The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian insurer yesterday revealed that just two Hurricane Dorian-related claims are left to be settled after its highest-level “financial strength” and credit ratings were reaffirmed by the industry’s top assessor.

Anton Saunders, RoyalStar Assurance’s managing director, speaking after AM Best confirmed its “A (Excellent)” financial strength and “a” (Excellent) long-term credit rating, together with a ‘stable’ outlook, told Tribune Business that it had paid out around $300m to-date in Dorian claims.

“We have settled all of our Dorian claims and only two remain outstanding,” he said. “Ourselves and our reinsurance partners paid out $300m. From the Dorian claims perspective, the impact is on our reinsurance costs and customers who are rebuilding.

“We have been managing the [COVID] crisis and ensuring our agents are in touch with their clients. We have not had that much fall-off in business, but we are maintaining our client base and agents and ensuring we don’t run into any cash flow issues.”

In an aside to Bahamian property and casualty insurance profits being dictated by the annual level of hurricane activity, Mr Saunders added: “We are ahead of last year because of the US Virgin Islands’ profitability, and on budget at the same time. The next three months will determine what the profitability will be at the end of the year.”

A. M. Best, in its assessment of RoyalStar released yesterday, said: “The ratings reflect RoyalStar Assurance’s balance sheet strength, which A. M. 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 capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative investment portfolio and comprehensive reinsurance programme.

“These strengths are partially offset by RoyalStar’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 capitalisation at the strongest level.”

A. M. Best continued: “RoyalStar’s strong operating results over the last five-year period have been bolstered by favourable 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 RoyalStar’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.

RoyalStar operates in The Bahamas, the Cayman Islands, the Turks and Caicos Islands, the US Virgin Islands, the British Virgin Islands and Anguilla, and the rating agency said: “A. M. Best expects the company to continue to produce favourable 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 programme placed with a panel of high-quality reinsurers.”