party business alongside its captive business.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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