Business & Finance
Business and Finance
Business and Finance
Wed, May 25, 2011
Tue, May 24, 2011 Fitch Places FPIC's Ratings on Rating Watch Positive Following Transaction
CHICAGO--([ BUSINESS WIRE ])--Fitch Ratings has placed on Rating Watch Positive the 'BBB-' senior debt rating and 'BBB' Issuer Default Rating (IDR) of FPIC Insurance Group (NASDAQ: FPIC)and the 'A-' Insurer Financial Strength (IFS) ratings of FPIC's wholly owned insurance subsidiaries (see list below).
Today's rating action follows the announcement by The Doctors Company (TDC) to purchase FPIC for $362 million, or 1.6 times (x) tangible book value. The purchase price represents a 31% premium over FPIC's closing price on May 23, 2011. FPIC's Board of Directors has approved the proposed transaction and has resolved to recommend that its shareholders approve the merger. The transaction is expected to close in the fourth quarter of 2011 and is subject to customary closing conditions, including the receipt of regulatory approvals, and approval by a majority of FPIC's shareholders.
FPIC's ratings are currently based on strong underwriting performance and profitability, adequate loss reserve levels, a relatively strong asset portfolio, and adequate capital position.
The rating also considers that FPIC is a mono-line insurer operating in one of the more volatile segments of the property/casualty insurance industry.
FPIC reported a GAAP calendar year and accident year combined ratio of 86.8% and 100.5%, respectively, for full year 2010. This is comparable to the 85.4% calendar year and 97.5% accident year combined ratio FPIC reported for full-year 2009.
Fitch expects to upgrade FPIC's ratings one notch to TDC's rating level at the close of this transaction. TDC's operating subsidiaries currently have an 'A' IFS from Fitch.
Fitch has placed the following FPIC Insurance Group, Inc.'s ratings on Rating Watch Positive:
--IDR at 'BBB'; Rating Watch Positive;
--Senior debt rating at 'BBB-'.
Fitch has placed the following FPIC insurance subsidiaries on Rating Watch Positive:
First Professional Insurance Company
Anesthesiologists Professional Assurance Company
Intermed Insurance Company
Advocate MD Insurance of the Southwest, Inc.:
--IFS 'A-'.
The Rating Outlook for all of the above ratings is Stable.
Additional information is available at '[ www.fitchratings.com ]'.
Applicable Criteria and Related Research:
--'Insurance Rating Methodology' (March 31, 2011);
--'Non-Life Insurance Rating Criteria (Global)' (March 31, 2011);
--'Fitch's Approach to Rating Insurance Groups' (December 14, 2010);
--'Insurance Industry: Global Notching Methodology' (March 31, 2011).
Applicable Criteria and Related Research:
Insurance Industry: Global Notching Methodology and Recovery Analysis
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=614265 ]
Insurance Rating Methodology
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=614266 ]
Non-Life Insurance Rating Methodology
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=604366 ]
Fitch's Approach to Rating Insurance Groups
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=586765 ]
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