KBRA Releases Insurance Research: “Are Two (IFSR) Ratings Better Than One? You Decide”

Kroll Bond Rating Agency (KBRA) releases a new research note, “Are Two (IFSR) Ratings Better Than One? You Decide.”

KBRA discusses why the adage “two heads are better than one” applies to insurance financial strength ratings (IFSRs). The recent spate of negative rating actions related to the California wildfires highlights why the Insurance Information Institute (I.I.I.) recommends considering ratings from two or more independent rating agencies. Eight of the 17 recent negative rating actions were on insurance companies with a financial strength rating from only one rating agency.

An IFSR provides an independent third-party evaluation of an individual company’s ability to pay policyholder claims. The insurance ratings process highlights credit strengths as well as potential weaknesses, such as inadequate pricing, poor risk management, and other important factors. As noted by the I.I.I. (www.iii.org), “rating agencies disagree often enough…” – this is partly due to the agencies’ varying standards and rating methodologies.

As KBRA seeks to provide the investment community and other interested parties with the products and tools needed to make informed decisions, KBRA’s website, www.kbra.com, offers all market participants complimentary access to full rating reports and research. Additionally, KBRA believes a thorough financial analysis of an insurer, without reliance solely or predominantly on a capital model, is a more accurate way to effectively evaluate an insurers’ financial strength.

For the full report, click here.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190114005599/en/