OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has upgraded the financial strength rating (FSR) to
A (Excellent) from A- (Excellent) and issuer credit ratings (ICR) to "a"
from "a-" of ProAssurance Group (ProAssurance) and its group
rated members. A.M. Best also has upgraded the ICR to "bbb" from "bbb-"
of ProAssurance's parent holding company, ProAssurance Corporation (PRA)
(NYSE: PRA). The outlook for these ratings has been revised to stable
from positive.
Concurrently, A.M. has upgraded the ICR to "bbb+" from "bbb" and
affirmed the FSR of B++ (Good) of ProAssurance National Capital Insurance
Company (ProAssurance National) (Washington, DC). In addition, A.M.
Best has affirmed the FSR of A- (Excellent) and ICR of "a-" of ProAssurance
Wisconsin Insurance Company (ProAssurance Wisconsin) (Madison, WI).
At the same time, A.M. Best has affirmed the FSRs of A- (Excellent) and
ICRs of "a-" of The PICA Group, its member and PACO Assurance
Company, Inc. (Illinois), which were recently acquired. The
outlook for these ratings is stable. (See below for a detailed list of
the companies and ratings.)
These rating actions follow the positive outlook, which was assigned to
ProAssurance in June 2008 and takes into consideration the group's
consistently strong operating performance over the last several years.
The rating upgrades further reflect ProAssurance's excellent risk
adjusted capitalization, conservative reserving and investing practices
and its business position as one of the leading writers of medical
professional liability insurance in the United States.
A.M. Best also recognizes the additional geographical and line of
business diversification that PRA has achieved through three
acquisitions in 2009. With the additions of The PICA Group, Georgia
Lawyers Insurance Company and Mid-Continent General Agency, PRA has
added to the number of states in which it writes, while considerably
expanding its reach into the medical professional liability, lawyer
professional liability and ancillary healthcare lines. PRA's strong
management team has extensive experience in the merger and acquisition
arena, which largely mitigates any integration concerns. Furthermore,
the integration risk of The PICA Group is minimal, as it will operate as
a stand-alone subsidiary.
Additionally, the ratings consider the financial flexibility that PRA
provides to the operating companies. PRA's financial leverage (total
debt/total capital) was a modest 2.4% at year-end 2008, following the
redemption of over $107 million in convertible senior debentures in July
2008 and the reacquisition of $23 million in outstanding notes in
December 2008. PRA's interest coverage remains exceptionally strong, and
it currently holds a substantial amount of cash and short-term
investments outside of its insurance subsidiaries, which is available
for use without regulatory approval.
Partially offsetting these rating strengths are the inherent challenges
associated with the medical professional liability insurance sector as
it relates to price competition, legislative (tort) reform, loss cost
trends and regulatory challenges. An additional factor is the history of
moderate fluctuations in ProAssurance's earlier operating results,
driven by adverse reserve development in older accident years. However,
more recent reserve development has been favorable, reflecting
management's corrective actions and general market conditions.
The FSR has been upgraded to A (Excellent) from A- (Excellent) and the
ICRs to "a" from "a-"for ProAssurance Group and its following
members:
-- ProAssurance Indemnity Company, Inc.
-- ProAssurance Casualty Company
-- ProAssurance Specialty Insurance Company, Incorporated
The FSR of A- (Excellent) and ICRs of "a-" have been affirmed for The
PICA Group and its member, Podiatry Insurance Company of America.
For Best's Credit Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including
any additional methodologies and factors that may have been considered,
can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit
rating organization dedicated to serving the financial and health care
service industries, including insurance companies, banks, hospitals and
health care system providers. For more information, visit www.ambest.com.
Source: A.M. Best Co.
Contact: A.M. Best Co.
Analysts
Greg Williams, 908-439-2200, ext. 5815
greg.williams@ambest.com
or
Henry Witmer, 908-439-2200, ext. 5097
henry.witmer@ambest.com
or
Public Relations
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com