Best’s News & Research Service - May 22, 2015 09:24 AM (EDT)
A.M. Best Assigns Ratings to Coverys Specialty Insurance Company
Oldwick //BestWire// - A.M. Best has assigned a financial strength rating of A (Excellent) and an issuer credit rating of "a" to Coverys Specialty Insurance Company (Coverys Specialty) (Morristown, NJ). The outlook assigned to both ratings is stable.
These ratings recognize the implementation of a quota share reinsurance agreement between Coverys Specialty and Medical Professional Mutual Insurance Company (ProMutual) (Boston, MA), the lead company of Coverys Companies (Coverys). In addition to providing substantial reinsurance support to Coverys Specialty, ProMutual will provide the company with administrative and managerial services. Coverys Specialty also will benefit from ProMutual's leadership position in the medical professional liability market, its long-term profitable operations and the continued support for its policyholders through strong patient safety and risk management programs. Additionally, despite Coverys Specialty's status as a start-up, it is insulated from underwriting risks such as adverse loss experience or insufficient rate structure and the stresses these risks could cause on resources due to its quota share arrangement. Partially offsetting these positive rating factors are the market risks inherent within the medical professional liability insurance sector, including tort reform, price competition and regulatory trends.
Coverys Specialty intends to complement Coverys' expertise in medical professional liability insurance across the United States by providing coverage and service to potential policyholders beyond physicians, physician groups and hospitals to regional health care systems, teaching institutions and specialty providers on an excess and surplus lines basis.
Because of the depth of the relationship between the two organizations, changes in the ratings of ProMutual may impact Coverys Specialty's ratings. Positive rating actions would be driven by underwriting results or loss experience that demonstrates superiority to other medical professional liability insurance providers, as reflected in accident-year loss and LAE (loss adjustment expense) ratios and combined ratios. The ratings could be negatively impacted if capital adequacy declines materially due to higher reserve requirements resulting from weakening loss experience also reflected in prospective loss and LAE ratio and combined ratio deterioration trends.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology .
Key insurance criteria reports utilized:
- Rating Members of Insurance Groups
- Rating New Company Formations
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
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 visit A.M. Best's Ratings & Criteria Center.
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