From marketwatch.com: OLDWICK, N.J., Jul 25, 2014 (BUSINESS WIRE) — A.M. Best has downgraded the financial strength rating to B (Fair) from B+ (Good) and the issuer credit rating to “bb” from “bbb-” for Preferred Contractors Insurance Company Risk Retention Group, LLC (PCIC) (Billings, MT). The outlook for both ratings has been revised to negative from stable.
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The ratings reflects Preferred Contractors deteriorating risk-adjusted capitalization and uncertainty surrounding its volatile operating performance given the multiple and significant changes in reinsurance arrangements in recent years. These concerns are amplified by the sizable adverse loss-reserve development recorded during 2013 on prior accident years, sizable growth since 2011 and relatively weak management controls. The negative outlook on the ratings reflects A.M. Best’s concerns regarding the adequacy of the company’s loss reserves, relatively weak capitalization and uncertainty over future underwriting and operating results. (read more)