Insurance Credit Rating Factors Introduction

Insurance Credit Rating Factors Introduction

Gurdip Dhami

25 years: Treasury & ratings

In the first video of his series on ‘Insurance company credit factors’, Gurdip introduces different factors that ratings agencies use to rate insurers and explains how those factors vary among ratings agencies. Gurdip also explains how three ratings agencies use leverage ratio analysis and how rating methodologies set out the earnings coverage ratios.

In the first video of his series on ‘Insurance company credit factors’, Gurdip introduces different factors that ratings agencies use to rate insurers and explains how those factors vary among ratings agencies. Gurdip also explains how three ratings agencies use leverage ratio analysis and how rating methodologies set out the earnings coverage ratios.

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Insurance Credit Rating Factors Introduction

8 mins 37 secs

Overview

Moody's, Standard & Poors' and Fitch are the three main rating agencies in Europe. Credit ratings are forward-looking opinions produced by rating agencies on the relative credit strength of issuers or instruments issued by them. Each rating agency has its own rating scale which can be found on its website. Ratings are not the output of a model but are analyst driven and the analysts can adjust the calculated scores. The analysts may give more weight to a credit factor than the standard weighting set out in the rating methodology.

Key learning objectives:

  • Define credit ratings and credit worthiness of a company

  • Explain the measurement units for credit ratings

  • Define the strategy on which the company is valued

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