A.M. Best Downgrades MLMIC Group, Princeton Insurance Company and OHIC Insurance Company.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Feb. 19, 2003 A.M. Best Co. has downgraded the financial strength rating to B++ (Very Good) from A- (Excellent) of MLMIC MLMIC Medical Liability Mutual Insurance Company Group, which is based on the consolidated operating performance and financial condition of Medical Liability Mutual Insurance Company, and its wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Princeton Insurance Company, OHIC Insurance Company and Professional Liability Insurance Company of America. The rating remains under review with negative implications. Additionally, A.M Best has downgraded the financial strength rating to B (Fair) from B+ (Very Good) of the independently-rated Princeton Insurance Company and to B++ (Very Good) from A- (Excellent) of OHIC Insurance Company. Both ratings also remain under review with negative implications. The rating action of MLMIC Group follows the decline in policyholders' surplus at year-end 2001 and through the first nine months of 2002, driven by deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in operating results from the strengthening of loss reserves by $280 million, primarily in the group's New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and New Jersey medical malpractice Improper, unskilled, or negligent treatment of a patient by a physician, dentist, nurse, pharmacist, or other health care professional. book of business and unrealized capital losses on the group's investment portfolio. Also, the rating action of Princeton Insurance Company reflects deterioration in operating results from the strengthening of loss reserves in 2001 and in the first nine months of 2002 (by $100 million) resulting from rapidly rising severity of losses, which nullified nul·li·fy tr.v. nul·li·fied, nul·li·fy·ing, nul·li·fies 1. To make null; invalidate. 2. To counteract the force or effectiveness of. the benefit of the additional capital contribution of $40 million from its parent, MLMIC, during the first quarter 2002. This, along with the strong growth in gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. of more than 45% and decline in policyholders' surplus by nearly 30% during the first nine months of 2002, has resulted in the company's net and gross leverage measures increasing to a level that is higher than the medical malpractice industry composite. Finally, the rating action of OHIC Insurance Company follows the recent reduction in investment income and weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. in overall capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. driven by the decline in reported surplus and strong premium growth in 2002. Furthermore, OHIC Insurance Company is dependent on the financial support of its parent, which is experiencing financial difficulties. Capitalization of MLMIC Group falls short of its current rating. It is also dependent on business from New York, making it highly susceptible to the unique regulatory environment in the state for medical malpractice companies as evidenced by its inability to obtain adequate physicians' rates in 2002. A.M. Best remains concerned regarding the adequacy of loss reserves given the reserve strengthening and current claim severity trends in the medical malpractice market. As such, the ratings of MLMIC Group, Princeton Insurance and OHIC Insurance Company will remain under review with negative implications, pending the analysis of both the year-end 2002 financials and management's ongoing capital enhancing efforts. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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