AM Best has revised the outlooks to stable from negative and affirmed the financial strength rating (FSR) of A- (Excellent) and the long-term issuer credit rating (long-term ICR) of “a-” (Excellent) for the Lufthansa-owned captive, Delvag.
AM Best said the credit ratings reflect Germany-domiciled Delvag’s balance sheet strength, which it assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also reflect rating drag due to its association with its financially weaker parent, Deutsche Lufthansa.
The revision of Delvag’s outlook to stable from negative reflect improvements in the creditworthiness of Lufthansa, which are tied to strong performances in 2022 thanks to the uptick in air traffic and to an improvement of the group’s liquidity position.
Furthermore, Lufthansa has raised its earnings forecast for 2022 by 50% compared with its previous forecast.
Tobias Winkler and Andreas Brügel, who work in senior positions for Lufthansa’s near 90-year-old captive, appeared on GCP #58, and gave listeners a comprehensive history of Delvag, its status today, the third-party lines it writes and recent restructuring projects.