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FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 07, 2019 12:54 PM (EST)
AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of RoyalStar Assurance Ltd. (RSA) (Nassau, Bahamas). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect RSA’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
RSA’s primary operating market is the Bahamas, where it has strong brand recognition and competes for business among the top insurance writers on the island. However, the operating disruption and the catastrophic damages caused by Hurricane Dorian prompted an AM Best response to place RSA under review with developing implications, along with the other rated Bahamas domiciled market participants. AM Best has since evaluated RSA’s loss estimates and related reinsurance contracts and expects this to be an earnings event since loss estimates are within its current reinsurance coverage, and the net impact to the organization is anticipated to be its contract retention amount.
RSA’s balance sheet strength is at the strongest level based on supportive risk-adjusted capitalization, favorable earnings, which have been accretive to surplus growth especially in non-catastrophe affected years, and the extensive use of reinsurance to reduce RSA’s net exposure to natural catastrophes. RSA’s favorable underwriting performance, especially in non-catastrophe years, supported by steady levels of investment income, continues to contribute to RSA’s strong operating results. These strengths are offset partially by the geographic concentration of RSA’s business in the Bahamas, the company’s exposure to weather-related catastrophe events and its dependence on reinsurance to mitigate losses and protect its surplus. RSA mitigates much of its catastrophe exposure through prudent risk management planning, which includes minimizing coverage written in flood and storm surge areas, 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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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