You are here:HomeNews CenterInsurance News2004A.M. Best Publishes 34-Year Property/Casualty Insolvency Study

A.M. Best Publishes 34-Year Property/Casualty Insolvency Study

The U.S. property/casualty industry in the past decade has shown resiliency and improved risk management amid extraordinary events. Since 1969, this business segment has experienced...
May 25, 2004

The U.S. property/casualty industry in the past decade has shown resiliency and improved risk management amid extraordinary events. Since 1969, this business segment has experienced wide fluctuations in annual impairment rates. Those are among the conclusions of an A.M. Best study on insolvencies between 1969 and 2002.  Among other findings:

  • The frequency of financial impairments tended to move in tandem with the factors affecting company earnings. More than half the impairments were caused by deficient loss reserves/inadequate pricing or by too-rapid growth. Often, financial or underwriting shocks pushed already vulnerable companies into impairment.
  • The predictive value of a Best's Rating in identifying the more vulnerable companies was confirmed. Best's Rating system identified nearly all companies approaching impairment by significantly lowering or eliminating their rating.

The report is available free to subscribers and for a fee to non-subscribers at www.bestweek.com

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