A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) of RoyalStar Assurance Limited (Bahamas). The rating has been removed from under review with negative implications and assigned a stable outlook.
This rating action follows A.M. Best’s review of RoyalStar’s losses emanating from third quarter 2004 hurricane activity and the impact on its risk-based capital in conjunction with the presentation of a formal recapitalization plan.
The recapitalization plan included raising $5 million in preference shares through a private placement. The transaction was recently completed with RoyalStar in receipt of the funds at the end of May 2005. The recapitalization plan presented to A.M. Best following the impact of the hurricane losses met A.M. Best’s capital strengthening expectations and fully supports the current financial strength rating.
RoyalStar’s financial strength rating was placed under review on Oct. 1, 2004, due to the uncertainty surrounding the ultimate loss exposures from Hurricanes Frances, Jeanne and Ivan in the Bahamas and Cayman Islands and the effect of the hurricanes on the company’s risk-based capitalization.
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