OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has assigned a financial strength rating of B+ (Good) and an issuer credit rating of "bbb-" to Preferred Contractors Insurance Company Risk Retention Group, LLC (PCIC) (Billings, MT). The outlook assigned to both ratings is stable.

These rating actions reflect PCIC's adequate capitalization and its quality management team, which has substantial expertise in marketing the type of business PCIC writes. Also inuring to the ratings is incorporation of a favorable business plan, upon which the profitability and liquidity metrics of the ratings are based.

Partially offsetting these positive rating factors are the company's volatile operating results during the first three years of operation, high expense ratio and limited business profile. An additional offsetting factor is execution risk associated with the implementation of PCIC's business plan.

Further rating factors are the company's fundamental business strategies, which include providing stable insurance coverage coupled with quality service for its members. Reflecting its limited business profile, PCIC as an insurer is exclusively oriented toward one class of insures, who act to concatenate the company's spread of risk. PCIC maintains a conservative operating strategy by limiting participation in its insurance program to members. Its geographic diversification is adequate since PCIC is registered in 20 states and has registrations pending in other states. The company is writing a consistent book of business and is familiar with the accounts it writes. The insurance program provides general liability coverage to general contractors and subcontractors in the residential and commercial construction industry. The company has consistently posted negative underwriting profits in its three short years of operations. However, the ratings recognize PCIC's financial projected operating results indicating favorable returns.


A.M. Best has concerns with PCIC meeting the goals included in its business plan, with the existing competitive pressures as well as economic volatility. A.M. Best will closely monitor the quarterly performance of PCIC, and any material negative deviation from its business plan in terms of management, earnings, capitalization or risk profile could result in negative rating pressure and a possibly downgrading of the ratings.

A.M. Best remains the leading rating agency of captive insurers rating a wide variety of more than 200 captives in the United States and throughout the world.

For current Best's Credit Ratings and independent data on the captive and alternative insurance market, please visit www.ambest.com/captive.

The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Company

Analysts

Alexander Sarfo, 908-439-2200, ext. 5779

alexander.sarfo@ambest.com

or

Steve Chirico, CPA, 908-439-2200, ext. 5097

steven.chirico@ambest.com

or

Public Relations

Jim Peavy, 908-439-2200, ext. 5644

james.peavy@ambest.com

or

Rachelle Morrow, 908-439-2200, ext. 5378

rachelle.morrow@ambest.com



Source: A.M. Best Company