OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to stable from positive and affirmed the Financial Strength Ratings of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Connecticut Medical Insurance Company (CMIC) (Glastonbury, CT) and its sponsored risk retention group company, CMIC Risk Retention Group (District of Columbia). These companies are collectively referred to as Connecticut Medical Insurance Group (the group).
The revised outlooks reflect the group’s sub-par results reported over the past several years, which were well outside of A.M. Best’s expectations when the positive rating outlooks were initially assigned. The strain on underwriting results in recent years stem from the impact of prolonged soft market conditions in the medical professional liability (MPL) sector, weaker than expected results in Massachusetts and the emergence of unfavorable loss reserve development.
Despite the revised outlooks, the ratings reflect the group’s strong balance sheet strength and its long history of positive organic surplus growth, mainly attributed to profitable operating results and retained earnings. The ratings are supported by the longevity of the group’s business model through commitment, service, and focus on medical care providers in Connecticut and Massachusetts and by its extensive knowledge of the evolving MPL environment in which it operates. While the group expects to benefit from its expansion initiatives, its success in maintaining underwriting discipline while expanding its product offerings to neighboring states has yet to be determined.
In addition to the aforementioned, other offsetting rating factors include the group’s concentration of risk geographically and by product, which increases its susceptibility to underwriting cycle changes and potential changes in frequency and severity trends, as well as regulatory and tort reform issues. Furthermore, there is an added degree of risk associated with business growth outside of the group’s home state of Connecticut.
Positive credit rating action could result from successful execution of strategic growth plans while maintaining better than average earnings, strong capitalization in support of exposure growth, and a reduction of adverse reserve development. Negative credit rating action could occur from a material decrease in risk-adjusted capitalization. Negative credit rating action could also occur as a result of an unfavorable underwriting trend that may lead to below average earnings overall, further deterioration in the combined ratio, or adverse reserve development that may negatively impact earnings.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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