Ratings Roundup: Michigan Professional, Bancinsure, Maiden NA

March 29, 2012

A.M. Best Co. has upgraded the issuer credit rating to “bbb+” from “bbb” and affirmed the financial strength rating of ‘B++’ (Good) of Michigan Professional Insurance Exchange (MPIE), both with stable outlooks. The ratings reflect MPIE’s “strong risk-adjusted capitalization, long-term operating profitability, historical investment returns and leadership position as a provider of medical professional liability insurance for hospitals and physicians in Michigan,” Best explained. The ratings also take into account MPIE’s “commitment to reserve adequacy, adequate pricing and expense management.” As partial offsetting factors is best cited MPIE’s “exposure operating as a mono-line, mono-state carrier,” as well as the “risks associated with medical professional liability as they relate to price competition, tort reform challenges, changes in market composition and loss cost trends.” Best said the stable outlook is based on “MPIE’s ability to maintain appropriate underwriting and claim results within variable operating conditions. Prospectively, the ratings for MPIE may be affected positively through stabilized underwriting and operating results or growth in premiums throughout market cycles. Issues that may impact the ratings adversely may include, but are not limited to, disruption in market dynamics, shifts in claim severity and frequency or regulatory changes such as health care measures or tort reform provisions.”

A.M. Best Co. has downgraded the financial strength rating to ‘C-‘ (Weak) from ‘B’ (Fair) and issuer credit rating to “cc” from “bb” of Oklahoma City-based BancInsure Inc., both with negative outlooks. Best concurrently withdrew the ratings in response to BancInsure management’s request that the company no longer participate in Best’s interactive rating process. Best said the rating downgrades for BancInsure “are due to the unexpected and precipitous decline in its risk-adjusted capitalization, which was caused by accelerated underwriting losses and non-admittance of a large net deferred tax asset. As a result, the actual 2011 policyholders’ surplus declined by more than half, causing risk-adjusted capital to be significantly less than Best had anticipated earlier this year. Also, the uncertainty from the recent turnover of some key management positions attributed to BancInsure’s rating movement. Effective February 14, 2012, BancInsure entered into an agreement to transfer the renewal rights and the license to the name BancInsure to AmTrust Financial Services, Inc.”

A.M. Best Co. has assigned an issuer credit rating of “bbb-” to Delaware-based Maiden Holdings North America, Ltd. (Maiden NA), a direct, wholly owned subsidiary of Bermuda-based Maiden Holdings, Ltd. Best concurrently assigned debt ratings of “bbb-” to the recently issued $100 million 8.0 percent senior unsecured notes due March 2042 and to the $107.5 million 8.25 percent senior unsecured notes due June 2041 (issued in June 2011) of Maiden NA. Best noted that these “senior notes are fully and unconditionally guaranteed by Maiden Holdings. The outlook assigned to all ratings is stable. All remaining ratings of Maiden Holdings are unchanged.” The proceeds from these recent issuances will be used for general corporate purposes. Best said that, “based on the new debt offering, Maiden Holdings’ adjusted debt-to-tangible capital ratio is approximately 28 percent. Maiden Holdings’ financial leverage and coverage ratios are within Best’s guidelines for its current ratings and are expected to remain so over the near term.”

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