OLDWICK, N.J.–(BUSINESS WIRE)–AM Best’s latest special report on the long-term impairment rates
of AM Best-rated U.S.-domiciled insurance companies states that three
U.S. insurance companies became impaired in 2018, continuing a prolonged
trend of low insurance industry impairments.
The Best’s Special Report, titled, “Best’s Impairment Rate and
Rating Transition Study — 1977 to 2018,” marks AM Best’s 16th study and
is aimed at estimating the risk of impairment of U.S. insurers. The
analysis covers 41 one-year periods from Dec. 31, 1977, to Dec. 31,
2018, and includes only U.S. insurers that had at least one Financial
Strength Rating (FSR) or one corresponding Long-Term Issuer Credit
Rating (ICR) during the period. The report provides summary statistics
related to impairments on the FSR scale (13 points) and the ICR scale
(21 points) most familiar to users of debt market ratings.
Subsets of impairment-related data discussed in the report include:
-
Gross impairments, which encompass the broadest definition of
impairments and include companies that AM Best has ceased rating by
the time of impairment. Gross impairments further reduces cohorts of
insurance carriers by withdrawn ratings, thus further boosting
impairment rates; -
Net impairments, which represent gross impairments, except
insurers that became impaired after rating withdrawals are not counted
and cohorts of insurers are not reduced for withdrawn ratings; and -
Liquidations, which represent insurers counted in the net
impairments that were eventually liquidated.
The report also addresses the issues related to comparing the AM Best
impairment study with corporate default studies of other major
Nationally Recognized Statistical Rating Organizations (NRSROs). These
corporate default studies primarily reflect the defaults associated with
senior unsecured debt obligations or their proxies. The report
emphasizes that any comparisons between AM Best’s impairment studies and
the corporate default studies of those NRSROs should be based on AM
Best’s holding company ICRs or their proxies, which are effectively
equivalent to AM Best’s senior unsecured debt ratings.
To access a copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=286570.
AM Best will present a webinar, “Best’s Impairment Study 2018,” on
Tuesday, June 18, 2019, at 10 a.m. (EDT). During the event, AM Best
analysts will review the results published in this report and address
the challenges in comparing corporate default studies of other NRSROs
with AM Best’s impairment studies. To register for the complementary
webinar, please visit http://www.ambest.com/webinars/impairment19.
AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Emmanuel Modu
Managing Director,
Insurance-Linked
Securities
+1 908 439 2200, ext. 5356
[email protected]
Michael Porcelli, FSA
Director,
Insurance-Linked
Securities
+1 908 439 2200, ext. 5548
[email protected]
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
[email protected]
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
[email protected]
