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FOR IMMEDIATE RELEASE
OLDWICK - MAY 07, 2014 02:56 PM (EDT)
A.M. Best has removed from under review with negative implications and affirmed the financial strength rating of A (Excellent) and issuer credit ratings of "a" of Pacific Specialty Insurance Company (Pacific Specialty) (Menlo Park, CA) and its wholly owned subsidiary, Pacific Specialty Property and Casualty Company (Austin, TX). The outlook assigned to all ratings is stable.
In January 2013, the ratings of Pacific Specialty were placed under review reflecting A.M. Best's uncertainty concerning the organization's ultimate control and future strategic direction given the director and shareholder initiated litigations. The rating actions also reflected concern with Pacific Specialty's ability to execute its business plan successfully.
The rating affirmations acknowledge Pacific Specialty's continued excellent risk-adjusted capitalization following an extraordinary dividend that was paid to its parent, Western Service Contract Corp, to settle various litigations at the holding company. Furthermore, following the appointment of new board members, a chief executive officer and a wide-ranging review of Pacific Specialty's operations and its parent's post-settlement financial condition, A.M. Best's concerns have been alleviated. The stable outlook acknowledges A.M. Best's expectation that Pacific Specialty will continue to maintain its supportive level of capitalization, prospectively.
Key rating triggers that could result in positive rating actions would be for Pacific Specialty to have a steady growth of surplus through investments and underwriting, meeting and/or exceeding its business plan over the long term.
Key rating triggers that could result in negative rating actions would be the organization not executing its business plan over the long term and/or having large losses that would reduce its risk-adjusted capital.
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.