AM Best affirms Delvag ‘A’ rating, stable outlook
AM Best has affirmed the financial strength rating of A and the long-term issuer credit rating of “a” (Excellent) of Delvag Versicherungs. The outlook of these ratings is stable.
AM Best said that the ratings reflect Delvag’s balance sheet strength, which it assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Delvag is the captive insurer for Deutsche Lufthansa Aktiengesellschaft (Lufthansa), a global aviation group domiciled in Germany.
The captive’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which remained at the strongest level at year-end 2024, as measured by Best’s capital adequacy ratio. AM Best expects the captive’s prospective risk-adjusted capitalisation to be maintained at the strongest level and be further supported by a profit and loss absorption agreement with Lufthansa, which provides Delvag with added balance sheet protection. The balance sheet strength assessment also factors in Delvag’s conservative and prudent reserving practices, as well as its good liquidity profile. A partly offsetting factor is Delvag’s moderately high 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 has a good historical earnings track record, as demonstrated by a five-year weighted average combined ratio of 85% (2020-2024), as calculated by AM Best, supported by a good balance of underwriting and investment incomes during most years,” the rating agency said. “The combined ratio for 2024 stood at 87% (2023: 102%), as calculated by AM Best, slightly above the five-year weighted average combined ratio. The company has undertaken remedial actions since 2020, on underperforming lines of business and through a partial discontinuation of non-group-related reinsurance business.
“Delvag’s profile is enhanced by its strategic importance to and integration within the Lufthansa group. Lufthansa has recently confirmed the importance of Delvag as part of the group’s ERM strategy. The company continues to leverage its expertise in the aviation and transport sectors to write a book of third-party business alongside its core Lufthansa portfolio.”
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
