OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of RoyalStar Assurance Limited (RSA) (Nassau, Bahamas). The outlook for both ratings is stable.
The ratings reflect RSA’s solid risk-adjusted capitalization, strong operating performance, established presence within the Caribbean market and its resilient underwriting results, which consistently places it among the top of its Caribbean peers.
RSA continues to record overall profitability, which is derived from the company’s strong underwriting performance and steady levels of investment income. Consistent earnings have enabled RSA to continue to achieve surplus growth and enhance its risk-adjusted capitalization. Under the direction of an experienced and knowledgeable management team with local market expertise, RSA provides personal and commercial lines coverage throughout the Bahamas, as well as the Cayman Islands and Turks and Caicos Islands.
Partially offsetting these positive rating factors is the geographic concentration RSA’s operations in the Bahamas, the company’s exposure to weather-related catastrophe events and its dependence on reinsurance to mitigate losses and protect its surplus. Additionally, Caribbean insurance markets have become increasingly competitive as domestic and regional insurers have ramped up attempts to gain market share.
RSA mitigates much of its exposure to frequent and severe weather-related events through prudent risk management planning, which includes minimizing coverage written in flood and storm surge areas, along with a comprehensive reinsurance program placed with a panel of high quality reinsurers.
While the ratings are stable, factors that may lead to positive rating actions include RSA’s continued strong underwriting results in conjunction with surplus appreciation and improvements in the Bahamas’ macroeconomic environment. Factors that may lead to negative rating actions include a material decline in RSA’s risk-adjusted capitalization or adverse operating results that are exacerbated by a series of large catastrophic events.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. 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:
- A.M. Best’s Perspective on Operating Leverage
- Catastrophe Analysis in A.M. Best Ratings
- Evaluating Country Risk
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
- Understanding Universal BCAR
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.
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