AM Best Affirms Credit Ratings of RoyalStar Assurance Ltd.

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” (Excellent) of RoyalStar Assurance Ltd. (RSA) (Nassau, Bahamas). The outlook of these Credit Ratings (ratings) is stable.

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

The balance sheet strength is derived from the group’s strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative investment portfolio and comprehensive reinsurance program. These strengths are partially offset by RSA’s exposure to weather-related catastrophe events, given its geographic concentration of business in the Caribbean, and its dependence on reinsurance to mitigate losses and protect its surplus. Nevertheless, strong earnings over the past five years, despite major catastrophe events in 2016 and 2019, have enabled the company to maintain risk-adjusted capitalization at the strongest level.

RSA’s strong operating results over the last five-year period have been bolstered by favorable underwriting performance in non-catastrophe years, consistent levels of investment income and commission income derived from business ceded to reinsurers. Despite an economic shutdown in RSA’s operating territories due to the COVID-19 pandemic, the company produced strong earnings in 2020 as demonstrated by solid profitability and return metrics compared with its Caribbean peers.

AM Best views the group’s business profile as neutral. Under the direction of its experienced management team, RSA provides personal and commercial lines coverages throughout the Bahamas, the Cayman Islands, the Turks and Caicos Islands, the U.S. Virgin Islands, the British Virgin Islands and Anguilla.

AM Best expects the company to continue to produce favorable results despite its exposure to catastrophe events. The company mitigates much of this exposure through prudent risk management planning, focusing on high quality business not susceptible to storm surge, along with its comprehensive reinsurance program placed with a panel of high-quality reinsurers.

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 Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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