AM Best assigned a financial strength rating of A- (excellent) and a long-term issuer credit rating of âa-â (excellent) to
The ratings reflect the strength of AMS RRG’s balance sheet, which AM Best considers to be very strong, as well as its adequate operational performance, limited business profile and appropriate management of business risks.
AMS RRG’s balance sheet valuation is supported by risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), at the highest level. The valuation also takes into account the constant growth of the company’s surplus through profits and required capital contributions from policyholders. To be insured, members are required to contribute 30% of their premium for claims due as capital. These members’ contributions are paid over a period of three years, which means that a significant part of the capital is to be received from the insured. The balance sheet is further reinforced by unfavorable development coverage, which isolates the company from any future development of reserves on business taken out in 2020 and before. The very strong assessment of balance sheet strength also takes into account improvements to the company’s reinsurance program and planned capital contributions totaling
While the company’s published results were below average, the most recent accident year results were comparable to its peers when adjusted for variable rate reinsurance. This assessment also takes into account recent reinsurance initiatives by management, which are expected to isolate the company from much of its legacy business written before 2021. These initiatives include the elimination of variable-rated reinsurance with more traditional reinsurance at the future, buying coverage, and purchasing variable premium protection coverage – all of which should reduce the volatility of underwriting results and slower earnings going forward. The overall assessment of adequate operational performance places considerable importance on management’s projections and the expected return of the company to technical profitability in 2022.
AMS RRG provides professional medical liability (MPL) coverage to over 3,000 individual physicians and members of small physician groups. The limited assessment of the company profile mainly reflects the geographic and product concentration risks as a monoline MPL underwriter, with around 70% of the premium volume in its five main operating states, exposing the group to risks associated with changes in underwriting cycles, claims cost trends, healthcare delivery, and the legal, economic and regulatory environment.
The company benefits from an appropriate ERM program that promotes clear communication throughout the organization. A formally defined appetite and risk tolerance were established as fundamental elements of the framework. AMS RRG also maintains an appropriate fixed rate reinsurance program beyond its
The stable outlook reflects AM Best’s expectations that the company will maintain its overall balance sheet assessment, supported by highest level risk-adjusted capitalization, and a restored level of underwriting results and operating profitability that are generally in line. management projections.
A negative rating action could arise as a result of a weakening of the overall strength of the balance sheet, a significant decline in risk-adjusted capitalization or other quantitative and / or qualitative measures of the balance sheet. Negative rating actions may also occur if operating and underwriting results differ materially from management’s projections due to adverse changes in the frequency or severity of claims, changes in market dynamics or the emergence of an unfavorable development of the claims reserve over the potential occurrence years not covered by the unfavorable development. blanket.
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Source: AM Best