AMSTERDAM--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Builders Reinsurance S.A. (Builders Re) (Luxembourg) and Builders Direct S.A. (Builders Direct) (Luxembourg), both subsidiaries of HOCHTIEF Aktiengesellschaft (HOCHTIEF), a large Germany-based construction company that is majority owned by Actividades de Construcción y Servicios S.A. The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Builders Re’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
Builders Re’s balance sheet strength is supported by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects Builders Re’s risk-adjusted capitalisation to remain at a strongest level, supported by good internal capital generation.
Builders Re has a track record of strong and stable operating performance, largely driven by robust underwriting results, as demonstrated by a three-year average combined ratio of 82.7%. Prospectively, performance may be subject to some volatility, due to exposure to aggregation of liability losses. The company partly mitigates this risk by purchasing whole account quota share reinsurance.
Builders Re’s business profile assessment reflects the company’s geographically concentrated portfolio of casualty risks that emanate from HOCHTIEF’s construction operations in North America. Additionally, Builders Re reinsures open-market business, including business emanating from its sister company, Builders Direct.
Builders Direct was created in 2013 and provides insurance cover to third-party entities with a focus on mutual companies. Builders Direct’s ratings primarily reflect its strategic importance to Builders Re as a source of business growth and diversification, as well as explicit support from Builders Re in the form of reinsurance protection.
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