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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 29, 2009 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating of "a" of Pharmacists Mutual Insurance Company (Pharmacists Mutual).
Concurrently, A.M. Best has revised the outlook to negative from stable and downgraded the FSR to B+ (Good) from B++ (Good) and ICR to "bbb-" from "bbb" of Pharmacists Life Insurance Company (Pharmacists Life). All companies are domiciled in Algona, IA.
The ratings of Pharmacists Mutual reflect its favorable operating performance, niche market profile as a leading insurer dedicated to the pharmacists industry and excellent geographic diversification. Pharmacists Mutual has specialized in providing commercial and professional liability coverage for pharmacies and pharmacy owners for 100 years.
The ratings also recognize Pharmacists Mutual's consistently high customer retention ratios in recent years, further demonstrating its solid standing within this specialty market.
These positive rating factors are offset by Pharmacists Mutual's recent deterioration in risk-adjusted capitalization driven by the widespread financial crisis and sharply lower stock market. The negative outlook reflects the company's marginally supportive capitalization and susceptibility to additional investment losses.
The ratings of Pharmacists Life are the result of its net operating losses over the past five years, negative impact of investment impairments, as well as a large amount of unrealized investment losses relative to its statutory surplus funds and its overall modest contribution to the parent organization, Pharmacists Mutual.
Partially offsetting these rating factors is the significant role Pharmacists Life holds within Pharmacists Mutual from a marketing perspective. Pharmacists Life specializes in marketing to the well established pharmacists-based marketplace and has financial support from the parent organization.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
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.