Ratings Recap: Phila. Consolid., AmCOMP, Medical Savings, Hospitals

A.M. Best Co. has withdrawn and assigned an “nr” to the issuer credit rating (ICR) of “a-” of Pennsylvania-based Philadelphia Consolidated Holding Corp. as a result of the recently completed acquisition of the company by a subsidiary of Japan’s Tokio Marine Holdings, Inc. Best also said that the financial strength rating (FSR) of ‘A+’ (Superior) and ICRs of “aa-“of Philadelphia Insurance Companies and its members and the FSR of ‘A-‘ (Excellent) and ICRs of “a-” of Liberty American Insurance Group and its members “are unchanged. Philadelphia Consolidated is the parent holding company of Philadelphia Insurance and Liberty American. The outlook for all ratings is stable. Under the terms of the transaction, the shareholders of Philadelphia Consolidated received $61.50 per share in cash, and the company became a wholly owned subsidiary of Tokio Marine & Nichido Fire Insurance Co. Ltd.” Best also noted that the “common stock of Philadelphia Consolidated, which prior to the closing traded on the NASDAQ Global Select Market under the symbol “PHLY,” ceased to trade before the opening of the market on December 1, 2008 and was delisted as of the close of business that same day. The withdrawal of Philadelphia Consolidated’s ICR contemplates that delisting.”

A.M. Best Co. has assigned a financial strength rating (FSR) of ‘A-‘ (Excellent) and issuer credit ratings (ICR) of “a-” to AmCOMP Preferred Insurance Company and AmCOMP Assurance Corporation. The two companies now operate through an intercompany pooling agreement with Employers Insurance Company of Nevada (EICN) and Employers Compensation Insurance Company (ECIC), collectively known as Employers Insurance Group, headquartered in Reno, Nev. The rating outlooks are stable. Best said the “rating actions follow the acquisition of AmCOMP Preferred and AmCOMP Assurance by Employers Holdings, Inc. (EHI) on October 31, 2008 as well as the execution of the approved pooling agreement.” Best also noted that on October 31, 2008, it had affirmed the FSR of ‘A-‘ (Excellent) and ICRs of “a-” of EMPLOYERS and its two pooling members, EICN and ECIC. Best also affirmed the ICR of “bbb-” of EMPLOYERS’ parent holding company, EHI. The outlook for these ratings was revised to stable from positive.

A.M. Best Co. has downgraded the financial strength rating (FSR) to ‘E’ (Under Regulatory Supervision) from ‘C++’ (Marginal) and issuer credit rating (ICR) to “rs” from “b” of Indianapolis-based Medical Savings Insurance Company. Best noted: “On December 1, 2008, the Indiana Department of Insurance announced it had placed an Order of Rehabilitation against Medical Savings and appointed a receiver for the company. Medical Savings has reported large losses the past three years, which has led to considerable deterioration of its capital and surplus position. As part of the Order of Rehabilitation, existing policyholders of Medical Savings have the opportunity to transfer their coverage, most on a guaranteed coverage basis, to Golden Rule Insurance Company, a subsidiary of UnitedHealth Group, Inc. Golden Rule Insurance Company has an FSR of ‘A’ (Excellent) and an ICR of “a” and focuses on the individual major medical market.”

A.M. Best Co. has downgraded the financial strength rating (FSR) to ‘C-‘ (Weak) from ‘C++’ (Marginal) and issuer credit rating (ICR) to “cc” from “b” of Hospitals Insurance Company, Inc. (HIC) of White Plains, NY. The outlook for both ratings is negative. Best subsequently withdrew the ratings at the company’s request and assigned a category NR-4 (Company Request) to the FSR and an “nr” to the ICR. “The downgrading of the ratings is based on the decrease in HIC’s risk-adjusted capitalization, primarily driven by the significant decline in the value of its equity investment portfolio,” Best explained. “HIC’s ratings are reflective of its weak capitalization, inconsistent operating performance, the business risk the company faces from its concentration in New York, the additional volatility associated with the equity markets given its large common stock portfolio relative to its surplus size and the lack of reinsurance protection. Risk-adjusted capitalization is hindered by the company’s highly elevated level of investment leverage and reserve leverage, which is exacerbated by the substantial surplus dependence on heavily discounted loss reserves and unstable reserve development.”