OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Hospitals Insurance Company, Inc. (HIC) (New York, NY). The outlook assigned to the Credit Ratings (ratings) is stable.
The ratings reflect HIC’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The balance sheet strength assessment reflects the company’s risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), which benefits from modest underwriting leverage, prudent reserving practices and a conservative investment portfolio. The company has a history of organic surplus growth and good quality of capital with no debt or surplus notes. HIC reported pre-tax operating income in each of the prior five years. Five-year average operating ratios and return metrics are better than the medical professional liability (MPL) peer group composite. AM Best expects these metrics to be more in line with or slightly outperform the peer group composite in the future.
HIC specializes in providing MPL insurance to hospitals and physicians affiliated with its insured hospitals in New York. Along with its sister company, Healthcare Risk Advisors (HRA), the combined entities offer an integrated approach to claims handling, risk management and data analytics that can provide a broad set of risk finance and risk transfer solutions to clients. While HIC has elevated product and geographic concentration risks as a single-state, primarily monoline insurer, this is mitigated partially by management’s significant depth of experience in the New York hospital professional liability market.
The Doctors Company, An Interinsurance Exchange (TDC), the second largest MPL insurer in the United States, acquired HIC in 2019. The company served the major N.Y. hospital systems—Mount Sinai, Montefiore and Maimonides—before its acquisition, and continues to do so post-acquisition. HIC recently opened its distribution model to accept other hospitals and physician groups in New York. While growth is projected to be moderate over the next few years, the planned expansion does carry a degree of execution risk. AM Best considers the group’s risk-management capabilities appropriate for the group’s risk profile. HIC has largely adopted the ERM practices of its parent, TDC.
The stable outlooks reflect the expectation that HIC will maintain a balance sheet assessment at the strongest level over the intermediate term with adequate operating results contributing to surplus growth needed to support the company’s expanding book of business following the opening of the HRA/HIC program to hospitals and physician groups in New York.
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