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Member, Beacon International Group, Ltd.
HANOVER, Germany Reinsurer Hannover Re Group has transferred the risks from about €1 billion ($1.3 billion) in "reinsurance recoverables" to the capital market, the company announced Monday.
Reinsurance recoverables outstanding claims held by reinsurers againsttheir retrocessionaires - constitute a substantial item on Hannover Re's balancesheet, the company said.
They can adversely affect the assessment of the group's solvency by rating agencies, primary insurers and brokers, the company added.
Through securitization, Hannover Re said it is substantially reducing thedefault risk associated with its reinsurance recoverables.
"We assume that the rating agencies of relevance to our industry, willconsider this transaction in quantitative and qualitative respects positively," said Hannover Re Chief Executive Officer Wilhelm Zeller in astatement.
"With this transaction Hannover Re has effectively immunized itself against a potential credit risk," he added.