According to Moody's, the rating review reflects concerns related to PMACC's operating performance and liquidity profile. Unexpectedly poor operating performance at the company's PMA Re unit was highlighted by its recent announcement of a $45 million pre-tax charge for adverse loss development on excess liability and professional liability lines for accident years 1998-2000. Moody's noted that while it recognizes that 2003 operating performance at PMA Re is expected to improve significantly due to the favorable underwriting environment that currently exists, it remains concerned about the risk of further adverse reserve development. From a liquidity perspective, Moody's noted that PMACC's fully-drawn $65 million bank credit facility contains a rating trigger that becomes effective upon a one notch downgrade of PMACC's senior debt rating maintained by another rating agency. It is Moody's view that such a scenario is unlikely absent some unexpected deterioration in the group's credit profile. Nevertheless, under such a scenario, the maturity of PMACC's obligations under the credit facility could be accelerated. www.moodys.com/insurance
Moody’s Reviews Ratings Of PMA Capital And PMA RE For Possible Downgrade
term debt ratings of PMA Capital Corporation (PMACC - senior at Baa3) and the A3 insurance financial strength rating of PMA Capital Insurance Company (which operates under the "PMA Re" brand name) on review for possible downgrade. The Baa1 insurance financial strength ratings of the members of PMA Insurance Group were affirmed, with the outlooks on these ratings moved to negative from positive due to the current rating status of their parent company, PMA Capital Insurance Company.
Published on February 10, 2003
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