OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a financial strength rating of B+ (Good) and an issuer credit rating of “bbb-” to Texas Hospital Insurance Exchange (THIE) (Austin, TX). The outlook assigned to both ratings is stable.
The ratings of THIE are reflective of its supportive risk-adjusted capitalization, operating profitability and judicious reserving practices. These positive rating factors are partially offset by THIE's narrow geographic spread of risk, highly competitive operating environment and elevated expense ratio levels. The outlook is based on the company’s prospects of continued operating profitability through price and reserve adequacy while maintaining supportive capital.
The ratings also acknowledge THIE's business focus as it provides commercial insurance products to small and rural Texas hospitals. This focus has led to high policyholder retention levels, favorable operating results and stronger capitalization. THIE has also benefited from prior-year loss reserve releases over the past few years as loss trends have been better than what were originally anticipated.
However, the company writes only in Texas, subjecting its results to changes in the economic, regulatory and judicial environments, competitive market conditions, as well as changes in medical professional and health care market dynamics throughout the state.
Factors that could lead to positive rating actions include sustained favorable performance on an underwriting and operating basis, consistent generation of surplus and the maintenance of strong capitalization. Negative rating actions could occur if risk-adjusted capitalization decreases or should a trend of unfavorable earnings from underwriting or investment losses develop.
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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