OLDWICK, N.J.--(BUSINESS WIRE)--March 4, 2005--A.M. Best Co. has
placed the financial strength rating of A- (Excellent) of ProAssurance
Group (ProAssurance) (Birmingham, AL) under review with negative
implications following the February 28, 2005, announcement that it has
entered into an agreement that provides for NCRIC Group (Washington,
DC) to be merged into ProAssurance through an all stock transaction.
Concurrently, A.M. Best has placed the debt rating of "bbb-" assigned
to ProAssurance Corporation's (PRA) (NYSE: PRA) $100 million, 20-year
senior unsecured convertible debentures and the issuer credit rating
of "bbb-" under review with negative implications. The negative
implications signal that the ratings could either remain the same or
be downgraded following the completion of the under review process.
The proposed transaction is valued at $69.6 million and values
NCRIC at $10.10 per share based on the closing price of PRA's common
stock on February 28, 2005. Should the transaction be completed, NCRIC
Group is expected to be positioned as a sister company to PRA's main
insurance subsidiaries within the organization.
A.M. Best believes that there is uncertainty related to the
prospective operating performance and capitalization of the newly
formed entity largely due to the adverse loss reserve development
experienced by NCRIC Group. Although ProAssurance has reported strong
operating results in the past two years and has demonstrated success
in its past experiences of acquiring companies, the group's
risk-adjusted capitalization is at the lower end of an acceptable
level for its current rating. A.M. Best believes that any required
capital infusions into NCRIC could have adverse effects on the
consolidated group's capitalization. However, A.M. Best recognizes
ProAssurance's ability to acquire additional capital in the public
markets and the potential for capital growth through earnings prior to
closing. This rating action is based on the current capital structure
of ProAssurance and is subject to change based on the outcome of
meetings that A.M. Best will conduct with ProAssurance's management
prior to the close of the transaction. A.M. Best will fully review the
newly integrated entity's operating plan, the 2004 loss reserve
analysis of each statutory operating unit and ProAssurance's capital
position at the time of close. The transaction is expected to close
during the third quarter of 2005 and still requires regulatory and
NCRIC shareholder approval.
The financial strength rating of A- (Excellent) has been placed
under review with negative implications for ProAssurance Group and its
following subsidiaries:
-- Medical Assurance Company, Inc.
-- ProNational Insurance Company
-- Red Mountain Casualty Insurance Company, Inc.
The following debt rating has been placed under review with
negative implications:
ProAssurance Corporation--
-- "bbb-" on senior unsecured convertible debentures
The following indicative ratings have been placed under review
with negative implications for securities available under the existing
shelf registration:
ProAssurance Corporation--
-- "bb" on preferred stock
-- "bbb-" on senior unsecured notes
-- "bb+" on subordinated notes
The issuer credit rating of "bbb-" of ProAssurance Corporation has
been placed under review with negative implications.
For Best's Ratings, an overview of the rating process and rating
methodologies, please visit http://www.ambest.com/ratings.
For current Best's Ratings, independent data and analysis on more
than 3,000 individual property/casualty companies, groups and industry
composites, please visit http://www.ambest.com/pc.
A.M. Best Co., established in 1899, is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit A.M. Best's Web site at http://www.ambest.com.
CONTACT: A.M. Best Co.
Public Relations:
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Striegel, 908-439-2200, ext. 5378
rachelle.striegel@ambest.com
or
Analysts:
Devin Inskeep, 908-439-2200, ext. 5449
devin.inskeep@ambest.com
or
Joseph Roethel, 908-439-2200, ext. 5630
joseph.roethel@ambest.com
SOURCE: A.M. Best Co.