AM Best Affirms Credit Ratings of Protective Insurance Corporation and Its Subsidiaries
September 04 2020 - 11:55AM
Business Wire
AM Best has affirmed the Financial Strength Rating (FSR)
of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term
ICR) of “a” of Protective Insurance Company (PIC) and its wholly
owned subsidiaries, Sagamore Insurance Company (Sagamore) and
Protective Specialty Insurance Company (Protective Specialty).
These companies collectively are referred to as Protective
Insurance Corporation Group. Concurrently, AM Best has affirmed the
Long-Term ICR of “bbb” of Protective Insurance Corporation, the
organization’s publicly traded ultimate parent [NASDAQ: PTVCA,
PTVCB]. The outlook of these Credit Ratings (ratings) is negative.
All companies are domiciled in Carmel, IN.
The ratings reflect the group’s balance sheet strength, which AM
Best categorizes as very strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise
risk management (ERM).
The negative outlook was placed on the group in November 2018
when it reported consecutive years of underwriting losses and
adverse reserve development. The new management team has taken
remedial actions, including the implementation of significant rate
increases, re-underwriting the book of business and exiting
unprofitable segments. The group’s operating results have since
stabilized and its loss and combined ratios are on a trajectory of
gradual improvement. The continuation of the negative outlook
reflects the challenges the group continues to face to return to a
level of profitability similar to its peers in a sector with
continuing rising loss cost trends, and the time it will take to
establish a consistent trend line due to the long-tailed nature of
its products. AM Best expects management to continue to implement
its strategy of improving its underwriting and reserving, while
strengthening its ERM capabilities.
The group’s balance sheet strength is assessed as very strong
based on its strongest level of risk-adjusted capitalization,
robust liquidity and a supportive reinsurance program that has
protected the group against significant losses, partially offset by
lingering concerns of the strength of its loss reserves. The
aggregate stop loss treaty, which had provided significant benefits
in the past was non-renewed in 2020 but continues to provide the
group with protection for prior accident years. Nevertheless, AM
Best expects the reduced benefits from the non-renewal of the
treaty to be offset gradually by better earnings prospects in the
near future and continue to support the balance sheet strength at
the very strong level.
This press release relates to Credit Ratings that have been
published on AM 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 see AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper media use of Best’s
Credit Ratings and AM Best press releases, please view Guide for
Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in New York, London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
Copyright © 2020 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Jieqiu Fan Senior Financial Analyst +1 908 439 2200, ext.
5372 jieqiu.fan@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Susan Molineux Director +1 908 439 2200, ext.
5829 susan.molineux@ambest.com
Jim Peavy Director, Public Relations +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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