February 26, 2020 by matray

AM Best has downgraded the Financial Strength Rating (FSR) to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a-” from “a” for the members of NORCAL Group (NORCAL). Concurrently, AM Best has maintained the under review status on these Credit Ratings (ratings) and revised the implications to developing from negative. (See below for a detailed listing of the companies.)

The ratings reflect NORCAL’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

These rating actions are a follow up to ones taken on Dec. 10, 2019, when the group was placed under review with negative implications after significant reserve strengthening was reported in third-quarter 2019, resulting in deterioration of capitalization and profitability. The rating downgrades reflect the adverse reserve development reported in fourth quarter, the additional net reserve leverage taken on by this charge and the potential for further adverse loss reserve development, which is considered in AM Best’s view of risk-adjusted capitalization. The size and breadth of the charge also raises questions as to risk awareness and the appropriateness of the group’s reserving and claims management practices, as well as loss-cost assumptions when setting pricing.  

The under review status takes into consideration the potential for additional reserve charges as well as the recently announced acquisition of the group by ProAssurance Corporation, one of the leading medical professional liability insurers in the United States. The value of the transaction involves a base consideration to policyholders of $450 million with a $150 million three-year earn-out on prior year reserves, following the demutualization of NORCAL. The transaction is expected to close in late fourth-quarter 2020 or in first-quarter 2021, pending demutualization and regulatory approval.  

The developing implications reflect the potential for NORCAL’s ratings to be lowered in the event the transaction does not close and/or further reserve development is reported. There is also the potential for NORCAL’s ratings to be stabilized or enhanced if the ProAssurance transaction is consummated. However, concerns regarding rising loss costs (i.e., severity) in the medical professional liability segment and its impact on profitability remain.

The FSR was downgraded to A- (Excellent) from A (Excellent) and the Long-Term ICRs downgraded to “a-” from “a”, with the implications of the under review status revised to developing from negative for the following members of NORCAL Group:

· NORCAL Mutual Insurance Company

· NORCAL Specialty Insurance Company

· Medicus Insurance Company

· FD Insurance Company

· Preferred Physicians Medical Risk Retention Group, a Mutual Insurance Company

February 20, 2020 by matray

ProAssurance Corp. and NORCAL Group announced today the signing of a definitive agreement under which NORCAL would become a part of ProAssurance in a $450 million transaction following the demutualization of NORCAL Mutual Insurance Company (NORCAL Mutual), NORCAL's ultimate controlling party. The demutualization and the acquisition agreement are mutually contingent, and are subject to required regulatory and policyholder approvals. Based on available estimates of premium, the combination of these companies is expected to create the nation's third largest specialty writer of liability insurance for healthcare professionals and facilities. The companies are targeting to close the transaction by the end of 2020, subject to required approvals.

This transaction is expected to deliver multiple strategic and financial benefits, including enhancements to scale and capabilities, access to the high-quality California physicians market at a time when the healthcare professional liability market is starting to harden, and an expected $18 million in pre-tax synergies. These synergies will consist of corporate and back-office expenses, staffing, and other cost areas such as technology and real-estate, along with consolidation of reinsurance and investments. We anticipate the transaction will be accretive to earnings in the second year of ownership, and generate highly attractive returns to shareholders over the longer term as well.

"Bringing together these two great organizations provides ProAssurance and NORCAL with a transformational opportunity to enhance the services we can deliver to our customers and distribution partners, while creating significant long-term value for ProAssurance shareholders," said Ned Rand, President and Chief Executive Officer of ProAssurance. "Much like ProAssurance's predecessors, NORCAL was founded by physicians in the 1970’s to serve the professional liability insurance needs of physicians. NORCAL's history and physician focused culture make it a perfect fit for the ProAssurance family."

Rand continued, "For over 40 years, ProAssurance and its predecessors have navigated the peaks and valleys of the long cycle characteristic of our businesses. This announcement serves as an example of what we have always believed: it is during the most challenging stages of the long cycle that the greatest opportunities arise."

