|[February 01, 2013]
A.M. Best Revises Outlook to Positive on Issuer Credit Rating of Eastern Dentists Insurance Company (A Risk Retention Group)
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has revised the issuer credit rating (ICR) outlook
to positive from stable and affirmed the financial strength rating (FSR)
of B++ (Good) and ICR of "bbb" of Eastern Dentists Insurance Company
(A Risk Retention Group) (EDIC) (Burlington, VT). The outlook for
the FSR is stable.
The rating actions reflect EDIC's continuing favorable operating results
and improved capitalization. This has been driven by profitable
underwriting performance, including maintaining pricing discipline and
favorable development on loss reserves that have continued to benefit
from positive trends in loss frequency and severity.
The ratings of EDIC reflect its excellent capitalization, history of
consistently improving underwriting results and operating profitability,
as well as the generation of non-risk-bearing fee income. These
favorable rating attributes are partially offset by the company's market
profile, which is characterized by a concentration of risks associated
with being a monoline writer of dental professional liability insurance.
As such, it may be affected by previously unexpected adverse claim
trends in dental practices as well as changes in the legal, regulatory
and judicial environments affecting its professiona liability line.
EDIC is the leader in providing professional liability coverage to
dentists in Massachusetts and writes business in all other states in the
Northeast as well as Virginia. Recently, the company acquired renewal
rights for business in North Carolina. Though this will generate
increased revenues and enhance geographic diversification, the potential
for increased leverage on capital will need to be monitored.
The outlooks for the ratings of EDIC are based on the maintenance of
supportive capitalization and favorable operating performance while
focusing on rate adequacy and prudent underwriting in its growth markets
and establishing adequate loss reserves.
The ratings could be downgraded and the outlooks for the ratings could
be revised if EDIC were to develop an adverse underwriting performance
due to a significant accumulation of claims and inadequate loss reserves
or over-aggressive growth.
Positive rating actions for EDIC could result from continued long-term
favorable performance on both an underwriting and operating basis, the
consistent generation of surplus and maintenance of strong
capitalization, as well as successful execution of any growth plans.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include: "Risk
Management and the Rating Process for Insurance Companies" and
"Understanding BCAR for Property/Casualty Insurers." Best's Credit
Rating Methodology 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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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