Best’s News & Research Service - February 05, 2016 10:09 AM (EST)
A.M. Best Assigns Ratings to Builders Reinsurance S.A. and Builders Direct S.A.
- February 05, 2016 10:09 AM (EST)
London //BestWire// - A.M. Best has assigned financial strength ratings of A- (Excellent) and issuer credit ratings of “a-” to Builders Reinsurance S.A. (Builders Re) (Luxembourg) and Builders Direct S.A. (Builders Direct) (Luxembourg), both subsidiaries of HOCHTIEF A.G. (HOCHTIEF), a large Germany-based construction company. The outlook assigned to all ratings is stable.
Builders Re is the special purpose reinsurance vehicle of HOCHTIEF formed in 2014. In June 2015, the HOCHTIEF group completed an internal loss portfolio transfer moving all insurance liabilities from its old reinsurance company into this new entity. The aim of the transaction was to release built up equalisation reserves in the old reinsurance company, which was partly sold in December 2015.
Builders Re’s ratings reflect the company’s strong risk-adjusted capitalisation and its importance to the HOCHTIEF group as a risk management tool and provider of predominantly group-related casualty and credit insurance cover. The ratings also take into consideration the good performance record of the transferred business.
Builders Re’s strong risk-adjusted capitalisation is supported by low net retention levels and an initial capital contribution of USD 409 million from HOCHTIEF during 2015.
A.M. Best expects Builders Re to report a combined ratio for 2015 in line with the 78% achieved by the old reinsurance company in 2014. Net profits are expected to be moderately weaker than the reported net profit of USD 54 million in 2014, driven by a weaker investment result.
Builders Direct’s ratings primarily reflect its strategic importance to Builders Re as a source of diversification as well as explicit support from Builders Re in the form of reinsurance protection. Builders Direct was created in 2013 and provides insurance cover to third-party and HOCHTIEF group-associated discretionary mutual companies.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.
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