Scott Diener, President and Chief Executive Officer of NORCAL, said, "We are thrilled to be partnering with ProAssurance. Given today’s challenging healthcare environment, both organizations will benefit significantly from the formation of this enhanced company. Combining with ProAssurance brings tremendous strategic value to NORCAL through increased financial strength, access to new and innovative products for policyholders, and the increased scale of our core services and data analytics. The completion of this transaction will enhance and expand NORCAL's ability to serve its customers in the highly competitive MPL industry as we strive to carry out our mission."

Mike Boguski, President of ProAssurance's Specialty Property & Casualty division, added, "This transaction is an exciting combination of healthcare professional liability industry leaders. Strategically, this combination provides us with a national platform, geographic diversification, deep penetration in the physician market, best in class talent, and access to high quality distribution partnerships. We look forward to working with the exceptional employees and distribution partners at NORCAL to create a premier organization to serve the evolving healthcare market on a national basis."

The Boards of Directors for both companies have unanimously approved the transaction, which now requires the approval of NORCAL Mutual policyholders and appropriate state and federal regulators. Eligible NORCAL Mutual policyholders will be asked to vote on the Plan of Conversion and at the same time will be asked to select how they will be compensated for their mutual company interest in NORCAL Mutual. Under the terms of the agreement, NORCAL Mutual's demutualization will be followed by a tender offer from ProAssurance to purchase the stock of the demutualized company. ProAssurance will pay a base consideration of $450 million in cash, with a contingent consideration of up to $150 million should ultimate loss estimates as of the acquisition date develop favorably. In addition, NORCAL will have the opportunity to nominate two individuals to new seats on the ProAssurance Board.

February 19, 2020 by matray

Specialist insurer Beazley has enhanced its Virtual Care insurance policy in the United States to offer greater protection for the providers of technology-enabled healthcare and lifestyle management services.

The rapidly growing global digital health market is estimated to reach a value of $504 billion by 2025 and includes telehealth, which enables remote medical diagnosis and monitoring, and m-health, which permits self-monitoring of chronic conditions via apps and wearables, through to a range of lifestyle and wellness technology.

With the addition of the new Surge endorsement, Beazley can now provide first-party coverage for direct financial loss arising from:

• eCrime including fraudulent instruction, funds transfer and telephone fraud
• Business interruption loss from security breach or system failure
• Dependent business interruption loss from security breach or system failure
• Data recovery loss
• Cyber extortion loss
• Cryptojacking including the unauthorized access or use of computer systems to mine for digital currency.

This is in addition to the coverage already in place within Beazley Virtual Care, including professional liability (medical malpractice) and a wide range of other third-party coverages. The policy is available for worldwide risks across all 50 states on a surplus lines basis and provides integrated insurance for healthcare providers that would otherwise have had to buy multiple policies to protect themselves and their clients from potential risks.

“Backed by specialist claims expertise, Virtual Care’s Surge endorsement provides additional first-party cover for cyber crime and the subsequent business interruption that can floor businesses and slow their recovery,” said Jennifer Schoenthal, U.S. underwriting lead for Virtual Care. “As risks are always evolving, we’ve also included protection against crypto-jacking, which can leave firms with exorbitant electricity bills and sluggish systems if their IT is breached by crypto-mining cyber criminals.

“Beazley Virtual Care brings together our global expertise in underwriting medical malpractice, errors & omissions and privacy coverages to deliver extensive protection that helps our clients avoid the risk of coverage gaps and supports their evolving businesses.”

February 19, 2020 by matray

January 29, 2020 by matray

The Doctors Company announced the promotion of Robert E. White, Jr., to executive vice president, medical professional liability (MPL). White most recently served as the company's lead regional operating officer and previously held the position of regional operating officer of The Doctors Company's Southeast region.

In this new role, White will be responsible for The Doctors Company's admitted MPL business nationwide. His direct reports include senior vice presidents of business development, claims, patient safety and risk management, and underwriting, as well as our regional operating officers.

