A Probit Analysis of Best Ratings

Raja Bouzluita and Arthur J. Young

Journal of Insurance Issues, 1998, vol. 21, issue 1, 23-34

Abstract: In 1991, the A.M. Best Company changed the schedules and procedures for assigning ratings to property-liability insurers. An explanation of this change is of interest to consumers, regulators, and management. This study uses ordered probit to test for a downshift in the average ratings. The results of the analysis show that there has been a movement toward lower ratings and that the return on surplus is more important with the new ratings. The results are robust with respect to alternative estimation procedures.

Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:wri:journl:v:21:y:1998:i:1:p:23-34

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