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The Reliability of Best's Insurer Ratings Using Financial Information Published in the Annual Report

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  • Billie Ann Brotman

Abstract

The reason for purchasing property/liability insurance is to mitigate the risk associated with an unexpected catastrophic loss. Lenders, corporations and policyholders in general rely upon Best’s ratings when assessing the solvency of a particular insurer. Insurers in a strong financial position are sought. A faulty rating system results in policyholders’ retaining much of the risk that they sought to manage through buying insurance. This study examines "key" financial variables published by Best to determine whether the reported rations are reliable indicators of the letter rating assigned. It assesses the reliability of the rating schedule using only information contained in the annual reports.

Suggested Citation

  • Billie Ann Brotman, 1989. "The Reliability of Best's Insurer Ratings Using Financial Information Published in the Annual Report," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 12(1), pages 58-70.
    • Handle: RePEc:wri:journl:v:12:y:1989:i:1:p:58-70
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    Cited by:

    1. Caporale, Guglielmo Maria & Cerrato, Mario & Zhang, Xuan, 2017. "Analysing the determinants of insolvency risk for general insurance firms in the UK," Journal of Banking & Finance, Elsevier, vol. 84(C), pages 107-122.
    2. Mike Adams & Bruce Burton & Philip Hardwick, 2003. "The Determinants of Credit Ratings in the United Kingdom Insurance Industry," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3‐4), pages 539-572, April.
    3. Patrycja Chodnicka -Jaworska & Piotr Jaworski, 2019. "Insurance Companies – What Determinates Their Credit Ratings," Faculty of Management Working Paper Series 52019, University of Warsaw, Faculty of Management.
    4. Guglielmo Maria Caporale & Mario Cerrato & Xuan Zhang, 2016. "Analysing the Determinants of Credit Risk for General Insurance Firms in the UK," CESifo Working Paper Series 5971, CESifo.
    5. Jaspreet Kaur & Madhu Vij & Ajay Kumar Chauhan, 2023. "Signals influencing corporate credit ratings—a systematic literature review," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 50(1), pages 91-114, March.
    6. Laura Chiaramonte & Alberto Dreassi & Andrea Paltrinieri & Stefano Piserà, 2020. "Sustainability Practices and Stability in the Insurance Industry," Sustainability, MDPI, vol. 12(14), pages 1-25, July.

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