A.M. Best Revises Outlook to Negative for The Bar Plan Group

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of The Bar Plan Group (The Bar Plan), and its member, The Bar Plan Mutual Insurance Company (St. Louis, MO).

The rating affirmation reflects The Bar Plan’s excellent capitalization and leadership position in providing lawyer professional liability insurance, primarily to sole practitioners and small law firms operating mainly in its core state of Missouri. Additionally, the group’s overall operating fundamentals have been favorable despite more recent results, with management placing specific emphasis on proactive risk management, stringent underwriting standards, prudent investment strategies, conservative loss reserve allocation and providing various customer service related products to insureds.

Partially offsetting these positive rating factors are the group’s business concentration risks, the deterioration in operating profitability in 2010, and previously, in 2006, and an unfavorable underwriting performance over most of the past five years.

Although the ratings were affirmed, A.M. Best has revised the rating outlook for The Bar Plan based on the recent operating losses, which have contributed to a decline in surplus, negative cash flows and a reduced invested asset base. This has been caused in part by a very challenging market that has been driven by poor economic conditions. In 2010, the group recorded a sizeable underwriting loss of $3.2 million with a corresponding combined ratio of 130.1. This was mainly due to $2.0 million of incurred losses from “further” loss development on 11 claims that reached the full retention of $250,000 each, as of year-end 2010.

The Bar Plan maintains its long-standing commitment to the legal community in its core state of Missouri, where it insures approximately 72% of the state’s eligible insureds, as well as maturing markets in Kansas, Indiana and New Mexico.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Rating Members of Insurance Groups.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2011 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best CompanyRobert Brokaw, 908-439-2200, ext. 5771
Financial Analyst
robert.brokaw@ambest.com
orRachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
orHenry Witmer, 908-439-2200, ext. 5097
Assistant Vice President
henry.witmer@ambest.com
orJim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Source: A.M. Best Company