A.M. Best Affirms Excellent Rating, Revises Outlook to Negative for CMIC Group

May 3, 2018

A.M. Best has affirmed its financial strength rating of A- (Excellent) and its long-term issuer credit ratings of “a-” while revising its outlook to negative from stable for Glastonbury, Conn.-based Connecticut Medical Insurance Company and its sponsored risk retention group company, CMIC Risk Retention Group. The companies are collectively referred to as Connecticut Medical Insurance Group.

The credit ratings reflect the group’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management, according to an A.M. Best release.

The revised outlooks reflect the negative trend in underwriting and operating performance, as well as the challenges the group faces to improve results in the near-term given the ongoing competitive market conditions. Indeed, underwriting results have suffered in recent years due to an increase in severity and the emergence of adverse development on prior accident year loss reserves, which culminated in a $23.4 million underwriting loss in 2017, the release added.

The group’s reserves historically developed favorably but have come under pressure in recent years as loss costs for the group have been increasing. Additionally, a large reserve “one-time adjustment” of $8 million was taken in order to recognize retro-dated features in the group’s modified claims made book of business, which had not been previously included in the third party actuarial consultant’s assumptions. Despite the strengthening, surplus increased $10 million from the previous year due to unrealized gains, according to the release.

In terms of financial strength and stability, A.M. Best stated that the company’s balance sheet has received the strongest level of risk-adjusted capitalization rating. It also commented that the company’s investments are conservative and liquid, while underwriting leverage continues to remain low, according to a press release issued by CMIC Group.

“Despite these recent developments, our company continues to be very strong financially and the board of directors, management team and staff are working diligently to improve our financial performance during this difficult market cycle,” said CMIC Group CEO Stephen J. Gallant in the company’s release. “Likewise, we are reviewing our product offerings to ensure they continue to meet the evolving needs of the marketplace, and we appreciate the continued loyalty and support of our esteemed member physicians and valued distribution partners as we remain committed to the long-term success of the company.”

Source: A.M. Best, CMIC Group

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