AUGUST 23, 2019 11:46 AM (EDT)
AM Best Affirms Credit Ratings of Protective Insurance Corporation and Its Subsidiaries
Senior Financial Analyst
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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 23, 2019 11:46 AM (EDT)
AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Protective Insurance Company (PIC) and its wholly owned subsidiary, Sagamore Insurance Company (Sagamore). These companies collectively are referred to as Protective Insurance Corporation Group. AM Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” of Protective Specialty Insurance Company (Protective Specialty). Concurrently, AM Best has affirmed the Long-Term ICR of “bbb” of Protective Insurance Corporation, the organization’s publicly traded ultimate parent [NASDAQ: PTVCA, PTVCB]. The outlook of these Credit Ratings (ratings) remains negative. All companies are domiciled in Carmel, IN.
The ratings reflect the group’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The ratings of Protective Specialty reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, very limited business profile and appropriate ERM.
The group reported underwriting losses in 2017, 2018 and the first six months of 2019 due to increased loss costs in the commercial auto sector. It also had three consecutive years of adverse reserve development. The new management team has taken remedial actions, including rate increases, re-underwriting the book of business and exiting unprofitable segments. The negative outlooks reflect the challenge the company is facing in a sector with loss cost trends that continue to rise, as well as the execution risks of its turnaround efforts. AM Best expects management to continue implementing the current strategy of improving its underwriting and reserving, while strengthening its ERM capabilities. The turnaround efforts could take one to two years to manifest itself in its financial results.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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