Best’s News & Research Service - August 12, 2016 01:37 PM (EDT)
A.M. Best Affirms Ratings of The Doctors Co. and Several Subsidiaries; Downgrades Ratings of First Professionals Insurance Co.
- August 12, 2016 01:37 PM (EDT)
Oldwick //BestWire// - A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a” of The Doctors Company, An Interinsurance Exchange (the Doctors Company) (Napa, CA) and its wholly owned subsidiary, TDC Specialty Insurance Company (TDC) (Washington, DC). The outlook for each rating is stable.
In addition, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a” of Underwriter for the Professions Insurance Company (UPIC) (Salem, OR). At the same time, A.M. Best has affirmed the FSRs of A- (Excellent) and the ICRs of “a-”of OHIC Insurance Company (OHIC) (Columbus, OH) and American Physicians Assurance Corporation (APAC) (East Lansing, MI). The outlook for each of these ratings is stable.
Furthermore, A.M. Best has downgraded the FSR to A- (Excellent) from A (Excellent) and the ICR to “a-” from “a” of First Professionals Insurance Company (Jacksonville, FL) (FPIC). The outlook for each of these ratings is stable.
Concurrently, A.M. Best has affirmed the FSR of B++ (Good) and the ICR of “bbb+” of American Healthcare Indemnity Company (AHIC) (headquartered in Napa, CA). The outlook for each of these ratings is stable. Subsequently, A.M. Best has withdrawn the ratings, as AHIC is essentially a shell with a contingent liability for assumed reinsurance sold to an unaffiliated party in 2015.
All companies are wholly owned subsidiaries of the Doctors Company.
The rating affirmations of the Doctors Company and TDC are due primarily to strong risk-adjusted capitalization, profitable operating performance and the Doctors Company’s leading market position within the U.S. medical professional liability (MPL) sector. This position has been achieved as a result of better-than-average earnings through profitable underwriting, favorable reserve development, successful acquisitions, and strong patient safety and risk management programs. TDC’s ratings also benefit from the explicit support from the Doctors Company, which includes intercompany reinsurance.
UPIC’s ratings reflect its supportive risk-adjusted capitalization and its specialty role within the organization, assuming liabilities from the Doctors Company for death, disability and retirement coverages.
OHIC’s and APAC’s ratings reflect their strong balance sheets and run-off status, as all of their new and renewal business has been moved to the Doctors Company.
The rating downgrades of FPIC reflect the significant change in the company’s business profile, as it essentially entered run-off status in 2014. Previously, FPIC specialized in providing MPL insurance to physicians, dentists and other health care providers. FPIC was acquired by the Doctors Company group in 2011 and subsequently began moving all new business and renewing all of its existing insureds with The Exchange. Currently, FPIC is focused on running off its outstanding MPL claims, with longer-tail occurrence policies accounting for roughly 22% of loss and loss adjustment expense reserves at year-end 2015.
Offsetting these negative rating factors are FPIC’s supportive balance sheet strength, adequate liquidity and operating profitability. The ratings also benefit from the implicit support provided by the Doctors Company. The outlooks reflect A.M. Best’s expectation that FPIC will successfully administer the run-off of its portfolio and maintain solid risk-adjusted capitalization and solid liquidity throughout the run-off period.
AHIC’s ratings have been withdrawn, as the company no longer writes business.
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.
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