A.M. Best has affirmed the financial strength ratings of “A (Excellent)” and the issuer credit ratings of “a” for Delvag Luftfahrtversicherungs (Delvag) and its subsidiary Delvag Rueckversicherungs (Delvag Rueck), both domiciled in Germany.
The ratings consider Delvag’s role as the captive insurer of Deutsche Lufthansa Aktiengesellschaft (Lufthansa), its ultimate parent.
According to A.M. Best, partially offsetting the rating is Delvag’s dependence on reinsurance to protect the Lufthansa business, however, the associated credit risk is mitigated through the use of a financially “strong and diverse” reinsurance panel.
A.M. Best suggested that Delvag’s risk-adjusted capitalisation will remain strong.
The ratings company said: “A profit and loss absorption agreement with Lufthansa provides balance sheet protection but limits the captive’s accumulation of earnings. The ratings also consider the captive’s track record of robust earnings, which is underpinned by strong technical performance.”
