A.M. Best has assigned a financial strength rating of “A (Excellent)” and an issuer credit rating of “a” to COPIC, a risk retention group based in the District of Columbia.
COPIC RRG’s ratings reflect its excellent risk-adjusted capitalisation, A.M. Best’s expectation of modest favourable operating performance (being a start-up company) and strong reinsurance protection.
Its initial capital was provided by its sponsor, COPIC Trust, while “significant reinsurance support” is provided to the RRG by COPIC Insurance Company, the lead company of a diversified service organisation dedicated to anticipating and meeting the needs of healthcare in Colorado.
These positive rating factors are partially offset by COPIC RRG’s risk of adverse losses from being a start-up company and expanding into new states, the concentration risk of primarily writing one line of business “in a somewhat limited geographic area” and the amount of initial capital contributed, which “is somewhat low”, according to A.M. Best.
The ratings further reflect the limited permanency of capital as COPIC RRG’s entire capital is in the form of a 20-year surplus note. But this is mitigated by the long maturity of the note and the anticipated very low underwriting leverage represented in COPIC RRG’s business plan.
The RRG maintains a conservative investment portfolio with minimal returns expected. Therefore, underwriting performance will be the primary driver of surplus growth, said the rating agency.
The outlook is based on its conservative pricing and reserving practices and strong business position in its medical professional liability insurance markets.
