OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Ohio Bar Liability Insurance Company (OBLIC) (Columbus, OH).
The rating affirmations reflect OBLIC’s solid risk-adjusted capitalization, conservative operating strategy and historically strong overall profitability. The ratings also consider the company’s leadership position in providing lawyers’ professional liability insurance (LPLI) to sole practitioners and smaller-size law firms operating in Ohio. These positive rating factors are primarily derived from OBLIC’s continued focus and commitment to attorneys in Ohio by maintaining stability in the state’s LPLI market and offering high quality service to its policyholders.
These positive rating factors are partially offset by OBLIC’s concentration of risk by writing one line of business in a single state. This increases its susceptibility to adverse loss trends and economic conditions, as well as challenges in the regulatory or legislative environments. Operating performance was impacted by an upward trend in loss ratios during 2010 and 2011 due primarily to unexpected claims severity, including moderately higher defense costs. Management responded by conducting market research and pricing studies. Through this, OBLIC initiated changes to deductible credits, area of practice debits and firm size discounts, which led to higher overall rates to generate additional premium.
A.M. Best revised the outlook for the ratings of OBLIC based on the recent improvement in its underwriting and operating profitability during the past two years. This has restored growth in surplus despite the impact of stockholder dividends. Management has stabilized after significant turnover in 2010 and 2011 and put increased focus on pricing and reserving.
The ratings of OBLIC could be downgraded as a result of a significant decline in its risk-adjusted capitalization or a trend of adverse underwriting performance such as from elevated loss costs and/or inadequate loss reserves. Positive rating actions could result from long-term favorable results stemming from measures taken to restore the company’s underwriting and operating performance, and the continued generation of surplus in order to maintain strong capitalization.
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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