MIIX Group Rating Withdrawn

A.M. Best Co. withdrew the financial strength rating of “C+” (Marginal) of MIIX Group (MIIX), Lawrenceville, N.J., and assigned it a rating of NR-4 (Company Request). This rating action was based on management’s decision not to participate in the interactive rating process.

The rating action applies to MIIX Insurance Company, and its two subsidiaries, Lawrenceville Property & Casualty Co. Inc. and MIIX Insurance Company of New York. The negative outlook is also being withdrawn.

The request to withdraw from the rating process follows the acceptance by the New Jersey Department of Banking and Insurance (NJ DOBI) of the run-off of MIIX Insurance Company.

The plan requires the company to immediately discontinue writing new medical malpractice policies. However, it allows for the renewal of New Jersey policies over the next 90 days, at which time MIIX—with the exception of providing tail coverage—must stop issuing policies in accordance with each state’s requirements.

The prior rating of “C+” (Marginal) with a negative outlook reflected the group’s significantly weakened capitalization, which resulted primarily from adverse loss reserve development, funds held charges and establishment of a valuation reserve to offset a deferred tax asset recorded during fourth quarter 2001.

The reserve charge reflected a trend of unprecedented loss severity that emerged in the latter half of 2001, particularly in the Pennsylvania institutions book as well as adverse development associated primarily with physician business in certain other states, most notably Pennsylvania, Texas and Ohio. MIIX Insurance and Lawrenceville reported NAIC Risk Based Capital (RBC) ratios below the minimum threshold required by the NAIC.