AM Best assigns A- FSR to Builders Re and Builders Direct

AM Best has assigned a financial strength ratings of A- (Excellent) to Builders Re (Luxembourg) and Builders Direct (Luxembourg), both subsidiaries of HOCHTIEF a large Germany-based construction company.

The outlook assigned to the rating 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.

AM Best said Builders Re’s rating reflects 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 rating also takes onto consideration the good performance record of the transferred business, according to AM Best.

Builders Re’s strong risk-adjusted capitalisation is supported by low net retention levels and an initial capital contribution of $ 409 million from HOCHTIEF during 2015.

AM Best expects Builders Re to report a combined ratio for 2015 in line with the 78 percent achieved by the old reinsurance company in 2014. Net profits are expected to be moderately weaker than the reported net profit of $ 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, according to AM Best.

Builders Direct was created in 2013 and provides insurance cover to third-party and HOCHTIEFgroup-associated discretionary mutual companies.