TheStreet.com Ratings

Advertisement
TheStreet.com Ratings Research Methodology for Property/Casualty Insurers

TheStreet.com Ratings analyzes the financial results of U.S. Property and Casualty Insurers based on annual and quarterly financial statements filed with the National Association of Insurance Commissioners as well as supplemental information requested directly from the rated insurance companies. The Financial Strength Ratings are designed to give policyholders and financial professionals a solid indication of a company’s risk of failure.

TheStreet.com Financial Ratings are based on a quantitative analysis of hundreds of factors that are synthesized into five indices: capitalization, reserve adequacy, profitability, liquidity and stability. These indices are then used to arrive at a letter grade. In order to receive a good rating, an insurer must score well on all seven indices. But a weak rating on any one index can result in a low rating, as insolvency can be caused by any one of a number of factors, such as inadequate capital, unpredictable claims experience, poor liquidity, inadequate reserving, or operating losses.

The primary components of TheStreet.com Financial Strength Rating are as follows:

What Our Ratings Mean

A Excellent. The company offers excellent financial security. It has maintained a conservative stance in its investment strategies, business operations and underwriting commitments. While the financial position of any company is subject to change, we believe that this company has the resources necessary to deal with severe economic conditions.
B Good. The company offers good financial security and has the resources to deal with a variety of adverse economic conditions. It comfortably exceeds the minimum levels for all of our rating criteria, and is likely to remain healthy for the near future. However, in the event of a severe recession or major financial crisis, we feel that this assessment should be reviewed to make sure that the firm is still maintaining adequate financial strength.
C Fair. The company offers fair financial security and is currently stable. But during an economic downturn or other financial pressures, we feel it may encounter difficulties in maintaining its financial stability.
D Weak. The company currently demonstrates what we consider to be significant weaknesses which could negatively impact policyholders. In an unfavorable economic environment, these weaknesses could be magnified.
E Very Weak. The company currently demonstrates what we consider to be significant weaknesses and has also failed some of the basic tests that we use to identify fiscal stability. Therefore, even in a favorable economic environment, it is our opinion that policyholders could incur significant risks.
F Failed. The company is deemed failed if it is either 1) under supervision of an insurance regulatory authority; 2) in the process of rehabilitation; 3) in the process of liquidation; or 4) voluntarily dissolved after disciplinary or other regulatory action by an insurance regulatory authority.
+ The plus sign is an indication that the company is at the upper end of the letter grade rating.
- The minus sign is an indication that the company is at the lower end of the letter grade rating.
U Unrated Companies. The company is unrated for one or more of the following reasons: 1) total assets are less than $1 million; 2) premium income for the current year is less than $100,000; 3) the company functions almost exclusively as a holding company rather than as an underwriter; or 4) we do not have enough information to reliably issue a rating.