AM Best Co. has upgraded the issuer credit rating (ICR) to "a+" from "a" and affirmed the financial strength rating (FSR) of A (Excellent) of Hannover Re (Bermuda) Ltd. The outlook for both ratings is stable.

The ICR of Hannover Re Bermuda has been upgraded to reflect the strategic importance of the company to its parent, Hannover Rueckversicherung AG (Hannover Re) (Germany), as the main property catastrophe excess of loss carrier and as the centre of excellence for catastrophe business within Hannover Re. Hannover Re Bermuda's ratings also reflect its excellent stand-alone risk-adjusted capitalisation as well as the benefit of comprehensive reinsurance protection provided by its parent.

AM Best believes that the company continues to manage its risk profile effectively, achieving technical profitability even in years with major catastrophes. In 2008, Hannover Re Bermuda's net income decreased to 86 million euros from 139 million euros in 2007, due to a drop in investment income and a worse year for catastrophe claims, particularly Hurricane Ike and windstorm Emma. The company still achieved a very low combined ratio of 49.6 percent, albeit a deterioration from 43.1percent the previous year.

AM Best acknowledges the geographic diversification of Hannover Re Bermuda's book of business, although the diversification across lines of business remains limited with over 90% of premiums written in property catastrophe excess of loss lines. The balance is written in US workers' compensation catastrophe, terrorism and personal accident catastrophe lines. Gross premiums written contracted marginally to 337 million euros in 2008 from 348 million euros in 2007.