A.M. Best Revises Outlook to Positive for Coastal Medical Insurance Ltd.

A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Coastal Medical Insurance Ltd. (Coastal) (Hamilton, Bermuda).

The ratings reflect Coastal’s excellent capitalization, favorable operating results generated by a very low expense structure and customized risk management programs, experienced senior management team and conservative reserving and investment philosophies.

Partially offsetting these positive rating factors are Coastal’s limited market scope and relatively high retention levels. However, these concerns are mitigated due to explicit as well as implicit parental support based on the strategic importance of Coastal within the overall risk management program of the Meridian Health System (Meridian) and its mission of providing affordable, stable coverage to its insureds.

Meridian’s risk management and insurance department provides important supporting services to the parties indemnified and reinsured by Coastal. Meridian’s risk management program for the hospital system establishes risk control policies and procedures, which include safety education, data collection and evaluation, claims management and risk financing. The ratings also take into consideration the role Coastal serves in providing hospital and physician professional and general liability insurance to Meridian.

Meridian is a financially strong organization, which has reported stable operational performance and recently improved investment results, contributing to favorable operating and excess margins. The system also maintains excellent liquidity measures, with a day’s cash on hand of approximately 200 days in each of the past several years. Meridian also has a favorable and well-diversified market position, stretching along the eastern seaboard of New Jersey.

Offsetting these strengths are the system’s high—albeit—decreased leverage position, as well as the relative uncertainty regarding the ultimate impact of recent changes to its business profile, through the addition of new operating entities.

A.M. Best remains the leading rating agency of captive insurers rating a wide variety of more than 200 captives in the United States and throughout the world.

For current Best’s Credit Ratings and independent data on the captive and alternative insurance market, please visit http://www.ambest.com/captive.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at http://www.ambest.com/ratings/methodology.