OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and
issuer credit rating (ICR) of "a-" of American Physicians Insurance Company
(API)(Austin, TX). A.M. Best also has affirmed the ICR of "bbb-" of API`s parent
holding company, American Physicians Service Group, Inc. (APS) (Austin, TX)
(NASDAQ: AMPH).The outlook for all ratings is stable.
API`s ratings reflect its excellent risk-adjusted capital position, solid
history of operating profitability and strong policyholder retention levels.
Furthermore, API is directed by an experienced management team, which has
skillfully utilized the local market knowledge obtained from API`s longstanding
commitment to the Texas healthcare community to its competitive advantage. The
company`s profitability also has been enhanced by the passage of tort reform in
2003, which has contributed to an influx of physicians into Texas and a
significant reduction in claim frequency. The stable outlook reflects A.M.
Best`s expectations that a solid level of profitability will be maintained over
the near term, further supporting API`s risk-adjusted capitalization.
The ratings also take into consideration the financial flexibility of APS. At
June 30, 2009, APS` financial leverage (total debt/total capital) was minimal at
4.3%. The long-term debt consists solely of $7 million in mandatorily redeemable
preferred stock, which is to be redeemed at $1 million per year through 2016. In
addition, there continues to be a substantial amount of cash and investments at
the holding company level.
Partially offsetting these positive rating factors are the market risks
associated with being a predominantly single state, monoline medical
professional liability insurer as it relates to price competition, loss cost
trends and regulatory challenges. In addition, API`s exposure base continues to
grow, which has led to additional risks in the pricing, claim and reserving
areas. However, these risks are mitigated by the company`s conservative reserve
position and excellent risk-adjusted capital position.
For Best`s Credit Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including any
additional methodologies and factors that may have been considered, can be found
at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
industries, including insurance companies, banks, hospitals and health care
system providers. For more information, visit www.ambest.com.
A.M. Best Co.
Analysts
Greg Williams, 908-439-2200, ext. 5815
greg.williams@ambest.com
or
Henry Witmer, 908-439-2200, ext. 5097
henry.witmer@ambest.com
or
Public Relations
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com
Copyright Business Wire 2009
