Business Wire, Jan 26, 2010
CHICAGO — Fitch Ratings has affirmed ProAssurance Corporation’s (PRA) Issuer
Default Rating (IDR) at ‘BBB ‘. Fitch has also affirmed the ‘A’ Insurer
Financial Strength (IFS) ratings of PRA’s primary insurance operating
companies (listed below). In addition, Fitch has assigned an IFS rating
of ‘A’ to the recently acquired Podiatry Insurance Company of America
(PICA) subsidiaries. The Outlook on all ratings is Stable.
Fitch’s rating actions consider the solid capital position of PRA’s
operating subsidiaries, as well as their consistent profitability,
financial and operating flexibility, and highly experienced management
team. PRA has an established reputation for providing quality service
and expertise in risk management in the medical professional liability
line as well as a strong track record of aggressively defending
non-meritorious claims, which enhances customer loyalty and reduces
fraud.
Partially offsetting these positives is the potential volatility the
company is exposed to as a monoline company that operates in one of the
industry’s most unpredictable lines of business.
PRA reported a calendar year GAAP combined ratio of 79.1% thru Sept. 30,
2009; however, on an accident year basis the company reported a 106%
combined ratio or 4 basis point deterioration over the prior year. The
$108 million of favorable reserve development primarily related to
accident years 2002 through 2006. Fitch views PRA’s loss reserve
position as adequate and notes that the company does have a history of
favorable reserve development.
PRA significantly reduced its financial leverage in July 2008 when it
converted its outstanding convertible debt into common equity. As of
Sept. 30, 2009 the company had a very strong debt-to-capital ratio of
2.9% and earnings based interest coverage of approximately 72.6 times
(x) for the same period. Fitch’s longer term rating expectations
anticipate that financial leverage will return to the mid 20% range and
that coverage will be in the 4x-7x range.
Alabama-based PRA is a publicly traded insurance holding company with
operating subsidiaries engaged in medical professional liability
insurance
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