AM Best has affirmed Munich Reinsurance Company's A+ Superior financial strength rating and "aa" long-term issuer credit rating, citing the group's balance sheet strength and record 2025 profit despite softer reinsurance pricing entering 2026.
The rating agency also affirmed Munich Re America Corporation's "a" Excellent long-term issuer credit rating, along with issue credit ratings for subsidiaries American Alternative Insurance Corp. and The Princeton Excess and Surplus Lines Insurance Co. All outlooks remain stable.
AM Best withdrew its rating of Munich Re America Corporation after the company requested to no longer participate in AM Best's interactive rating process. The agency separately withdrew ratings for Digital Advantage Insurance Company, a Princeton, New Jersey-based shell company, citing insufficient financial data to support a current rating opinion.
AM Best attributed the affirmation to Munich Re's balance sheet strength, which the agency assesses as strongest, along with strong operating performance, a very favorable business profile and very strong enterprise risk management. The group's risk-adjusted capitalization exceeds the level required for the strongest assessment under Best's Capital Adequacy Ratio, and AM Best expects that position to hold despite Munich Re's exposure to large losses and its pattern of dividends and share buybacks. The company's adjusted financial leverage ratio stood at 8.3% at year-end 2025, with strong interest coverage, calculated without credit for contractual service margin.
The rating affirmation follows a year in which Munich Re exceeded its own profit guidance for a fifth straight year. The reinsurer posted a net result of €6.121 billion for 2025, an increase of 7.6% from €5.69 billion in 2024, according to a February 2026 company release, surpassing its own €6 billion profit target. Return on equity reached 18.3%, level with the prior year, per the same release. Munich Re has set a 2026 net result target of €6.3 billion.
AM Best's summary of the annual results shows the group's property/casualty reinsurance division reported a net profit of €3.3 billion in 2025, while the Global Specialty Insurance segment earned €0.56 billion, supported by major-loss experience that was lower than expected. Life and health reinsurance and ERGO contributed net profits of €1.3 billion and €917 million, respectively.
AM Best noted Munich Re's business profile benefits from excellent diversification, with life, health and property/casualty operations performing largely independently of one another, positioning the group to face softer reinsurance market conditions given its global presence and brand strength.
The A+ and "aa" ratings extend to 18 Munich Re subsidiaries, including Great Lakes Insurance SE, Munich Reinsurance America Inc., and Temple Insurance Company. Issue credit ratings on surplus notes issued by American Alternative Insurance Corporation and The Princeton Excess and Surplus Lines Insurance Company were also affirmed at "a+" Excellent.
The affirmation comes as reinsurance pricing eases broadly across the market. Munich Re's own prices fell 2.5% at the Jan. 1, 2026, renewals, with written premium volume declining to €13.7 billion.
AM Best itself revised its outlook for the global reinsurance segment to stable from positive on Jan. 20, 2026, pointing to accelerating softening in property pricing alongside continuing pressure in US casualty lines. The agency reported that Jan. 1, 2026, renewal rates fell between 10% and 20%, with the steepest declines concentrated on accounts that had not suffered recent losses. Dan Hofmeister, an AM Best associate director, said the declines brought pricing closer to levels seen before 2023, when severe market dislocation had pushed risk-adjusted pricing sharply higher.
Fitch Ratings has taken a more cautious view of the same trend. The agency has maintained a "deteriorating" outlook for the global reinsurance sector heading into 2026, citing record capital supply that continues to outpace demand from cedants at the January renewals, The Royal Gazette reported. Manuel Arrivé, an insurance director at Fitch, said the shift reflects "a moderate decline in otherwise sound business conditions," adding that underwriting conditions have moved past their recent peak, while capitalization is expected to remain strong.
