Intelligent Insurer travels back to a time when reinsurers could still achieve triple-A ratings and asks why this is no longer the case.
Triple-A ratings are big news at the moment. In the arena of country credit ratings, the loss of, or even just the threat of losing, the highest of all ratings can be enough to instigate a state of national panic in major economies.
Once upon a time, it was the same for reinsurers. In the past, a number of the biggest reinsurers boasted triple-A status. Over the past 10 years, however, these have been steadily eroded, the last being lost in January 2012 when Standard & Poor’s downgraded the rating of French government-backed reinsurer CCR to AA+ from AAA.
Stuart Shipperlee, partner at Litmus Analysis, argues that one of the primary drivers of this decline was a change in the dynamic between the levels of capital held by reinsurers, and their operating performance, compared with what the rating agencies required.
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Rating agency, Litmus Analysis, Standard & Poor’s