Since Standard & Poor’s unveiled its updated criteria for rating insurers in May of last year, nothing much has changed with rating agency models, and few ratings changed in response to S&P’s new criteria, rating agency representatives say.

Executive Summary

Transparency matters in the ratings of P/C insurers, according to representatives of Standard & Poor's and Fitch Ratings. While rating processes haven't changed much since S&P's big announcement about revised rating criteria in May 2013, what has changed is the ability to engage with carrier executives about their impact on ratings and how other factors build to letter grades reflecting overall financial strength.

To rating officers at S&P and Fitch Ratings, the most notable changes aren’t related to the processes they use to assign letter grades to insurer financial strength. Instead, their efforts to offer clearer windows into the components of their ratings and how they fit together were the key activities they highlighted during interviews with Carrier Management this summer.

“A big theme among rating agencies these days is transparency,” said James Auden, Fitch’s leader of North American P/C Ratings. “So when we do our ratings, we need to strictly follow our criteria. And our rating packages, presentations cover all aspects of our criteria.”

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