Best Affirms ProAssurance and Members Ratings; Revises ICR to Positive

June 16, 2011

A.M. Best Co. has revised the outlook to positive from stable and affirmed the issuer credit ratings (ICR) of “a” of ProAssurance Group and its members. Best has also affirmed the financial strength rating (FSR) of ‘A’ (Excellent) of ProAssurance. The outlook for the FSR is stable.

In addition Best revised the outlook to positive from stable and affirmed the ICR of “bbb” of ProAssurance’s parent holding company, Alabama-based ProAssurance Corporation (PRA), as well as the indicative debt ratings of “bbb” for senior unsecured debt, “bbb-” for subordinated debt and “bb+” for the preferred stock of PRA.

Other ratings were also affected. Best has revised the outlook to positive from stable and affirmed the ICR of “a” of Texas-based American Physicians Insurance Company (API) and has affirmed API’s FSR of ‘A’ (Excellent).

Best also revised the outlook to positive from stable and affirmed the FSR of ‘A-‘ (Excellent) and ICR of “a-” of Washington D.C.-based ProAssurance National Capital Insurance Company (ProAssurance National) (District of Columbia).

Best has affirmed the FSRs and ICR of ProAssurance Wisconsin Insurance Company, Illinois-based Podiatry Insurance Company of America (PICA) and PACO Assurance Company, Inc. (PACO). The outlook for the ratings of ProAssurance Wisconsin is positive, the outlook for the ratings of PICA is stable and the outlook for the ratings of PACO is negative.

The revised outlook for the ICR of ProAssurance recognizes its “sustained underwriting and operating profitability and excellent risk-adjusted capitalization,” Best explained. The ratings also “acknowledge the group’s solid balance sheet, aggressive claims defense, risk management expertise, geographical diversification and localized knowledge within the various jurisdictions in which it operates.”

As partial offsetting factors Best cited “the inherent market risks associated with the medical professional liability insurance sector as they relate to price competition, legislative (tort) reform, loss cost trends and regulatory challenges.

“The ratings further reflect the financial flexibility afforded by PRA, its publicly traded parent. PRA’s financial leverage is very conservative, interest coverage is strong and it currently holds a significant amount of cash and short-term investments outside of its insurance subsidiaries that are available for use without regulatory approval.

Best summarized the ratings affected as follows: The FSR of ‘A’ (Excellent) and ICR of “a” have been affirmed for ProAssurance Group and its following members:
* ProAssurance Casualty Company
* ProAssurance Indemnity Company, Inc.
* ProAssurance Specialty Insurance Company, Inc.

The FSRs of ‘A-‘ (Excellent) and ICR of “a-” have been affirmed for ProAssurance Wisconsin Insurance Company and PACO Assurance Company, Inc.

The FSR of ‘A’ (Excellent) and ICR of “a” have been affirmed for Podiatry Insurance Company of America.

Source: A.M. Best

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