OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a financial strength rating of A (Excellent) and an issuer credit rating of “a” to COPIC, A Risk Retention Group (COPIC RRG) (District of Columbia). The outlook assigned to both ratings is stable.
COPIC RRG’s ratings reflect its excellent risk-adjusted capitalization, A.M. Best’s expectation of modest favorable operating performance (being a start-up company) and strong reinsurance protection. Its initial capital was provided by its sponsor, COPIC Trust (Trust). Significant reinsurance support is provided to COPIC RRG by COPIC Insurance Company (COPIC), the lead company of COPIC Companies (a diversified service organization dedicated to anticipating and meeting the needs of Colorado’s health care community), and a subsidiary of Trust.
These positive rating factors are partially offset by COPIC RRG’s risk of adverse losses from being a start-up company and expanding into new states, the concentration risk of primarily writing one line of business in a somewhat limited geographic area and the amount of initial capital contributed that is somewhat low. The ratings further reflect the limited permanency of capital as COPIC RRG’s entire capital is in the form of a 20-year surplus note. However, this is mitigated by the long maturity of the note and the anticipated very low underwriting leverage represented in COPIC RRG’s business plan. The company maintains a conservative investment portfolio with minimal returns expected. Therefore, underwriting performance will be the primary driver of surplus growth.
The outlook is based upon the organization’s conservative pricing and reserving practices and strong business position in its medical professional liability insurance markets.
Positive rating actions could occur from COPIC RRG having a long-term continuation of strong underwriting results, as well as careful evaluation of enterprise risk management risks and opportunities with appropriate actions taken to enhance the value of the company for its insureds and owners.
The outlook for the ratings may be lowered if adverse underwriting results develop from a loss of underwriting discipline, market conditions put pressure on top-line growth and/or negative investment outcomes affect surplus levels. Furthermore, negative rating actions may occur should support from COPIC be diminished or interrupted.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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.
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