Hannover Re has worked to maintain steady earnings and reduce its financial leverage, and Fitch Ratings has recognized the company with a ratings upgrade.

Fitch said it has boosted the insurer’s financial strength ratings to AA- from A+. Hannover Re’s issuer default rating got a similar upgrade.

Fitch explained in its announcement that the ratings upgrade stems from Hannover RE’s “strengthened financial profile, including reduced financial leverage, very strong risk-adjusted capitalization and consistent earnings generation from the core non-life reinsurance segment.”

Fitch particularly cited Hannover Re’s 2013 combined ratio of 94.4, which “remains below the company’s target of 96.” What’s more, Fitch said that the volatility of Hannover Re’s combined ratio remained lower than its rivals, which it attributed to “Hannover Re’s selective underwriting approach and focus on preserving margins rather than on strong growth.”

For the 2014 second quarter results announced in early August, Hannover Re said its total gross premium for non-life reinsurance dipped by just a half of a percentage point compared to last year, landing at 4.1 billion euros ($5.4 billion), almost unchanged from the same period in 2013. Hannover credited a “new high volume reinsurance treaty from China” as well as expansion in Southeast Asia for helping maintain the numbers. Net earned premium for the division dipped by 1 percent to 3.4 billion euros ($4.5 billion), essentially the same as last year. Group net income for non-life reinsurance hit 347.9 million euros (nearly $462 million) during the quarter, versus 362.1 million euros ($480.8 million) a year ago.

Fitch also issued a similar upgrade for Swiss Re, noting that the reinsurance market for all remains very soft and highly competitive.

Source: Fitch Ratings