AM Best Affirms Credit Ratings of ProAssurance Group Members and ProAssurance Corporation
20 Junio 2024 - 8:32AM
Business Wire
AM Best has affirmed the Financial Strength Rating (FSR)
of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term
ICR) of “a+” (Excellent) of the members of ProAssurance Group.
Concurrently, AM Best has affirmed the Long-Term ICR of “bbb+”
(Good) and the existing indicative Long-Term Issue Credit Ratings
(Long-Term IR) of ProAssurance Corporation (PRA) (headquartered in
Birmingham, AL). The outlook of the Credit Ratings (ratings) is
stable. All companies are indirect subsidiaries of PRA. (See below
for a detailed listing of subsidiaries and indicative Long-Term
IRs.)
The ratings of ProAssurance Group reflect its balance sheet
strength, which AM Best assesses as strongest, as well as its
adequate operating performance, favorable business profile and
appropriate enterprise risk management (ERM).
The group’s balance sheet strength assessment remains in the
strongest range reflective of its strongest level of risk-adjusted
capitalization, as measured by Best’s Capital Adequacy Ratio
(BCAR), as well as quality of investments, adequate liquidity and
strength of reserves. Loss reserve development trends over the
prior 10 calendar and accident years have been mixed, driven in
part by adverse development reported by the NORCAL subsidiaries,
the development associated with a large national healthcare account
and the emergence in 2023 of adverse development on the workers
compensation line of business, reflecting the impact of rising
medical severity.
The ratings also consider ProAssurance Group’s operating
performance, which remains adequate, despite some deterioration
over the past five-year period. The group’s operating results were
impacted by the large national healthcare account’s non-renewal and
the challenging loss environment in the specialty property/casualty
segment’s healthcare professional liability and workers
compensation segments, reflecting ongoing significant increases in
average claim costs. Operating performance results and
profitability in 2023 and through the first quarter of 2024 were
bolstered by net investment income following the reallocation of
investments and the continuation of higher yields. The ratings also
consider the group’s national market position as one of the leading
medical professional liability insurers in the United States with
its breadth of product offerings across multiple disciplines, and
geographic diversification. The ratings also recognize the group’s
developed ERM framework and risk management capabilities across the
organization.
The ratings also benefit from the financial flexibility afforded
by PRA, the ultimate parent via access to the capital markets.
PRA’s financial leverage is modest with adequate interest coverage,
holding a significant amount of cash and short-term investments
outside the insurance operations, which are available for use
without regulatory approval or restriction. However, surplus growth
has been limited over the most recent five-year period due to
significant payments of dividends to PRA, which the parent has
utilized for company stock repurchases and payment of shareholders’
dividends, and unrealized capital losses partially offsetting
profitability. Management continues to remain committed to
maintaining capital strength at its rated entities at levels
commensurate with their ratings.
The stable outlooks reflect AM Best’s expectation that the group
will maintain its strongest level of balance sheet strength
assessment, supported by effective capital management, while
ongoing initiatives implemented by management will maintain stable
operating performance, supported by its favorable business
profile.
Negative rating actions may occur if the group’s loss experience
continues to impact underwriting profitability negatively and leads
to further deterioration in operating performance trends. Negative
rating action may also occur if the group's balance sheet strength
weakens, which could result from deterioration of risk-adjusted
capitalization or further adverse reserve development in its
workers compensation or medical professional liability books from
rising claims frequency or severity, or changes in regulatory,
legislative and judicial actions. While unlikely in the near term,
positive rating actions may occur following a positive trend in
operating performance metrics that outpaces the group’s peers and
materially contributes to surplus growth.
The FSR of A (Excellent) and the Long-Term ICRs of “a+”
(Excellent) have been affirmed, with stable outlooks for the
following members of ProAssurance Group:
- ProAssurance Indemnity Company, Inc.
- ProAssurance Specialty Insurance Company
- Medmarc Casualty Insurance Company
- ProAssurance Insurance Company of America
- ProAssurance American Mutual, A Risk Retention Group
- Allied Eastern Indemnity Company
- Eastern Advantage Assurance Company
- Eastern Alliance Insurance Company
- NORCAL Insurance Company
- NORCAL Specialty Insurance Company
- Medicus Insurance Company
- FD Insurance Company
- Preferred Physicians Medical Risk Retention Group, a Mutual
Insurance Company
The following indicative Long-Term IRs under the shelf
registration have been affirmed with stable outlooks:
ProAssurance Corporation— -- “bbb+” (Good) on senior unsecured
debt -- “bbb” (Good) on senior subordinated debt -- “bbb-” (Good)
on preferred stock
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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2273 vicky.riggs@ambest.com
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