AM Best has affirmed the financial strength rating of A+ (Superior) and the long-term issuer credit ratings of “aa” (Superior) of Germany-based Munich Reinsurance Co and its subsidiaries, which include Munich Re of Bermuda Ltd.

The ratings agency also has affirmed the long-term ICR of “a” (Excellent) of Munich Re America Corporation of New Jersey and its associated long-term issue credit ratings.

The outlook of these credit ratings is stable.

The ratings reflect Munich Re’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management.

Munich Re’s balance-sheet strength is underpinned by its risk-adjusted capitalisation that exceeds the level required to support the strongest assessment, as measured by Best’s capital adequacy ratio.

AM Best said it expects Munich Re’s risk-adjusted capitalisation to remain at the strongest level, despite the group’s exposure to potentially large losses and its record of substantial dividend payments and share buybacks.

In addition, the group benefits from excellent financial flexibility and a relatively low financial leverage with a robust coverage ratio.

AM Best said: “The group’s operating performance is strong, demonstrated by a ten-year weighted average return-on-equity ratio of 8.8 per cent (2013-2022) (based on IFRS 4, as calculated by AM Best).

“In 2023, under IFRS 17, Munich Re reported a net profit of 4.6 billion euros, or approximately $5.01 billion (2022: €5.3 billion) with ROE standing at 16.1 per cent (as calculated by AM Best).

“The group’s property/casualty reinsurance division reported a net profit of €2.4 billion with natural catastrophe and man-made losses slightly below budget at €3.3 billion.

“Munich Re's life and health reinsurance division and Ergo Insurance Pte Ltd reported net profits of €1.4 billion and €721 million, respectively, demonstrating the benefits of the group’s good earnings diversification.

“Furthermore, increased investment results contributed significantly to Munich Re’s annual results.

“Munich Re is a leading global reinsurer and its business profile benefits from excellent diversification, with the performance of its various life, health and P/C operations largely uncorrelated.

“Given its global market presence and excellent brand, the group is well-positioned to benefit from improved reinsurance market conditions.”