RIDGELAND — A.M. Best has upgraded the financial strength rating to “A (Excellent)” from “A- (Excellent)” and issuer credit rating to “a” from “a-” of Medical Assurance Company of Mississippi (MACM). The outlook for both ratings has been revised to “stable” from “positive.”
A.M. Best wrote: “The ratings of MACM are reflective of its strong risk-adjusted capitalization, its history of favorable operating performance and conservative loss reserve position. The company also benefits from its sustainable expense advantage and dominant position in providing medical professional liability (MPL) insurance within the Mississippi physicians market.
“These positive rating factors are partially offset by the inherent market risks associated with being a single state, monoline MPL insurer, particularly as these risks relate to legislative (tort) reform, regulatory challenges and loss cost trends. MACM also exhibits elevated common stock leverage, increasing the potential for changes in surplus from volatility in the equity markets.
“The company has benefited from its conservative approach in booking case reserves, which has contributed to MACM’s ability to continue its mission of providing a long-term stable market for physicians in Mississippi. The company operates as a non-profit organization and is not required to pay state taxes nor obligated to participate in the state’s guaranty fund—all the while maintaining rate flexibility. However, MACM remains exposed to the potential for tort reform legislation on constitutional grounds as well as the potential for inconsistent awards by juries in Mississippi.
“The outlook is based on A.M. Best’s expectation of continued solid capitalization and sustained strong operating profitability under the company’s relatively stable operating environment.
“Positive rating actions are not anticipated in the midterm, as MACM’s capitalization, operating performance and business profile fully support its current ratings. However, the company’s ratings/outlook may be adversely impacted by the development of a trend of unprofitable underwriting, adverse loss reserve development, or a significant decline in risk-adjusted capitalization.”