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FOR IMMEDIATE RELEASE
OLDWICK - JUNE 09, 2015 04:57 PM (EDT)
A.M. Best has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and the issuer credit rating to "a" from "a-" of The Mutual Risk Retention Group, Inc. (The Mutual) (headquartered in Walnut Creek, CA). The outlook for the ratings has been revised to stable from positive.
The ratings of The Mutual reflect its excellent balance sheet strength, long-term underwriting and operating profitability and the advantages gained from its core specialty focus and close strategic alignment and program agreement with CEP America (CEPA). The ratings further acknowledge the company's strict underwriting guidelines, low expense structure and high level of customer service, including active risk management strategies, insurance solutions and aggressive defense of non-meritorious claims.
Partially offsetting these positive rating factors are The Mutual's narrow line of business focus on emergency medicine and hospitalist specialties within the medical professional liability insurance (MPLI) sector and a geographic concentration of risk in California. This includes inherent challenges associated with legislative (tort) reform in the state, loss cost trends and judicial and regulatory issues. Furthermore, CEPA represents almost the entirety of policyholders. This concern is mitigated somewhat by greater geographic diversification from growth in other states and by the interdependence from a strong long-term relationship between CEPA and The Mutual, as a cohesive group solidified by a five-year program agreement, which became effective Jan. 1, 2014. In addition, current tort laws in the company's primary states of business are considered favorable to the MPLI sector.
The company is appropriately situated at its current rating level. The ratings could be lowered as a result of an adverse trend in underwriting performance, excessive exposure growth or weakening in risk-adjusted capitalization.
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. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology .
Key insurance criteria reports utilized:
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.
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