NASSAU, BAHAMAS — Royal Star Assurance (RSA) Ltd has seen its financial strength rating affirm by global insurance rating agency AM Best.
AM Best has affirmed the insurer’s financial strength rating of A (Excellent) and the long-term issuer credit rating (long-term ICR) of “a” (Excellent) with a stable outlook.
The ratings agency said: “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.”
AM Best noted that 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,” the ratings agency noted.
“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 US Virgin Islands, the British Virgin Islands and Anguilla.”