In my opinion, this whole episode hurts Demotech’s credibility. They had a conference call, press releases, meetings, etc. and basically spoke to the real financial and managerial shortcomings of many Florida HO companies. Then, after some infusion of capital and a couple of mergers they come up with this-it’s all OK except one minor downgrade. Borrowing someone else’s capital does not make a company good or solvent, it just staves off their demise for another day. Rating agencies are supposed to ferret out these types of companies but Demotech apparently is OK with having a “dead man walking” set of insurance enterprises instead.
Several Demotech rated carriers do indeed have AM Best Ratings as well. Florida Family, SafePoint, Castle Key, and ASI off the top of my head. None of the carriers that were “in danger” had an AM Best rating though.
The ending to this story is worse than the Matrix trilogy.
In my opinion, this whole episode hurts Demotech’s credibility. They had a conference call, press releases, meetings, etc. and basically spoke to the real financial and managerial shortcomings of many Florida HO companies. Then, after some infusion of capital and a couple of mergers they come up with this-it’s all OK except one minor downgrade. Borrowing someone else’s capital does not make a company good or solvent, it just staves off their demise for another day. Rating agencies are supposed to ferret out these types of companies but Demotech apparently is OK with having a “dead man walking” set of insurance enterprises instead.
Yeah but chances are that there will never be another hurricane in Florida so it’s all good.
And all of those carriers lack AM best rating…
Several Demotech rated carriers do indeed have AM Best Ratings as well. Florida Family, SafePoint, Castle Key, and ASI off the top of my head. None of the carriers that were “in danger” had an AM Best rating though.
What would it take to not get an A rating from Demotech?? Have to give the guy credit for finding a niche in the rating charade.
Demotech is a joke. They basically caved on this. Once they realized that they were about create panic in the market, they buckled.