A.M. Best Downgrades Ratings of PMA Capital Insurance Company; Ratings Remain Under Review with Negative Implications
December 05 2008 - 1:30PM
Business Wire
A.M. Best Co. has downgraded the financial strength rating (FSR) to
C++ (Marginal) from B (Fair) and issuer credit rating (ICR) to �b�
from �bb� of PMA Capital Insurance Company (PMACIC) (Philadelphia,
PA), the run-off operations of PMA Capital Corporation (PMA
Capital) (Blue Bell, PA) [NASDAQ: PMACA], following the recent
reserve strengthening actions occurring during third quarter 2008.
Additionally, the ratings remain under review with negative
implications as a result of the announcement earlier this year that
PMACIC�s parent, PMA Capital, entered into a letter of intent and
subsequently signed a stock purchase agreement with a third party
to sell PMACIC. The ratings of PMA Capital and PMA Insurance Group
(Blue Bell, PA) and its members are unchanged. The downgrading of
PMACIC�s ratings reflect the significant reduction in its
stand-alone capitalization following additional reserve
strengthening actions during the first and third quarters of 2008,
impacting claims made general liability business and, to a lesser
extent, occurrence liability business. Partially offsetting these
negative rating factors is PMA Capital�s commitment to maintain
adequate capitalization to support the run-off operations following
the recent reserve strengthening actions. While capitalization
remains marginal, A.M. Best expects ongoing financial support from
PMA Capital to ensure an orderly run off. The under review status
of PMACIC�s ratings reflect the planned sale to a third party and
uncertainty with the level of commitment of the new parent to
sustain operations, as well as the continued execution risk
associated with managing the run-off business. For Best�s Ratings,
an overview of the rating process and rating methodologies, please
visit www.ambest.com/ratings. Founded in 1899, A.M. Best Company is
a global full-service credit rating organization dedicated to
serving the financial and health care service industries, including
insurance companies, banks, hospitals and health care system
providers. For more information, visit www.ambest.com.
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