Best’s News & Research Service - November 07, 2016 04:14 PM (EST)
A.M. Best Comments on Credit Ratings of the Members of NORCAL Group
- November 07, 2016 04:14 PM (EST)
Oldwick //BestWire// - A.M. Best has commented that the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of the members of NORCAL Group (NORCAL) remain unchanged following the recent announcement by NORCAL that they have entered into a definitive agreement to acquire PPM Services, Inc. (PPM). The Credit Ratings (ratings) remain unchanged for the group members: NORCAL Mutual Insurance Company (San Francisco, CA), NORCAL Specialty Insurance Company (Mechanicsburg, PA), Medicus Insurance Company (Austin, TX) and FD Insurance Company (Jacksonville, FL). The outlook of these ratings remains negative.
On Nov. 4, 2016, NORCAL announced that it would acquire PPM from its shareholders, which are the policyholders of Preferred Physicians Medical Risk Retention Group, Inc. (Preferred Physicians). As a result of this transaction, NORCAL will obtain effective control of Preferred Physicians. The acquisition is expected to provide NORCAL with further geographic diversification as well as diversification within its medical professional liability footprint, by adding a very profitable risk retention group specializing in covering anesthesiologists. Management expects that, along with the group’s current initiatives, the consolidation of Preferred Physicians into NORCAL will improve prospective operating performance. However, in A.M. Best’s opinion, an immediate change in the ratings or outlook is not warranted at this time.
The closing is expected to take place in the first quarter of 2017, and is subject to regulatory approvals and other customary closing conditions. A.M. Best will continue to monitor the progress of the transaction and evaluate any developments and implications for impact on the ratings.
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.
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