S&P Lowers Med Mal Insurer's Ratings
NU Online News Service, June 6, 3:01 p.m. EDT? Standard & Poor's Ratings Services in New York yesterday lowered its counterparty credit and financial strength ratings for Princeton Insurance Co., downgrading the Princeton, N.J.-based medical malpractice insurer to Bpi from BBBpi.
The rating firm said it took the action because of Princeton's adverse reserve development in 2002 and 2001, which significantly affected operating performance and capitalization.
"Standard & Poor's believes the company will continue to be challenged in the deteriorating medical malpractice market within its primary state of business, New Jersey," said Standard & Poor's credit analyst Tom E. Thun.
The prior rating on the company reflected the benefits from implied group support from the Hum Group of Companies, Inc. Because of Princeton's poor performance, the benefit of implied group support has been removed, said S&P.
"Reserve deficiencies in its medical malpractice and workers' compensation business weighed heavily on its year-end capitalization," Mr. Thun added, "and future underwriting profitability to regain those losses remains questionable in the medium term."
The company primarily underwrites medical malpractice (64 percent of direct premiums) and workers' compensation coverages (28 percent). New Jersey, Pennsylvania, and New York contribute more than 75 percent of total direct premium revenue.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.