A.M. Best Assigns Ratings to ProAssurance American Mutual, a Risk Retention Group

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has assigned a financial strength rating of A+ (Superior) and an issuer credit rating of “aa-” to ProAssurance American Mutual, a Risk Retention Group (ProAssurance RRG) (District of Columbia). The outlook assigned to both ratings is stable.

These ratings recognize the implementation of a quota share reinsurance agreement between ProAssurance RRG and ProAssurance Indemnity Company, Inc. (ProAssurance Indemnity), one of the lead companies of ProAssurance Corporation (PRA) (NYSE:PRA). In addition to providing substantial reinsurance support to ProAssurance RRG, ProAssurance Indemnity will provide the company with administrative and managerial services. ProAssurance RRG also will benefit from PRA’s leadership position in the medical professional liability insurance (MPLI) market, its long-term profitable operations and the continued support for its policyholders through strong patient safety and risk management programs.

Despite ProAssurance RRG’s status as a start-up, it is insulated from underwriting risks such as adverse loss experience or insufficient rate structure and the stresses these risks could cause on resources due to its quota share arrangement. Partially offsetting these positive rating factors are the market risks inherent within the MPLI sector. These include: potential changes to tort reform; soft market pricing and strong competition; changes in the regulatory or legislative environments; and changes in health care delivery and MPLI market dynamics.

ProAssurance RRG broadens PRA’s opportunities to provide coverage for physician and facility medical professional liability and related general liability on a claims-made basis. ProAssurance RRG will give the ProAssurance enterprise greater flexibility in states where it currently writes admitted business and the regulatory environment is more onerous. It will also provide a useful risk-bearing entity in its corporate structure in coming years as health care continues to consolidate and large multi-state, multi-specialty risks emerge.

Because of the depth of the relationship between the two organizations, changes in the ratings of ProAssurance Indemnity may impact ProAssurance RRG. Positive rating actions could occur with ProAssurance’s ongoing successful business operating performance and diversification by business line as demonstrated by consistent fundamental profitability while preserving its excellent risk-adjusted capitalization. Negative rating actions could occur if ProAssurance Indemnity experiences materially adverse loss experience, reserve deficiency trends or weaker risk-adjusted capitalization. Negative rating actions could also occur with loss of the RRG's explicit and/or implicit support from ProAssurance Indemnity.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

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

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A.M. Best Company, Inc.

Dan Teclaw, 908-439-2200, ext. 5394

Senior Financial Analyst

dan.teclaw@ambest.com

or

Charles M. Huber, 908-439-2200, ext. 5122

Managing Senior Financial Analyst

charles.huber@ambest.com

or

Christopher Sharkey, 908-439-2200, ext. 5159

Manager, Public Relations

christopher.sharkey@ambest.com

or

Jim Peavy, 908-439-2200, ext. 5644

Assistant Vice President, Public Relations

james.peavy@ambest.com

Source: A.M. Best Company, Inc.