White's promotion is part of The Doctors Company's new leadership structure, which the company says is designed to meet the needs of the emerging medical community as the transformation of healthcare continues.

January 22, 2020 by matray

ProAssurance Corp. today reported a preliminary estimate of $37 million of adverse development in our prior accident year loss reserves in the fourth quarter of 2019 in our Specialty Property & Casualty segment. This adverse development is in response to deteriorating loss experience, driven by a large national healthcare account written since 2016.

In addition, the ProAssrance expects to book, in the quarter, a current accident year net loss ratio for the Specialty Property & Casualty segment between 134% and 148%. This also reflects deteriorating loss experience related to the previously noted national healthcare account and, to a lesser extent, in the healthcare professional liability excess and surplus lines of business. This business includes custom physicians, healthcare facilities, correctional healthcare, and long-term care policies. Loss estimates for the company’s core physicians, podiatric, chiropractic, legal professional liability and medical technology liability businesses will be in line with expectations.

The adverse development in prior accident years and the higher current accident year net loss ratio in the fourth quarter will result in a full-year 2019 net loss ratio between 105% and 109% for the Specialty Property & Casualty segment.

“As we have observed and discussed over the past 18 months, results in the medical professional liability line are deteriorating,” said ProAssurance president and chief executive officer Edward L. Rand, Jr. “Following our usual year-end review of updated loss data with internal and external actuaries, management concluded that additional reserves were needed in our Specialty Property & Casualty segment, particularly in regard to a single large national healthcare account that has experienced losses far exceeding the assumptions made when the account was underwritten. Since the middle of 2019, new leadership in the Specialty P&C segment has executed a comprehensive underwriting strategy in response to emerging loss trends and changing conditions in healthcare professional liability. This includes organizational structure enhancements, recruitment of additional talent in Specialty underwriting, tightening of underwriting criteria, terms and conditions and price strengthening. We are encouraged by our progress, and believe this strategy has positioned the company for future success.”

As previously announced, ProAssurance will report full results for the quarter and year ended December 31, 2019 after the close of normal New York Stock Exchange trading on Thursday, February 20, 2020. ProAssurance will conduct a conference call at 10:00 AM ET on Friday, February 21, 2020 to discuss the results, and other items of interest to investors participating in the call.

January 22, 2020 by matray

The Hilb Group announced the acquisition of New York-based BR Vital Brokerage. The transaction became effective January 1, 2020.

Based in Brooklyn, New York, BR Vital Brokerage is an independent brokerage primarily providing property and casualty insurance with a specialty in providing liability coverage to medical professionals. Steven Bykovsky, owner of BR Vital Brokerage, will continue to lead BR Vital Brokerage’s associates out of their existing location in Brooklyn.

"We are looking forward to the added capabilities we will have as part of The Hilb Group," said Bykovsky. "Access to a national network and pool of resources will help us provide clients with better, more expansive service than ever before." " BR Vital Brokerage’s specialty focus goes a long way toward strengthening both our program offerings and presence in the Tri-State region," said Ricky Spiro, The Hilb Group CEO. "We look forward to welcoming Steven and his associates to THG's team."

January 13, 2020 by matray

Coverys, a provider of medical professional liability insurance, announced the formal launch of Coverys European Holdings Limited (CEH), an agency platform and network that will invest in and collaborate with managing general agencies in Continental Europe and the United Kingdom (UK), specializing in the professional lines sector.

CEH will be led by a management team headed by Steven Spano as CEO and Doug Robare, who has been appointed as chief underwriting officer, supported by the resources available within Coverys UK, and with the full engagement of Coverys.

The new business will target non-competing MGAs across Europe with complementary portfolios in the professional lines sector. CEH is developing infrastructure and technology across the business to help improve MGA performance and reduce operating costs.

Spano, who worked as UK country manager at Generali Group, also served as chief financial officer for Generali UK and as chief financial officer of Travelers Managing agency at Lloyd’s. Robare, who previously served as global head of financial lines at Generali Group and as head of financial lines and professional liability at Aviva, began his career at AIG Europe.

