AM Best Revises Issuer Credit Rating Outlook to Negative and Affirms Credit Ratings of Members of Builders Mutual Insurance Group
03 Mayo 2024 - 1:48PM
Business Wire
AM Best has revised the outlook to negative from stable
for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed
the Financial Strength Rating (FSR) of A (Excellent) and the
Long-Term ICRs of “a+” (Excellent) of Builders Mutual Insurance
Company and Builders Premier Insurance Company, collectively
referred to as Builders Mutual Insurance Group (Builders Mutual)
(Raleigh, NC). The outlook of the FSR is stable.
The Credit Ratings (ratings) reflect Builders Mutual’s balance
sheet strength, which AM Best assesses as strongest, as well as its
strong operating performance, neutral business profile and
appropriate enterprise risk management (ERM).
The revision of the Long-Term ICR outlook to negative from
stable reflects AM Best’s concern that the company will not be able
to reverse the negative trend in operating performance over the
near term. The deterioration in performance is due mostly to a
period of heightened severity of large claims experienced from
mid-2022 to mid-2023. The frequency of claims remained relatively
stable throughout the period. In 2023, Builders Mutual made an
intentional pivot away from a multi-year technology transformation
in favor of adopting an agile approach. This shift came with a
sizeable non-recurring expense compounding the elevated
results.
Builders Mutual’s balance sheet strength assessment is supported
by its risk-adjusted capitalization, which has remained at the
strongest level, as measured by Best’s Capital Adequacy Ratio
(BCAR), at year-end 2023. Other balance sheet strength
considerations include conservative reserving practices, consistent
leverage metrics and favorable liquidity.
The neutral business profile reflects Builders Mutual’s position
as a leading workers’ compensation insurer in its home state of
North Carolina. Serving residential home builders and commercial
construction builders, Builders Mutual’s footprint encompasses
seven other states mostly located in the Southeast USA. The group
also carries an endorsement from North Carolina Home Builders
Association to provide all commercial lines of insurance coverage
to its members.
Builders Mutual’s ERM assessment of appropriate reflects the
group’s established risk framework, which includes governance
committees that focus on all aspects of risk emergence,
identification, assessment, mitigation and monitoring.
This press release relates to Credit Ratings that have been
published on AM 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 AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best's Credit Ratings. 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.
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Michael Cantalino Senior Financial Analyst +1 908 882
2243 michael.cantalino@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Greg Williams Senior Director +1 908 882
2434 greg.wiliams@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com