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, located in Germany.
Delvag is the captive insurer for Deutsche Lufthansa Aktiengesellschaft (Lufthansa), a global aviation group domiciled in Germany.
A.M. Best categorises Delvag’s balance sheet strength as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The rating agency said Delvag’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, 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, A.M. Best noted, 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 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.