|[January 15, 2013]
A.M. Best Revises Outlook of RoyalStar Assurance Limited
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has revised the outlook to positive from stable and
affirmed the financial strength rating of A- (Excellent) and issuer
credit rating of "a-" of RoyalStar Assurance Limited (RSA (News - Alert))
The ratings reflect RSA's consistent overall profitability, excellent
capitalization and established presence within the Caribbean market. RSA
continues to produce positive operating results, which are a function of
the company's prudent underwriting philosophy and steady stream of
investment income. The positive outlook reflects RSA's resilient
underwriting results, which consistently places it among the top of its
RSA writes all of its business in the Caribbean, which exposes it to
frequent and severe weather-related events. Although this makes RSA
somewhat dependent on reinsurance as part of its overall risk management
strategy, its panel of high quality reinsurers mitigates much of this
These positive rating factors are partially offset by RSA's geographic
concentration, aforementioned dependency on reinsurance and exposure to
weatherrelated catastrophes, as well as sluggish economic conditions in
the Bahamas. Furthermore, the Bahamas and other Caribbean insurance
markets have become increasingly competitive as indigenous and outside
insurers seek to gain market share in the region.
Key rating drivers that may lead to positive rating actions on RSA
include its continued strong underwriting results in conjunction with
surplus appreciation and improvements in the Bahamas' macroeconomic
environment. Negative rating triggers could include prolonged adverse
operating results that are exacerbated by a series of large catastrophic
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. Key criteria utilized include: "Risk
Management and the Rating Process for Insurance Companies"; "Understanding
Universal BCAR"; "Catastrophe Analysis in A.M. Best Ratings"; "Insurance
Holdings Company and Debt Ratings"; and "Evaluating Country Risk."
Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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