OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of Plans’ Liability Insurance Company (Plans’ Liability) (headquartered in Oakbrook Terrace, IL).
The outlook revision largely reflects sizable underwriting losses in each of the last three years, driven by poor calendar year underwriting results and significant adverse development of loss reserves for accident year 2012, and the associated reduction in surplus and risk-adjusted capitalization. Most of the adverse development was associated with class-action lawsuits (now consolidated) against several Blue Cross and Blue Shield companies (BCBS companies) reinsured by Plans’ Liability.
Plans’ Liability’s ratings reflect its strong but declining level of risk-adjusted capitalization, which remains fully supportive of the rating, historically favorable operating performance and the benefits it derives from its affiliation with a number of BCBS companies.
Offsetting these positive rating factors are the company's limited product diversification, volatile underwriting results, continued competitive market conditions, expense ratio disadvantage and dependence on an affiliate for core business functions.
A.M. Best does not anticipate positive rating actions over the near to intermediate term, although a sustained improvement in underwriting and operating results could drive positive movement of the rating outlook.
Factors that could lead to negative rating actions include a material deviation from the company's financial projections and/or a significant decline in its risk-adjusted capitalization.
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.
Key insurance criteria reports utilized:
- Alternative Risk Transfer (ART)
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
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 visit A.M. Best’s Ratings & Criteria Center.
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