The financial strength rating of The PHICO Group, Mechanicsburg, Pa., has been downgraded to “B” (Fair) from “B++” (Very Good) with a negative outlook by A.M. Best Co.
This rating action applies to the group’s three pool members, led by PHICO Insurance Company, as well as a Bermuda affiliate, PHICO Re Ltd., which is provided reinsurance protection through a separate agreement with the lead company. This rating action reflects the group’s recent poor operating performance and the resulting weak capitalization. PHICO experienced significant premium growth in prior years in a soft market by expanding into new, unfamiliar jurisdictions and underwriting new, larger and more complex types of accounts. Also, the group has been adversely impacted by the increase in severity of claims that has evolved in medical malpractice.
The group writes professional liability, general liability and workers’ compensation coverages for hospitals and physicians. It ranks among the 20 largest writers of medical professional liability insurance in the United States with an estimated 2 percent market share based on direct malpractice premiums written.
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