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FOR IMMEDIATE RELEASE
OLDWICK - JULY 22, 2016 10:49 AM (EDT)
A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of ProAssurance Casualty Company, ProAssurance Indemnity Company, Inc., ProAssurance Specialty Insurance Company, Inc., and ProAssurance American Mutual, A Risk Retention Group (RRG). The companies are collectively referred to as ProAssurance Group (ProAssurance). The outlook for each rating is stable. All companies are headquartered in Birmingham, AL.
Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the ICRs of “a” of Medmarc Casualty Insurance Company (Medmarc) and Noetic Specialty Insurance Company (Noetic). The outlook for the FSR remains stable, while the outlook for the ICRs remains positive. Both companies are headquartered in Chantilly, VA.
Additionally, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a” of Podiatry Insurance Company of America (PICA). The outlook for the ICR has been revised to positive from stable, while the outlook for the FSR remains stable. At the same time, A.M. Best has affirmed the FSR of A- (Excellent) and the ICR of “a-” of PACO Assurance Company, Inc. (PACO). The outlook for each rating remains stable. Both companies are headquartered in Franklin, TN.
A.M. Best also has affirmed the FSR of A (Excellent) and the ICRs of “a+” of Eastern Alliance Insurance Company, Allied Eastern Indemnity Company and Eastern Advantage Assurance Company (collectively referred to as the Eastern Alliance Insurance Group [EAIG]) (all companies are domiciled in Lancaster, PA) and Eastern Re Ltd., SPC (Eastern Re) (Grand Cayman, Cayman Islands). The outlook for each of these ratings is stable.
All of these companies are indirect subsidiaries of ProAssurance Corporation (PRA) [NYSE:PRA].
Along with these rating actions, A.M. Best has affirmed the ICR of “a-” of PRA, including the “a-” issue rating of PRA’s $250.0 million 5.30% 10-year senior unsecured notes, due 2023.The outlook for each rating remains stable. A.M. Best also has assigned the indicative issue ratings under the shelf registration of “a-” on the senior unsecured debt, “bbb+” on the senior subordinated debt and “bbb” on the preferred stock of PRA. The outlook assigned to each of these ratings is stable. The new shelf registration replaces PRA’s previous shelf registration, which expired May 23, 2016. Consequently, the indicative ratings for the previous shelf registration have been withdrawn.
The rating affirmations of ProAssurance’s members reflect their strong risk-adjusted capitalization, favorable operating performance and strong business profile primarily in the medical professional liability (MPL) insurance sector. The group’s ongoing underwriting success is credited to management’s conservative reserving practices, disciplined underwriting standards, and proactive legal defense and claims handling philosophy. The ratings also consider the group’s market position across multiple jurisdictions and diversification across multiple disciplines within the MPL space.
These ratings also acknowledge the depth and breadth of ProAssurance’s enterprise risk management programs and policies. In addressing challenges in a prolonged, soft MPL market, management has leveraged its talent, knowledge base and market position to introduce innovative alternatives.
The rating affirmations of Medmarc and Noetic reflect ongoing improvements in underwriting results after re-underwriting their multinational, large account medical device book of business since 2011 and expanded provision of its legal professional liability (LPL) book by writing small-firm coverage and renewing coverage previously written by ProAssurance Casualty Company. The companies have improved the performance of their LPL book of business by bringing in house the underwriting and claims management processes. Management has ensured the entities have retained supportive capital adequacy through the processes. The ratings of Medmarc and Noetic also reflect their excellent capital positions, ongoing strong operational results and their positions in the market as leaders in medical device product liability.
The rating affirmations of PICA and PACO reflect the two companies’ respective supportive capital positions and generally improved operating performance since being acquired by PRA in 2010. The companies broadened PRA’s MPL lines of business to include podiatrists at PICA and chiropractors and acupuncturists at PACO, niche medical specialties with favorable loss parameters. The companies’ underwriting has been modestly profitable, benefiting from favorable industry trends in claims and losses in lower-risk lines of business during a softening market.
EAIG members’ and Eastern Re’s rating affirmations reflect their respective balance sheet strength, strong underwriting and overall operating performance, in addition to well-defined business profiles and an experienced, shared management team. The members of EAIG, which operate under an intercompany pooling reinsurance agreement, have been able to write new business by further expanding its programs in the eastern half of the United States after being concentrated in Pennsylvania. In addition, Eastern Re added three new protected cells to its predominately workers’ compensation segregated portfolio platform in 2015, including its first commingling of workers’ compensation and MPL coverage into a single cell. However, several of the cells within Eastern Re fall short of supporting the overall company’s consolidated financial strength and remain a concern.
As PRA is a publicly traded organization on the New York Stock Exchange, these ratings also reflect the financial flexibility afforded to all of PRA’s subsidiaries. PRA’s financial leverage is very conservative, interest coverage is strong, and it holds significant levels of cash and short-term investments outside of the insurance operating companies that are available for use without regulatory approval. Additional factors supporting the rating affirmations include the extensive operational support and industry expertise available across the organization.
This press release relates to rating(s) 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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.