S&P Assigns R Rating to PHICO

Standard & Poor’s has assigned an ‘R’ rating (under regulatory supervision) to PHICO Insurance Co., following the granting of the Pennsylvania Insurance Department’s petition to place the insurer under its supervision.

The PDI obtained the Order of Rehabilitation following a dramatic decrease in the company’s surplus, which dropped from $127 million at year’s end to $6.8 million. The PDI’s action, mandatory in such circumstances, places it in control of PHICO’s operations. It’s main focus is to preserve the company’s capital adequacy, if possible and to marshall sufficient assets to pay outstanding claims.

S&P’s action is standard practice in such a situation, and recognizes the fact that regulators have broad power to favor one class of obligations over others, or to pay some obligations and not others.

PHICO, which specializes in medical malpractice and related coverage for health care providers, hospitals and health care systems, has seen its reserves steadily decline due to poor operating performance. S&P downgraded the company’s rating in July 2000 to “BBpi.”|”snp, assigns, r, rating, phico