Pengyuan International’s insurer financial strength rating (IFSR) is a globally comparable, forward-looking opinion about an insurance operating company’s ability to repay its policyholder obligations on time and in full. Not only is the IFSR relevant to investors looking to assess an insurance company’s financial status, but it is also of significant value to insurance clients, intermediaries and other credit counterparties.
The IFSR is not a recommendation to purchase insurance policies from any insurance provider. Furthermore, the IFSR does not address situations where the legitimacy of a specific insurance claim or group of insurance claims is under commercial, legal or regulatory dispute during the normal course of business.
The IFSR applies to insurance operating companies that engage in the following business lines:
• Life and annuities;
• Property& casualty (“P&C”);
• Life and/or P&C reinsurance;
• Health insurance.
• However, it excludes insurers that operate in:
• Mortgage insurance; and
• Credit and guarantee insurance.
The IFSR follows a rating scale from AAA to D. The IFSR rating scale and the characteristics commonly associated with insurers in each rating category are shown in the table below.
The AAA to BBB categories are assigned to insurance organizations that we expect to have an “Extremely Strong” to “Adequate” ability to honor their policy holder obligations on time, namely: AAA (Extremely Strong), AA (Very Strong), A(Strong) and BBB (Adequate). +/- modifiers may be added to the AA, A and BBB rating levels to further distinguish creditworthiness within a particular level.
The BB to C categories are assigned to insurers that we believe have a “Marginally Adequate” to “Highly Vulnerable” ability to repay their policy holder liabilities on time and in full. These categories consist of BB (Marginally Adequate), B (Weak), CCC (Very Weak) and CC (Extremely Weak). +/- modifiers may accompany the BB, B and CCC rating categories to provide more granularity on the credit quality within each category.
In addition, the RS designation is assigned to insurers that are currently under regulatory supervision due to their failure to meet the relevant authorities’ solvency or other prudential requirements.
The D designation is assigned to insurance firms that have defaulted on their policy holder liabilities.
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