“Coverys European Holdings marks another key milestone in the Coverys international growth strategy,” said Philippe Sloan, director of underwriting for the Coverys Managing Agency and a director of CEH. “Steven and Doug are the ideal candidates to launch a business which will set itself apart through its focus on exceptional underwriting. We will empower MGA’s across Europe and the UK by providing them with the pricing and infrastructure capabilities and support to grow as we enter a hardening market. This is an exciting time for Coverys and we are certain CEH will make an immediate and clear impact in our target markets.”

“There is a clear gap in the market for a new approach to bring together MGA businesses with a common interest,” said Steven Spano, chief executive officer of Coverys European Holdings. “The Coverys philosophy is based on investing in specialist underwriting expertise. Through this new venture, CEH will enable skilled underwriters to participate in a network that allows them to leverage new avenues for distribution and to offer a broader suite of products, with the immediate focus being in the professional lines space.”

January 8, 2020 by matray

CMIC Group announced that Michelle M. Ursini, previously the director of business development and marketing, has been promoted to the role of vice president of business development and marketing. Additionally, Garrett P. Cronin, previously the director of member services and underwriting, has been promoted to the role of vice president of underwriting and member services.

Ursini came to the CMIC in 2016 and has more than 15 years of experience in the professional liability insurance industry. She leads the company’s business development and marketing efforts, enhancing CMIC’s market presence and brand recognition throughout the company’s footprint.

“Shelly’s broad knowledge on the industry has positively impacted the company,” said Stephen J. Gallant, chief executive officer of CMIC Group. “Her past broker and carrier experience have been a tremendous asset.”

Cronin has more than 25 years of experience in the insurance industry. Through his role at CMIC, he oversees a variety of initiatives within the member services and underwriting department, including the integration of a new internal data system. He also manages the company’s rate reviews and filings, reinsurance contracts and ancillary product development.

“Garrett continues to evaluate our coverage options to enhance our product offerings for our policyholders,” Gallant said. “We look forward to his leadership as we continue to grow the company.”

January 7, 2020 by matray

Actuarial consulting firm Pinnacle Actuarial Resources announced that Tim Mosler has been named a principal and consulting actuary.

Mosler joined Pinnacle in 2014 and has been in the property/casualty insurance industry since 1996. He has been a consultant since 2001, specializing in the areas of medical professional liability, workers’ compensation, general liability and commercial automobile insurance. His clients include insurance companies, captives, health systems, self-insurance funds and government risk pools.

“Pinnacle is pleased to welcome Tim Mosler to our principal group,” said Joe Herbers, Pinnacle managing principal. “Since joining Pinnacle, Tim has driven superior service for clients and demonstrated commitment to our firm values of teamwork, professionalism, eminence and development of our people. He will continue to be an outstanding representative of Pinnacle and help grow our influence and prominence within the profession.”

Mosler previously served as director and consulting actuary and a member of Pinnacle’s executive team. He currently leads Pinnacle’s research function, which keeps the firm ahead of major trends, directions and innovations in the insurance industry and actuarial profession.

“I’m honored to be invited to join Pinnacle’s exceptional group of principals,” Mosler said. “The firm and its principal group have a tremendous industry reputation, built on integrity, quality of work and dedication to our clients. I’ll work to contribute to that legacy and advance the firm’s sterling reputation within the insurance and actuarial communities.”

Mosler has been active in the actuarial profession, serving on numerous Casualty Actuarial Society and American Academy of Actuaries committees, including the CAS Exam and E-Forum committees and the CAS Member Advisory Panel since 2007. He has presented at numerous industry forums and panels and shared his thought leadership in various publications. He will continue to be based in the firm’s Atlanta, Georgia, office.

“Tim is a great professional and will be an asset to the firm in his new role as principal,” Herbers said. “I’ve been fortunate to work alongside Tim for several years, and witness his professionalism and technical expertise first-hand. Pinnacle has been fortunate to have him as a leader and our clients will continue to benefit from his skills, knowledge and experience.”