Demotech, Inc. Summarizes Sixteen Years of Financial Stability Rating® Survival Rates

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Demotech, Inc. has been analyzing the financial stability of Property and Casualty insurance companies for approximately sixteen years. This retrospective analysis of 23,118 Financial Stability Ratings® indicates that insurers earning FSRs of A or better, stable companies, had survival rates at or above expectations.

Demotech, Inc. releases an extensive, 16-year analysis, entitled ‘Serious About Solvency,’ of the survival rates of Financial Stability Ratings® (FSRs) prepared between 1989 and 2004. This study demonstrates the favorable survival rates associated with stable FSRs.

Based upon 23,118 FSRs prepared over the period 1989 through 2004, Demotech observes that P&C insurance companies earning an FSR of A or better have long-term survival rates that compare favorably to the impairment rates of other rating alternatives. Furthermore, given Demotech’s affinity for reviewing regional insurance companies, specialty insurance companies and relatively new insurance companies, its methodology effectively discerns between those that will be financially stable and those that will not.

Barry Koestler, Chief Ratings Officer of Demotech, states, “the analysis confirms the impressive track record of Financial Stability Ratings® and enables users of FSRs to reach a comfort level regarding the historical survival rates of companies with stable FSRs.” Accordingly, insurance carriers providing stand-alone umbrella coverage, reinsurance or insurance agents’ errors and omissions coverage can identify financially stable regional insurance companies and be confident in the long-term survival rates of insurance companies earning a Financial Stability Rating® of A or better.

Summary:

Demotech, Inc. has been analyzing the financial stability of Property and Casualty insurance companies for approximately sixteen years. This retrospective analysis of 23,118 Financial Stability Ratings® indicates that insurers earning FSRs of A or better, stable companies, had survival rates at or above expectations.

Since Demotech focuses on the assignment of Financial Stability Ratings® to regional and specialty insurance companies, the impressive historical record of financial analysis is evidence that regional and specialty insurance companies assigned stable Financial Stability Ratings® present no more financial risk than larger insurance companies earning stable FSRs. Due to the proven predictive ability of Financial Stability Ratings®, FSRs can be utilized to identify financially stable companies regardless of size.

A complete copy of the study is available for download at http://www.demotech.com.

Contact:

Joseph Petrelli

614-761-8602

joseph.petrelli@demotech.com

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