Fitch Upgrades The Doctors Company Group's Ratings; Outlook Stable
Fitch Ratings has upgraded the Insurer Financial Strength (IFS) ratings to
‘A’ from ‘A-‘ on The Doctor’s Company, an Intercompany Insurance Exchange
(Doctors) and its wholly owned insurance subsidiaries, see list below,
collectively referred to as The Doctors Company Group (TDC). The Rating
Outlook for all ratings is Stable.
Fitch, On Oct. 16, 2007, placed the ratings of TDC on Positive Rating Watch
following the company’s announcement of its proposed acquisition of SCPIE
Holdings, Inc (SCPIE) for $281 million. Fitch noted at this time that there
was positive rating pressure on TDC’s ratings from the company’s strong
performance under Fitch’s economic capital model, Prism, above-average
underwriting profitability relative to peers, adequate loss reserve levels,
and an experienced management team, however, a further analysis of SCPIE,
its loss reserve position, and a pro forma capital adequacy analysis of the
combined entities was warranted to resolve the Rating Watch status.
Fitch’s rating action today is predicated on its belief that the acquisition
of SCPIE will enhance TDC’s operating profile and will not materially alter
TDC’s above average capital position. Fitch believes SCPIE’s overall reserve
position is likely deficient to adequate. In particular, SCPIE’s run-off
assumed reinsurance reserves is likely deficient but the company’s core
medical malpractice reserves are likely redundant. On balance and when
combined with TDC’s strong reserve position Fitch believes reserve quality
of the combined entities is supportive of today’s rating action.
Fitch believes that TDC is in a good position to leverage potential
synergies from SCPIE due to the significant overlap in the companies’
geographical footprints and operating profiles. However, Fitch also notes
that the proposed acquisition creates potential integration and execution
risk. The proposed acquisition will likely close near the end of the first
Doctors is a California domiciled reciprocal insurer with operating
subsidiaries engaged in medical malpractice insurance. The company ranks
among the top five U.S. writers of medical malpractice insurance.
Founded in 1976, California-based TDC insures over 33,600 physicians and is
endorsed by numerous medical societies. As of Sept 30, 2007, TDC reported
$425 million of net premiums written, and shareholders equity of $811
million. TDC is licensed as an admitted carrier in 48 states, the District
of Columbia, and the Territory of Guam.
Fitch has upgraded the IFS ratings of the following TDC insurance
subsidiaries to ‘A’ with a Stable Outlook from ‘A-‘ Positive Rating Watch:
–The Doctors’ Company an Intercompany Insurance Exchange;
–Professional Underwriters Liability Insurance Company (PULIC);
–Underwriter for the Professions Insurance Company (UPIC);
–Northwest Physicians Insurance Company (NPIC).
–OHIC Insurance Company (OHIC)
available on the agency’s public site, www.fitchratings.com. Published
ratings, criteria and methodologies are available from this site, at all
times. Fitch’s code of conduct, confidentiality, conflicts of interest,
affiliate firewall, compliance and other relevant policies and procedures
are also available from the ‘Code of Conduct’ section of this site.