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

Billie Ann Brotman

Journal of Insurance Issues, 1989, vol. 12, issue 1, 58-70

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.

Date: 1989
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