AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” (Excellent) of Protective Property & Casualty Insurance Company (Protective P&C). The outlook of these ratings is stable. AM Best says the ratings reflect Protective P&C’s balance sheet strength, which AM Best assesses as “very strong”, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also reflect rating lift from its parent, Protective Life Insurance Company (Protective Life). The neutral business profile reflects the company’s concentration of underwriting risk in the highly competitive auto warranty market, offset by its geographic diversification. The company’s ERM is appropriate for its risk profile and is integrated with that of Protective Life, according to AM Best. Protective P&C’s balance sheet strength assessment is supported by the “strongest level” of risk-adjusted capitalisation, as measured by AM Best’s Capital Adequacy Ratio. It is supported by asset quality, adequate balance sheet liquidity and yearly organic surplus growth derived from earnings, which is partially offset by annual dividends to its parent. The balance sheet strength is partially diminished by Protective P&C’s extensive use of unrated dealer-owned reinsurance arrangements. AM Best considers the company’s operating performance to be adequate based on its consistent track record of profitability. Return metrics and underwriting ratios generally approximate its composite peer group of warranty insurers. AM Best has afforded rating enhancement to Protective P&C due to the implied support from its higher-rated parent. Based in St Louis, Missouri, Protective P&C specialises in providing coverage for vehicle service contracts and guaranteed asset protection products for automobiles, marine craft, power sport vehicles and recreational vehicles.
