OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating (FSR) of A (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a” to Healthcare Underwriters Group, Inc. (HU) (Columbus, OH). The outlook assigned to these Credit Ratings (ratings) is stable.
Concurrently, A.M. Best has affirmed the FSRs of A (Excellent) and the Long-Term ICRs of “a” of Medical Professional Mutual Insurance Company (ProMutual) (Boston, MA) and its other wholly owned subsidiaries, ProSelect Insurance Company (Omaha, NE), Preferred Professional Insurance Company (PPIC) (Omaha, NE) and Coverys Specialty Insurance Company (Morristown, NJ), as well as ProMutual’s sponsored risk retention group, Coverys RRG, Inc. (Washington, DC). The outlook of these ratings remains stable. All companies are members of Coverys Companies (Coverys or the group).
The ratings of HU recognize the implementation of a quota share reinsurance agreement between HU and ProMutual, the lead company of Coverys. In addition to substantial reinsurance support, HU also will benefit from ProMutual’s support for its policyholders through strong patient safety and risk management programs.
The group’s ratings reflect Coverys’ balance sheet strength, which A.M. Best categorizes as strongest as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management. The balance sheet strength is supported by a favorable reserve position and ample liquidity. In addition, underwriting and investment leverage ratios are low. Coverys is one of the leading providers of medical professional liability (MPL) insurance in the United States, ranking fifth in 2017, based on direct premium written. The group is active nationwide; however, its largest market share is in the northeastern states of Massachusetts, New Jersey, Connecticut, Pennsylvania and Michigan.
In the past three years, the group has exhibited a declining trend in underwriting and overall profitability, mainly due to an increase in claims severity, above-average expenses, soft competitive pricing and continued low interest rate environment. Although the group’s investment returns contribute significantly to overall earnings, the negative trend in underwriting is a concern given current MPL market conditions.
The ratings may be affected positively through improved underwriting and overall operating performance providing support for Coverys’ strong balance sheet.
Negative rating action could occur if Coverys’ risk-adjusted capitalization were to weaken materially, which could result from significant deterioration of operating performance, potentially from an increase in claims frequency or severity, or from adverse reserve development.
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