has downgraded the financial strength rating to “A-” (Excellent) from “A” (Excellent) of International Insurance Company of Hannover Limited, a UK-domiciled subsidiary of Hannover Rueckversicherung AG. The rating outlook is stable.
Although Best continues to regard Inter-Hannover as strategically important to its parent company, Best has factored a diminished level of support into the rating. As a program writer and fronting company for direct business, a significant proportion of business is ceded (70 percent of premium income likely in 2004). The high level of exposure to reinsurance recoverables (600 percent of shareholders’ funds likely in 2004) continues to be a concern, although a substantial proportion (70 percent) relates to its parent.
Premium development (35.6 percent reduction in net premium income in 2003) was below 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.
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