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 of “a” (Excellent) of RoyalStar Assurance Ltd. (RSA) (Nassau, The 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 (ERM).

RSA continues to have the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The BCAR is also assessed as strongest on a catastrophe-stressed basis, which is indicative of a certain level of capital stability even in the event of high risk exposure. Like most Caribbean domiciled insurance companies, RSA has a high dependence on reinsurance to manage capital exposure in the event of a catastrophe. While reinsurance dependence is high, RSA maintains adequate coverage through highly rated reinsurers and has additional capacity from its newly formed affiliated captive, RSA Risk Solutions. Capital growth has remained consistent in recent years largely due to favorable operating earnings, partially offset by dividends to the holding company. Invested assets are mostly held in short-term fixed-income securities, which have been diversified in recent years with the company’s expansion into United States Treasuries. RSA has low financial leverage that is driven by a small bank loan and the issuance of preference shares.

Operating performance for RSA is assessed as strong. The company has reported strong earnings in each of the last five years, supported by favorable underwriting results and consistent investment income. That trend continued through the first three quarters of 2025. Additionally, gross premiums written hit a five-year high in 2024, and results through the first three quarters of 2025 indicate that RSA reached a new high for full-year 2025.

RSA’s business profile is limited. While the company does offer several products through a solid distribution network of agents and brokers, it has a geographic concentration risk with more than 75% of business written in the Bahamas and Cayman Islands. The newly developed captive, RSA Risk Solutions, offers additional reinsurance capacity; however, geographic expansion is not expected in the near term.

The ERM program for RSA is appropriate. It has a developed program with a formal framework with a defined risk appetite, as well as tolerance levels with a good governance structure. The company maintains a comprehensive reinsurance program to protect its capital and surplus.

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