JUNE 16, 2020 02:55 PM (EDT)
AM Best Affirms Credit Ratings of Members of MedPro Group
FOR IMMEDIATE RELEASE
OLDWICK - JUNE 16, 2020 02:55 PM (EDT)
The ratings reflect MedPro’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.
The ratings also acknowledge MedPro’s strongest risk-adjusted capitalization, long-term profitable operating performance and the leading market position it maintains in the medical professional liability (MPL) sector. Additionally, the ratings consider the group’s substantial distribution capabilities, prudent claims-handling philosophy and culture of maintaining a margin of safety. Furthermore, the ratings benefit from the explicit and implicit financial support provided by its affiliate, National Indemnity Company, and MedPro’s ultimate parent, Berkshire Hathaway Inc. [NYSE: BRK A and BRK B], which includes reinsurance programs, investment opportunities and capital support.
Partially offsetting these positive rating factors are the inherent challenges associated with being a predominately monoline MPL insurer, particularly as they relate to price competition, changing market dynamics, potential changes in legislation (i.e., tort reform), increasing loss cost trends and regulatory risk. At the same time, AM Best recognizes the organization’s strong management team, broad premium base and jurisdictional diversity, which have resulted in MedPro outperforming its peers over the longer term.
In 2020, the group has experienced balance sheet volatility due to equity market devaluations related to COVID-19. The group’s large allocation in common stocks exposes them to significant volatility. However, the group is well-positioned to accept this risk due to their low underwriting leverage and the investment managers’ historical trend of success in volatile markets. AM Best also conducted stress tests on the group’s risk-adjusted capitalization, which incorporate multiple assumptions related to the market impact of COVID-19. MedPro performed well under all stressed scenarios, and management believes the impact of COVID-19 will be manageable.
Downward rating pressure may result from a material decrease in risk-adjusted capitalization. Downward rating pressure also may result should the group’s relationship with Berkshire Hathaway Inc. or National Indemnity Company change, which also would result in a diminution of the business profile.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.