AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” (Good) from “bbb” (Good) and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Trans World Assurance Company (TWA) (Las Vegas, NV). In addition, AM Best has revised the Long-Term ICR outlook to stable from positive, while the outlook of the FSR is stable.
The Credit Ratings (ratings) reflect TWA’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
TWA’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed as strongest. However, AM Best notes that modest capital growth, along with some below-investment-grade assets, has impacted the risk-based capital ratio. Liquidity capability is strong, with high overall liquidity metrics. TWA’s bond portfolio is composed of nearly all corporates with laddered maturities, which provides ample liquidity to meet unexpected cash needs. Premium levels have been declining historically, but organic growth remains driven by consistently positive operating gains. Earnings have been positive and stable, with no losses over the past several years. TWA is niched in offering products to active-duty soldiers and veterans and is recognized by the U.S. Department of Veterans Affairs as a partner to perform policy transition for those service members shifting into civilian coverage. The Long-Term ICR upgrade is driven by continued improvements to TWA’s ERM program, which has developed to a level seen as appropriate for the company’s risk profile.
Partially mitigating factors include some sector concentration in TWA’s asset portfolio, a trend of constrained growth in premiums and concentration of business in states with a heavy military base presence, such as Texas, California and Florida. Statutory return ratios are low compared with TWA’s peers and life industry averages.
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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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