CONTACTS:
FOR IMMEDIATE RELEASE
MEXICO CITY - MAY 08, 2024 02:16 PM (EDT)
AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Berliner Re Reinsurance Company Inc. (Berliner) (Barbados). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Berliner’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The company is Barbados-domiciled and began commercial operations in 2022, underwriting surety for renewable energy and infrastructure developments in Spain seeking further geographic diversification in Latin American markets.
The ratings of Berliner also reflect its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), adequate reinsurance program and conservative investment strategy aimed at providing liquidity and maintaining appropriate asset-liability management. Partially offsetting these positive rating factors are Berliner’s business profile that is bounded by its current concentration in a single business line and distribution channel, as well as the highly competitive landscape in its target geographic markets’ surety bond segment amid a challenging economic environment.
Berliner’s risk-adjusted capitalization stands at the strongest level underpinned by a robust capital base, and low underwriting leverage in conjunction with its conservative investment allocation. In AM Best’s view, the company’s operating performance is pressured by its high administrative expense structure, accordingly due to its startup nature; nevertheless, a continuously expanding top line in conjunction with well-contained claims and consistent inflow of investment income are expected to enhance bottom line results within the short term. Berliner constantly reviews its underwriting guidelines to improve the performance of its businesses. Additionally, reinsurance commissions stemming from its quota share agreement with counterparties with a good level of security, will contribute gradually to offset its high operating expense structure. Berliner posted a net income of USD 2.3 million within its first year of operation, reflecting a 2.3% return-on-equity ratio in 2022.
Negative rating actions could occur if underwriting results fall short of AM Best’s expectations and deteriorate to levels no longer supportive of an adequate operating performance assessment. Positive rating actions, while unlikely within the midterm, could occur if the company is able to achieve geographic expansion successfully while maintaining premiums sufficiency.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Jan. 18, 2024), which provides a comprehensive explanation of AM Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best’s Credit Ratings.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to rating(s) that have been published on AM Best's website. For additional 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 AM Best’s Recent Rating Activity web page.
If the ratings referred in this press release do not indicate a specific country suffix, it is understood that they are granted globally and not on a national scale.
AM Best does not validate or certify the information provided by the client in order to issue a credit rating.
While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.
AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.
AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. AM Best keeps certain activities of its business units separate from each other to preserve the independence and objectivity of their respective activities. As a result, certain business units of AM Best may have information that is not available to other AM Best business units. AM Best has established policies and procedures to maintain the confidentiality of certain confidential (non-public) information received in connection with each analytical process. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.