AM Best Reaffirms Long-Term Rating for Hannover Credit-Linked Note
AM Best has reaffirmed the Long-Term Issue Credit Rating of "a" (Excellent) for the $1.805 billion, 6.00% Series Hannover, No. 1 variable funding credit-linked note, due October 1, 2044. Issued by Weston2044 LLC, a Delaware-based limited liability company, this note has received a stable outlook, highlighting its financial strength and regulatory compliance.
The note relates to a variable funding surplus note issued by Redding Reassurance Company 4 LLC, a Missouri-domiciled special purpose reinsurance captive insurer wholly owned by Wilton Reassurance Company. This surplus note supports the excess reserves for a block of universal life secondary guarantee insurance. Wilton Reassurance manages this insurance segment through a coinsurance deal with Pruco Life Insurance Company, which is then retroceded to Redding Re 4.
The face value of the surplus note is closely aligned with the excess reserves, which is mirrored by the credit-linked note's face value. Wilton Reassurance operates on a funds-withheld basis for its retrocession to Redding Re 4, and both notes maintain identical interest rates through a netting arrangement, ensuring financial consistency and risk management.
Concurrently, Weston2044 established a risk transfer agreement via a cash-settled ISDA swap with Hannover Life Reassurance Company of America (Bermuda) Ltd. This agreement is designed to secure liquidity for any potential note redemption or monetization events, further strengthening the arrangement for all involved parties.
As of December 2025, statutory, economic, and excess reserves related to the underlying life insurance business aligned with anticipated projections. AM Best's credit rating reflects the issuer's capability to meet obligations, considering Hannover Life Reassurance Company of America (Bermuda) Ltd.'s superior credit rating and Wilton Reassurance’s stability, alongside legal concerns regarding transaction enforceability.
Potential changes in the financial condition or ratings of Hannover Life Reassurance Company of America (Bermuda) Ltd. or the Wilton Re Group may influence the Long-Term IR or its outlook. Comprehensive details on these ratings, including disclosures and responsibilities, are available on AM Best's platform, supporting transparency and informed risk management.
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