S&P Affirms Physicians Insurance Co. of WI Ratings

Standard & Poor’s affirmed its ‘BBBpi’ counterparty credit and financial strength ratings on Physicians Insurance Co. of WI. The ratings reflect the company’s very strong capitalization, good operating performance, and high geographic and product line concentration.

Major rating factors

— The company’s capitalization at year-end 2002 was very strong, and surplus stood at $65 million at year-end 2002. Leverage as measured by premiums and liabilities to surplus was conservative at 2.87x at year-end 2002;

— Operating performance of the company is good with Standard & Poor’s earnings adequacy ratio of 81 percent and a five-year average return on revenue of 15.5 percent. The net income of the company is volatile with a loss of $6.3 million in 2002 against a profit of $3.8 million in 2001.This volatility in net income limits the rating;

— The company displays high geographical and product line concentration, with the state of Wisconsin alone accounting for almost 50 percent of the net premiums written in the medical malpractice business segment. High concentration exposes the company to economic, regulatory and competitive risk.