AM Best Upgrades Issuer Credit Rating of Texas Hospital Insurance Exchange
November 26, 2019by
AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “bbb” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Texas Hospital Insurance Exchange (THIE) (Austin, TX). The outlook of the Long Term ICR has been revised to stable from positive, while the outlook of the FSR remains stable.
These Credit Ratings (ratings) reflect THIE’s balance sheet strength, which AM Best categorizes as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
The Long-Term ICR upgrade reflects AM Best’s opinion that THIE’s management has demonstrated improved balance sheet strength through consistent and positive growth in policyholder surplus, favorable loss reserve development, and the implementation of risk-mitigation strategies that address tail-risk events related to potential man-made catastrophes. The company’s strong operating performance was a major contributor to the growth in policyholder surplus.
The strong balance sheet strength assessment also considers THIE’s strongest level of risk-adjusted capitalization, partially offset by its limited scale and financial flexibility. In addition, a significant percentage of policyholder surplus pertains to subscriber savings, which are earmarked to be repaid to the company’s members, beginning five years after a subscriber leaves THIE.
Partially offsetting these positive rating factors is THIE’s limited business profile and narrow spread of risk due to its focus on writing workers’ compensation and medical professional liability insurance for small rural hospitals in Texas