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A.M. Best Revises Issuer Credit Rating Outlook to Positive for Select ProAssurance Corporation Subsidiaries; Affirms All Ratings

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A.M. Best has revised the outlook to positive from stable for the issuer credit ratings (ICR) of Medmarc Casualty Insurance Company (Medmarc) and Noetic Specialty Insurance Company (Noetic) (Chantilly, VA), while affirming the ICRs of “a” and the financial strength rating (FSR) of A (Excellent). The outlook for the FSRs remains stable. Both companies are subsidiaries of ProAssurance Corporation (PRA) [NYSE:PRA].

At the same time, A.M. Best affirmed the FSR of A+ (Superior) and the ICRs of “aa-” of ProAssurance Casualty Company, ProAssurance Indemnity Company, Inc. and ProAssurance Specialty Insurance Company, Inc. The companies are select subsidiaries of PRA and are collectively referred to as ProAssurance Group (ProAssurance). The outlook for these ratings is stable. The companies are headquartered in Birmingham, AL.

Additionally, A.M. Best affirmed the FSR of A (Excellent) and the ICR of “a” of Podiatry Insurance Company of America (PICA) and the FSR of A- (Excellent) and ICR of “a-” of PACO Assurance Company, Inc. (PACO) (Nashville, TN), also subsidiaries of PRA. The outlook for these ratings remains stable.

Along with these rating actions, A.M. Best affirmed the ICR of “a-” of PRA, including the “a-” rating of PRA’s debt issue of $250.0 million 5.30% 10-year senior unsecured notes due 2023. A.M. Best also has affirmed the indicative debt ratings under the shelf registration of “a-” on the senior unsecured debt, “bbb+” on the subordinated debt and “bbb” on the preferred stock of PRA. The outlook for these ratings is stable.

The outlook revisions for Medmarc and Noetic reflect A.M. Best’s expectation for continuing stabilization of underwriting results after re-underwriting their multinational, large account medical device book of business since 2011. A.M. Best has similar expectations for the legal professional liability (LPL) book. The companies have improved the performance of their LPL book of business by bringing underwriting processes and claims management, formerly written by a third party, in-house. Management has ensured both entities have retained supportive capital adequacy through the processes. At the beginning of 2013, Noetic became a consolidated subsidiary of Medmarc as part of a corporate reorganization, where it had previously been a sister company and the only other participant of an intercompany pooling arrangement that was terminated coincident with the restructure. The ratings of Medmarc and Noetic reflect their excellent capital positions, ongoing strong operational results and their positions in the market as leaders in medical device product liability. These ratings also benefit from the companies’ relationship with their ultimate parent PRA, the continuing assimilation of the companies into the enterprise and explicit operational and financial support provided by affiliates.

The affirmation of the ratings of the ProAssurance group’s members reflects their strong risk-adjusted capitalization, favorable operating performance and strong business profile in the medical professional liability insurance sector and other business lines. The group’s ongoing underwriting success is credited to management’s conservative reserving practices, disciplined underwriting standards and proactive legal defense and claims handling philosophy. The ratings also consider the group’s market position across multiple jurisdictions and diversification across multiple disciplines within the medical professional liability space, along with legal professional liability lines and the recently added life sciences and medical device liability business.

These ratings also acknowledge the depth and breadth of ProAssurance’s enterprise risk management programs and policies. In addressing market challenges in a prolonged soft medical professional liability, management has leveraged its talent, knowledge base and market position to introduce innovative alternatives and grown its platform following the successful integration of multiple bolt-on acquisitions. Current initiatives include joint ventures, network affiliation programs and capital investments in Lloyd’s syndicates. As the company pursues these endeavors while addressing other competitive and investment challenges, the outlook is based on the expectation of continued superior performance across the organization and capitalization that is supportive of these ratings.

The affirmations of the ratings for PICA and PACO reflect the two companies’ respective supportive capital positions and better operating performance since being acquired by PRA in 2009. The companies broadened PRA’s medical professional liability lines of business to include podiatrists at PICA and chiropractors and acupuncturists at PACO, niche medical specialties with favorable loss parameters. PICA has posted stronger underwriting results over the past five years while PACO has generated operating profits over the past three years after refocusing its operations and exiting two underperforming lines of business.

As PRA is a publicly traded organization on the New York Stock Exchange, these ratings also reflect the financial flexibility afforded to all of PRA’s subsidiaries. PRA’s financial leverage is very conservative, interest coverage is strong, and it holds significant levels of cash and short-term investments outside of the insurance operating companies that are available for use without regulatory approval. Additional factors supporting the affirmation of the ratings include the extensive operational support and industry expertise available across the organization.

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

Key insurance criteria reports utilized:

o Rating Members of Insurance Groups

o Risk Management and the Rating Process for Insurance Companies

o Analyzing Insurance Holding Company Liquidity

o Insurance Holding Company and Debt Ratings

o Understanding BCAR for Property/Casualty Insurers

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.

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit

Copyright (c) 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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