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A.M. Best Affirms Credit Ratings of Delvag Versicherungs-AG

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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
(Delvag) (Germany). The outlook of these
Credit Ratings (ratings) remains stable.

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

The ratings reflect Delvag's balance sheet strength, which A.M. Best
categorises as very strong, as well as its strong operating performance,
neutral business profile and appropriate enterprise risk management.

Delvag's balance sheet strength is underpinned by risk-adjusted
capitalisation at the strongest level, as measured by Best's Capital
Adequacy Ratio (BCAR), 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 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 operating performance is strong, demonstrated by a five-year
average operating ratio of 50% (2013-2017), which is supported by strong
underwriting performance and good investment earnings. A.M. Best expects
prospective underwriting results to remain at a strong level with a
combined ratio similar to the 85% achieved in 2017.

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.

A.M. 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
www.ambest.com/captive.

This press release relates to Credit Ratings that have been published
on A.M. 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 A.M. Best's
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Understanding
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
Guide
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases
.

A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

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