Best’s Special Report: Best’s Impairment Rate and Rating Transition Study — 1977 to 2018
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
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 Gross impairments further reduces cohorts of insurance carriers by withdrawn ratings, thus further boosting impairment rates;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insurers that became impaired after rating withdrawals are not counted and cohorts of insurers are not reduced for withdrawn ratings; and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
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.
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Source: AM Best
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