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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 11, 2016 12:56 PM (EDT)
A.M. Best has downgraded the financial strength rating to B+ (Good) from B++ (Good) and the issuer credit rating to “bbb-” from “bbb” of Plans’ Liability Insurance Company (Plans’ Liability) (headquartered in Oakbrook Terrace, IL). The outlook for each rating remains negative.
The rating downgrades reflect the deteriorating underwriting and operating results over the most recent five-year period, driven by poor underwriting performance and significant adverse loss reserve development. As a result, surplus has substantially decreased by approximately 37% over the past five years through 2015 and risk-adjusted capitalization has significantly weakened. Negative trends continued to be experienced through the first quarter of 2016. Pursuant to a reinsurance treaty, Plans’ Liability reinsures BCS Insurance Company for D&O/E&O coverage, which is subject to low frequency, high severity claims.
Plans’ Liability’s ratings reflect its solid, although deteriorating, level of risk-adjusted capitalization, relatively conservative investment portfolio resulting in consistent yet declining net investment income year over year, and benefits derived from its affiliation with a number of BCBS companies, including its enterprise risk management program.
Offsetting these positive rating factors are the company’s limited product diversification associated with dependence on its affiliate for core business functions, volatile underwriting results further impacted by adverse reserve development, continued competitive market conditions, and deteriorating operating measures which collectively have resulted in a considerable surplus decrease.
A.M. Best does not anticipate positive rating actions over the near to intermediate term. Factors that could lead to further negative rating action include a material deviation from the company’s submitted strategy and financial projections, a significant decline in risk-adjusted capitalization, or if operating performance falls markedly short of A.M. Best’s expectations.
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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