AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Stonefort Reinsurance S.A. (Stonefort Reinsurance) (Luxembourg), a subsidiary of HOCHTIEF Aktiengesellschaft (HOCHTIEF), a large Germany-based construction company that is majority owned by ACS, Actividades de Construcción y Servicios, S.A. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Stonefort Reinsurance’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

Stonefort Reinsurance’s balance sheet strength is supported by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Stonefort Reinsurance’s retrocession programme was discontinued in 2024, which exposes the company’s balance sheet to higher levels of volatility going forward. However, AM Best expects the company’s risk-adjusted capitalisation to remain at the strongest level, supported by low underwriting leverage. The company’s significant investment allocation to bonds issued by its intermediate parent company, HOCHTIEF, remains an offsetting factor.

Stonefort Reinsurance has a track record of strong operating performance, largely driven by underwriting results, as demonstrated by a five-year (2020-2024) weighted average combined ratio of 80.5%, as calculated by AM Best. Stonefort Reinsurance’s prospective performance continues to be subject to volatility, mainly due to the company’s exposure to business associated with the cyclical U.S. construction market. The discontinuation of the company’s retrocession programme further increases the potential for volatility in Stonefort Reinsurance’s results.

Stonefort Reinsurance’s business profile assessment of limited reflects its geographically concentrated portfolio of casualty risks, which emanates from HOCHTIEF’s construction operations in North America. Additionally, the company writes a small but growing open market reinsurance book of business.

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