Press Release - NOVEMBER 28, 2018
A.M. Best Upgrades Credit Ratings of Texas Hospital Insurance Exchange
FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 28, 2018
The Credit Ratings (ratings) reflect THIE’s balance sheet strength, which A.M. Best categorizes as adequate, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
The rating upgrades reflect A.M. Best’s opinion that THIE’s management has taken significant actions toward implementing an ERM framework that is viewed as appropriate for the company’s risk profile. In addition to implementing risk mitigation strategies that address tail-risk events related to potential man-made catastrophes, the company’s adequate ERM also reflects its continued strong operating and underwriting performance over time and through market cycles.
The adequate balance sheet strength assessment reflects THIE’s strongest risk-adjusted capitalization, history of organic surplus growth and favorable loss reserve development, partially offset by its limited scale and financial flexibility. In addition, a significant percentage of policyholders’ surplus pertains to subscriber savings, which are earmarked to be repaid to the company’s members, beginning five years after a subscriber leaves THIE.
In A.M. Best’s opinion, the quality of THIE’s capital is diminished by the subscriber savings. While THIE’s balance sheet strength is categorized currently as adequate, anticipated balance sheet strengthening through continued strong operating results over a period of time is the primary driver behind the positive outlooks.
Partially offsetting these positive rating factors is THIE’s limited business profile and narrow spread of risk, with a primary focus on writing workers’ compensation and medical professional liability (MPL) insurance for small rural hospitals in Texas.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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