AM Best Affirms Credit Ratings of Protective Insurance Corporation and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Protective Insurance Company (PIC) and its wholly owned subsidiaries, Sagamore Insurance Company (Sagamore) and Protective Specialty Insurance Company (Protective Specialty). These companies collectively are referred to as Protective Insurance Corporation Group. Concurrently, AM Best has affirmed the Long-Term ICR of “bbb” of Protective Insurance Corporation, the organization’s publicly traded ultimate parent [NASDAQ: PTVCA, PTVCB]. The outlook of these Credit Ratings (ratings) is negative. All companies are domiciled in Carmel, IN.

The ratings reflect the group’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The negative outlook was placed on the group in November 2018 when it reported consecutive years of underwriting losses and adverse reserve development. The new management team has taken remedial actions, including the implementation of significant rate increases, re-underwriting the book of business and exiting unprofitable segments. The group’s operating results have since stabilized and its loss and combined ratios are on a trajectory of gradual improvement. The continuation of the negative outlook reflects the challenges the group continues to face to return to a level of profitability similar to its peers in a sector with continuing rising loss cost trends, and the time it will take to establish a consistent trend line due to the long-tailed nature of its products. AM Best expects management to continue to implement its strategy of improving its underwriting and reserving, while strengthening its ERM capabilities.

The group’s balance sheet strength is assessed as very strong based on its strongest level of risk-adjusted capitalization, robust liquidity and a supportive reinsurance program that has protected the group against significant losses, partially offset by lingering concerns of the strength of its loss reserves. The aggregate stop loss treaty, which had provided significant benefits in the past was non-renewed in 2020 but continues to provide the group with protection for prior accident years. Nevertheless, AM Best expects the reduced benefits from the non-renewal of the treaty to be offset gradually by better earnings prospects in the near future and continue to support the balance sheet strength at the very strong level.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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Jieqiu Fan Senior Financial Analyst [phone], ext. 5372 [e-mail]

Christopher Sharkey Manager, Public Relations [phone], ext. 5159 [e-mail]

Susan Molineux Director [phone], ext. 5829 [e-mail]

Jim Peavy Director, Public Relations [phone], ext. 5644 [e-mail]