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Royal & SunAlliance Insurance To Stay In USVI
Firm reaches agreement with new Lt. Gov. Vargrave Richards, who is also in charge of banking and insurance
By JOHN COLLINS
February 13, 2003
Puerto Rico-based Royal & SunAlliance Insurance has decided to continue doing business in the U.S. Virgin Islands (USVI), said Lt. Gov. Vargrave Richards, who is also the commissioner of Insurance as well as Banking (CB Jan. 16).
"Im pleased to report that we have reached an agreement [with Royal] which will take up into perpetuity," said Richards. A stumbling point was a section in the agreement offering discounted property coverage for local members of the American Association of Retired Persons (AARP). Richards said he met with local AARP members to assure them that the section would be preserved. He also announced that Royal would initiate a "modest increase" in rates.
Royal, the second largest carrier of residential property insurance in the USVI, announced in 2002 that it would stop writing insurance in the territory effective Dec. 31, 2002 (CB May 16, 2002).
Royal has been serving the USVI for more than 20 years. It has declined to explain its decision to exit the market, but industry sources have indicated that the small size of the market and its vulnerability to hurricanes makes it an increasingly risky and costly business environment.
Royal writes more than 11% of the coverage in the USVI. Nemwil and Lloyds Underwriters are the other two largest property insurers, with a respective 7.7% and 49.6% of the local business, according to an analysis last year by the Division of Insurance & Banking (DIB).
Royal, founded in 1978, is the seventh largest property and casualty insurance company in Puerto Rico, up from eighth the year before, with 2001 assets of $181 million, up from $93.7 million in 2000. It reported 2001 annual gross revenue of $115.5 million (up from $77.6 million in 2000) and net profit of $4.5 million (down from $6.3 million the year before).
At press time Monday, Sun President Victor Rios could not be reached for comment on the decision to continue writing business in the USVI. He had previously indicated that Royals total sales ($115.5 million) included $96.3 million in Puerto Rico and $19.2 million in the USVI.
This Caribbean Business article appears courtesy of Casiano Communications.