A.M. Best Expands Best’s Impairment Rate and Rating Transition Study to Include More Granular Impairment Statistics

OLDWICK, N.J.--()--In a step designed to further enhance transparency, A.M. Best’s latest special report on the long-term impairment rates of A.M. Best-rated U.S.-domiciled insurance companies presents more granular impairment statistics associated with Best’s Credit Ratings. In addition, the report states that nine insurers were added to its impaired companies list in 2015, a group that includes eight property/casualty insurers and one life insurer.

The Best’s Special Report, titled, “Best’s Impairment Rate and Rating Transition Study — 1977 to 2015,” marks the 13th study conducted by the rating agency. This year’s report presents expanded information, including information on impairment rates associated with more granular Financial Strength Rating (FSR) categories and impairment rates associated with Long-Term Issuer Credit Ratings (Long-Term ICRs) – the rating scale most familiar to users of debt market ratings, as well as more granular transition tables.

Subsets of impairment-related data discussed in the report include:

  • Gross impairments, which encompass the broadest definition of impairments and reflect the impairment data A.M. Best has used to produce its ratings performance statistics in prior impairment studies;
  • Net impairments, which represent gross impairments, except that insurers that became impaired after ratings withdrawals are not counted and cohorts of insurers are not reduced for withdrawn ratings; and
  • Liquidations, which represent insurers counted under the net impairment tabulation that were eventually liquidated.

These three definitions of performance statistics provide different views of the credit risk associated with insurance carriers rated by A.M. Best. The report notes that users of these performance statistics should be aware of what types of issuers are included in the data when comparing default calculations across rating agencies. A.M. Best notes that these comparisons are inherently flawed due to the fact that not all rating agencies participate in the rating process across multiple industries. A.M. Best includes only insurance-related performance statistics in its impairment rates.

Drawn from A.M. Best’s general impairment database and historical rating records, this study is a special-purpose report on the ratings performance statistics associated with U.S. insurers that have had interactive FSRs and Long-Term ICRs from A.M. Best.

To access a copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=256284.

A.M. Best will host a webinar on Wednesday, Dec. 7, 2016, at 11:00 a.m. (EST), in which authors of this report will outline their findings. Register for the webinar at http://www.ambest.com/webinars/impairment16.

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

Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Emmanuel Modu, +1-908-439-2200, ext. 5356
Managing Director,
Insurance-Linked Securities
emmanuel.modu@ambest.com
or
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Emmanuel Modu, +1-908-439-2200, ext. 5356
Managing Director,
Insurance-Linked Securities
emmanuel.modu@ambest.com
or
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com