A.M. Best Assigns Ratings to Texas Medical Liability Trust and Its Subsidiary

A.M. Best Assigns Ratings to Texas Medical Liability Trust and Its Subsidiary

A.M. Best Co. has assigned a financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a” to Texas Medical Liability Trust (TMLT). Concurrently, A.M. Best has assigned a FSR of A (Excellent) and an ICR of “a” to TMLT’s wholly-owned subsidiary, Texas Medical Insurance Company (TMIC). The outlook assigned to all ratings is stable. All companies are domiciled in Austin, TX.

The ratings of TMLT reflect its excellent risk-adjusted capital position, favorable operating performance, experienced management team and its leading market position in Texas. TMLT also benefits from its strong relationship with the Texas Medical Association (TMA), which has exclusively endorsed TMLT since 1992. This endorsement, TMLT’s heavy involvement in physician advocacy issues and its service orientated approach, has allowed TMLT to maintain strong policyholder retention levels despite competitive market conditions. The competitive market in Texas follows the passage of tort reform in 2003, which among other provisions led to a non-economic damage cap of $250,000. TMLT’s operating results are partially reflective of the claim frequency benefits of this reform as well as management’s conservative approach to reserving, underwriting discipline and investing. These positive rating factors are partially offset by the inherent market risks associated with being a predominantly single state, monoline medical professional line insurer.

TMIC’s ratings are based upon A.M. Best’s group rating methodology and take into consideration TMIC’s role and strategic importance to TMLT. TMIC is currently admitted in Texas and Oklahoma. TMIC was formed in 1995 to provide professional liability coverage to the ancillary medical staff of TMLT policyholders as TMLT’s charter prevents it from insuring non-TMA medical personnel. The ratings further reflect the explicit support provided by TMLT (in the form of capital contributions) and the implied commitment in the future to support TMIC as needed in acquiring and retaining business in conjunction with and for TMLT.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Understanding Universal BCAR”; and “Rating Members of Insurance Groups.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2011 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Co.
Greg Williams
Senior Financial Analyst
908-439-2200, ext. 5815
greg.williams@ambest.com
or
Henry Witmer
Assistant Vice President
908-439-2200, ext. 5097
henry.witmer@ambest.com
or
Carole Lovell
Public Relations Associate
908-439-2200, ext. 5445
carole.lovell@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
908-439-2200, ext. 5644
james.peavy@ambest.com