Best’s Special Report: Best’s Impairment Rate and Rating Transition Study – 1977 to 2013

OLDWICK, N.J.--()--A.M. Best has released its 11th study on long-term impairment rates of A.M. Best-rated, U.S.-domiciled insurance companies.

The study covers the 36 one-year periods from December 31, 1977 to December 31, 2013 and only includes companies that had a financial strength rating (FSR) over this period. Of the 5,125 individual U.S. companies that carried a Best’s FSR, an average of 20.5 companies per year—or 738 companies—became financially impaired. Impairment, generally defined as any official action by a state regulator that restricts the insurance business activity of an operating insurance company, goes beyond the traditional concept of issuer defaults.

Since the last impairment study (which included impairments from 1977 through 2012), three companies have been added to the list of impaired insurers for 2013. These three impairments were property/casualty insurers.

The average annual impairment rate for all insurers over the period of this study was 0.64%. Secure companies—with FSRs of B+ (Good) and above—and Vulnerable companies—with FSRs of B (Fair) and below—had average annual impairment rates of 0.23% and 3.78%, respectively.

A.M. Best’s rating transition rates remained stable over the period covered by the study. Among companies with Secure ratings, 98.27% maintained their Secure status over a one-year period. The remaining 1.73% were downgraded to Vulnerable or became impaired over a one-year period.

For the full, complimentary report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=223018.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best Company
Emmanuel Modu, 908-439-2200, ext. 5356
Managing Director
Insurance-Linked Securities
emmanuel.modu@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

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Contacts

A.M. Best Company
Emmanuel Modu, 908-439-2200, ext. 5356
Managing Director
Insurance-Linked Securities
emmanuel.modu@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com