S&P Report Looks At ERM Scores of North American, Bermudian Insurers

Standard & Poor’s Ratings Services has updated its enterprise risk management (ERM) opinions for all of its rated North American and Bermudian insurance companies. S&P explained that an “insurer’s ERM program is a system of processes and practices that aims to measure and manage risk. Our ERM opinion reflects our assessment of the strength of an insurer’s ERM program.”

S&P said the findings, as detailed in the recently issued report – “Process Improvements And Regulation Drive ERM Of North American And Bermudian Insurers Forward” – include the following:
• There was little movement in the overall distribution of scores during the past year.
• Out of the seven companies rated as “weak” last year, four improved their scores to “adequate.” We believe this resulted from an increased focus on the importance of ERM and the impending effective date of the NAIC’s ORSA requirements.
• Property and casualty (P&C) companies continue to have a greater percentage of scores above “adequate” than do life companies.
• Scores for risk models are generally higher for P&C companies than for life insurers.
• Health insurance and P&C companies continue to be less affected by market/interest-related risks than their life insurance counterparts.
• Our reviews indicate that there are areas of ERM where the industry may face challenges in meeting the requirements of ORSA guidelines.
• As has been the case each year for which we have correlated ERM scores and stock performance, the level of stock price volatility of companies was inversely related to their ERM scores.

The report is available to subscribers of RatingsDirect at www.globalcreditportal.com and at www.spcapitaliq.com.

Source: Standard & Poor’s

Topics Carriers Property Casualty