S&P’s New Insurance Criteria Released; Method Would Have Spotted AIG’s Past Problems

May 8, 2013 by Susanne Sclafane

Incorporating lessons learned from historical periods for industry stress, including the near-failure of American International Group, Standard & Poor’s published a revised rating methodology for insurance companies on Tuesday.

Executive Summary

New factors that S&P analysts will use to rate insurers going forward would have caught some of the problems that caused insurer insolvencies and near-failures, but as ratings are published under the new criteria over the next three months, positive actions are the most likely.
Executive Summary New factors that S&P analysts will use to rate insurers going forward would have caught some of the problems that caused insurer insolvencies and near-failures, but as ratings are published under the new criteria over the next three months, positive actions are the most likely.

The criteria introduce new components to capture items like industrywide pricing declines, country risks, risk concentrations, and prospective capital changes.