Berliner Re earns “excellent” credit ratings from AM Best

AM Best, a global credit rating agency, has awarded Berliner Re Reinsurance Company Inc. (Berliner Re) a financial strength rating of A- (Excellent) and a long-term issuer credit rating of “a-” (Excellent). The outlook for both ratings is stable.

According to AM Best, the ratings reflect Berliner’s solid balance sheet, strong capitalization, and conservative investment strategy. Berliner launched commercial operations in 2022, specializing in underwriting surety bonds for renewable energy and infrastructure projects, primarily in Spain. According to a news release, the company plans to diversify its reach into Latin American markets.

The credit rating agency commended Berliner’s robust capital base and conservative investment portfolio, which contribute to its strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Additionally, Berliner’s reinsurance program and asset-liability management strategies were described as providing stability.

Despite these strengths, AM Best noted that Berliner has a limited business profile, focusing on a single business line and distribution channel. This concentration, combined with the competitive market for surety bonds in Latin America, could present challenges as the company seeks expansion.

Reliable financial position

Berliner reported a net income of US$2.3 million in its first year, yielding a return-on-equity ratio of 2.3% in 2022. AM Best indicated that the company’s conservative approach, combined with a growing revenue stream and consistent investment income, contributed to its stable financial position. However, AM Best also mentioned that Berliner’s high administrative costs, stemming from its startup status, could pressure operating performance in the short term.

The news release noted Berliner’s focus on refining its underwriting guidelines as part of its plans to mitigate these challenges. In addition, it has entered into reinsurance agreements with reputable partners. These measures are expected to gradually offset operational expenses as the company grows, according to AM Best.

AM Best also noted that negative rating actions could occur if Berliner’s underwriting results fall below expectations or if operating performance weakens. Meanwhile, positive rating actions could be possible if Berliner successfully expands geographically while maintaining premium sufficiency.

Berliner Re is a reinsurance company based in Barbados that is authorized to offer non-life and life insurance. It is licensed as a Class 2 insurance company by the Financial Services Commission in Barbados.

Have something to say about this story? Leave a comment below.