AM Best Downgrades Credit Ratings of Delvag Versicherungs-AG

AMSTERDAM–(BUSINESS WIRE)–AM Best has downgraded the Financial Strength Rating to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Rating to “a-” from “a” of Delvag Versicherungs-AG (Delvag) (Germany). The outlook of these Credit Ratings (ratings) has been revised to negative from stable.

The ratings reflect Delvag’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management, as well as rating drag due to its association with Deutsche Lufthansa Aktiengesellschaft (Lufthansa).

Delvag is the captive insurer for Lufthansa, a global aviation group domiciled in Germany.

The rating downgrades reflect a weakening in Lufthansa’s credit profile, resulting from a decline in aviation traffic caused by the COVID-19 pandemic. The negative outlooks reflect the potential for further deterioration in Lufthansa’s credit profile, as well as the risk that a slow recovery in the aviation industry will lead to a deterioration in performance metrics for Delvag.

Delvag’s balance sheet strength is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), and by a profit and loss absorption agreement with Lufthansa that provides balance sheet protection but limits the accumulation of earnings. The balance sheet assessment also factors in Delvag’s prudent reserving practices and good liquidity profile. A partly offsetting rating factor is the captive’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 has a good historical earnings track record, as demonstrated by a five-year weighted average operating ratio of 68% (2015-2019) (as calculated by AM Best), which is supported by strong underwriting performance and good investment earnings. However, 2019 performance was weaker, with a combined ratio of 99% (2018: 78%) (as calculated by AM Best), largely driven by a deterioration in loss ratio. Additionally, a reallocation of expenses from the non-technical account to the technical account weighted negatively on Delvag’s 2019 technical results. AM Best expects the loss ratio to improve in 2020, following various remedial actions taken by the company, which include a discontinuation of large parts of its underperforming non-group-related reinsurance business.

Delvag’s profile is enhanced by its strategic importance to and integration within the Lufthansa group. It continues to leverage its expertise in the aviation and transport sectors to write a book of third-party business alongside its core Lufthansa fleet portfolio.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


Konstantin Langowski
Senior Financial Analyst
+31 20 308 5431

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Dr. Angela Yeo
Senior Director, Analytics
+31 20 308 5421

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644

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