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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 23, 2013 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” and revised the outlook to stable from negative for ALPS Property & Casualty Insurance Company dba Attorneys Liability Protection Society, A Risk Retention Group (ALPS) (Missoula, MT).
The ratings of ALPS reflect its good risk-adjusted capital position, high policyholder retention, established relationships with various State Bar Associations and its geographic spread of risk. The company’s pre-tax operating performance has been positive on an overall basis during the previous five-year period, as prior year loss reserves have developed favorably. The positive rating factors are derived from ALPS’ re-focused operating strategies, efficient claims handling and customer-driven management philosophy. Also, management has tightened its underwriting criteria in recent years, resulting in some rate increases and the non-renewal of unprofitable firms while improving its book. Premium rates were further increased in 2012, which resulted in ALPS’ improved underwriting performance.
Partially offsetting these positive rating factors are ALPS’ concentration risk being a one-line writer, its fluctuating underwriting results, which included sizeable losses in 2009 and 2011, variability in surplus levels, high common stock leverage and volatility in operating performance.
The outlook is reflective of the recent improvement in ALPS’ operating results. While a modest underwriting gain was observed in 2012, sustained improvement in operating performance is expected going forward.
Adverse rating actions could occur if there is a deterioration in underwriting performance from elevated loss costs due to claim severity and/or inadequate loss reserves, or a decline in premium revenue. Additionally, if capitalization were to decline from poor operating results, which could include investment losses, negative rating actions would be possible.
Positive rating actions for ALPS could occur from long-term favorable results stemming from initiatives already put in place to restore the company’s underwriting performance to profitability while demonstrating less volatility in operating profitability going forward and maintaining supportive capitalization.
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.
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.