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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 22, 2008 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and issuer credit rating to "a-" from "bbb+" of Preferred Professional Insurance Company (PPIC) (Omaha, NE). The outlook for both ratings has been revised to stable from positive.
These ratings actions follow the positive rating outlook that was assigned to PPIC in June 2007 and takes into consideration the company's strong operating performance in 2007 and the first quarter of 2008. The ratings also recognize PPIC's strengthened risk-adjusted capitalization, which has benefited from an enhanced capitalization process and organic surplus growth. The ratings also reflect PPIC's good geographic spread of risk, conservative reserving practices and efficient direct distribution system. PPIC provides professional liability insurance and risk management services to physician and medical organizations associated with their Catholic healthcare owner systems. As such, the company maintains superior policyholder retention levels through its high level of customer service provided to these nineteen owner systems, of which eighteen are directly involved in the delivery of healthcare.
Partially offsetting these positive rating factors is PPIC's high ceded reinsurance leverage and product concentration of risk, which increases its susceptibility to adverse economic, competitive, regulatory or legislative changes. Much of the ceded reinsurance leverage is derived from business written on a fronted basis with 100% quota share reinsurance treaties with captives of PPIC shareholders. The reserve recoverables from the captives are collateralized by letters of credit and/or assets pledged to PPIC.
For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.