In mid-November last year, Standard & Poor’s announced it was updating its criteria for evaluating management and governance for corporate entities and insurers, but the rating agency does not expect any ratings surprises to emerge as a result. Executive SummaryS&P evaluates nine management factors and seven governance factors to develop scores of “strong,” “satisfactory,” “fair” or “weak” relating to the strategic effectiveness, management and board oversight of insurers. P/C carrier ratings are unlikely to change as a result of updated evaluation criteria that reveal more explicitly the type of thinking that has always been part of S&P’s analysis, analysts say.
In most cases, S&P’s view of corporate governance will not affect credit ratings of insurers, Rodney Clark, managing director for Standard & Poor’s Insurance Ratings in New York, wrote in a just-published article he wrote exclusively for Carrier Management, “S&P Explains Rating Evaluation Of Insurer Governance, Management Strategy.” By itself, good strong governance does not enhance creditworthiness, although weak governance can put negative pressure on creditworthiness, he added.