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A.M. Best affirms LAWPRO’s ‘A’ rating, changes outlook to negative


March 26, 2010   by Canadian Underwriter


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A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of Lawyers’ Professional Indemnity Company (LAWPRO), but changed its outlook from stable to negative on the basis of an increased loss ratio and a one-time re-evaluation of reserves based on the projected impact of the HST.
LAWPRO is a wholly owned subsidiary of the non-profit regulator The Law Society of Upper Canada (The Law Society). It writes lawyers’ professional liability insurance and title insurance exclusively, and is The Law Society program insurer for Ontario Lawyers.
A.M. Best said the rating and outlook reflected “LAWPRO’s adequate capitalization and favorable operating performance.”
But “partially offsetting these positive rating factors is the unfavorable claims development and further deterioration in the company’s combined ratio,” A.M. Best adds. “These results were due to a one-time revaluation of existing reserves by $10.7 million to reflect the anticipated impact of the implementation of a harmonized sales tax in Ontario and a significant decrease in the discount rate, resulting in an increase in claims liabilities.
“In addition, increases in loss frequency and severity trends contributed to unfavorable underwriting results. The company’s underwriting results may be further challenged by its exposure to fraud-related claims.”


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