OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and the issuer credit rating to “a” from “a-” of Coastal Medical Insurance, Ltd. (Coastal) (Hamilton, Bermuda). The outlook for both ratings has been revised to stable from positive.
The ratings reflect Coastal’s excellent risk-adjusted capitalization and operating performance, strong liquidity position, expanded and sophisticated risk management strategy and practices, conservative investment strategy and its management team’s extended experience in the industry.
Partially offsetting these positive rating factors are Coastal’s limited market. However, these concerns are mitigated due to the explicit as well as implicit parental support of Meridian Health System (Meridian), the strategic importance of Coastal within the overall risk management program of Meridian and its mission of providing an affordable and stable program of self-insurance.
The company was formed on June 17, 1998 in Bermuda to self-insure the risks of Meridian together with those entities related through common control, affiliation agreements or close working relationships and to access the reinsurance marketplace. Meridian’s risk management and insurance department provides important supporting services to the parties indemnified and reinsured by Coastal. Meridian’s risk management program for the hospital system establishes risk control policies and procedures, which include safety education, data collection and evaluation, claims management and risk financing. The ratings also take into consideration the role Coastal serves in providing a discipline program of hospital and physician professional and general liability self-insurance to Meridian.
A.M. Best views Coastal’s management and corporate strategy as a strength to its ratings, given the conservative risk limits on its underwriting, operational goals and transparency. A.M. Best views the company’s risk management practices as excellent given the impact on its conservative risk culture, defined risk controls and capital and surplus. Other rating factors considered include, but are not limited to, the diversification in Coastal’s line of business, geography and investments, and its panel of well-capitalized and highly rated reinsurers. Additionally, the support and commitment of Meridian and the captive’s mission have been considered as positive rating factors.
Coastal’s ratings are not expected to be upgraded or its outlook revised within the next 12-24 months, as the company’s operating performance and capital position already have been considered in the ratings process. A.M. Best could downgrade the ratings and/or revise the outlook if the company’s Best's Capital Adequacy Ratio (BCAR) score declines, operating performance and risk profile deteriorate, losses deplete capital, significant changes and turnover occur in its management team and/or risk management controls and tolerances, and deterioration occurs in the parent’s performance.
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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