March 27, 2014 / 2:21 PM / 4 years ago

Fitch Publishes ERM Report on Medical Professional Liability Insurers

(The following statement was released by the rating agency) CHICAGO, March 27 (Fitch) Fitch Ratings has just published a special report on Enterprise Risk Management (ERM) for the Medical Professional Liability Insurance Industry (MPLI). 'The application of ERM processes is expanding as part of property/casualty insurers' risk and strategic management practices.' said Jim Auden, Managing Director, Corporate Finance at Fitch Ratings. ERM provides a structure for an entity to systematically identify, measure, manage, and control the various risk exposures faced. As typically smaller entities, MPLI underwriters have fewer resources to devote to ERM programs. Compared to publicly held large multi-line insurance entities, MPLI writers also face a more limited number of material risk exposures. However, great uncertainty lies in MPLI from underwriting, loss reserve and operational risks. Fitch's Prism capital model provides a measure of capital adequacy on a risk-adjusted basis, while also providing risk insights and parameters in areas relating to underwriting, reserving, natural catastrophe, credit and equity market risks. Model results for a group of 21 MPLI specialists reveal that the companies are currently largely well capitalized. Summary Prism results for the group are provided in the report along with a discussion on how key financial risk exposures influence relative capital adequacy. Ultimate success of ERM hinges on limiting large losses and reducing volatility of earnings to boost risk-adjusted returns on capital. For the insurance industry overall, the success of market participants' ERM practices may be revealed by narrower swings in the market cycle with regard to pricing and profitability. The report 'MPLI Enterprise Risk Management' dated March 27 2014, is available at 'www.fitchratings.com' under 'Insurance' and 'Special Reports', or by clicking on the link. Contact: James A. Auden, CFA Managing Director +1-312-368-3146 Fitch Ratings, Inc. 70 West Madison St. Chicago, IL 60602 Gerry Glombicki, CPA Director +1-312-606-2354 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: MPLI Enterprise Risk Management (Prism Capital Analysis Reveals Strengths and Vulnerabilities) here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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