As cedants become ever more sophisticated in their understanding of ratings, analytical firm Litmus Analysis examines the ratings of the wide range of reinsurance carriers in Europe using a unique methodology to establish their average ratings. Here, Stuart Shipperlee, partner at Litmus, describes some of the chart’s findings.
A striking feature of the table we produced for Intelligent Insurer last month covering the 40 largest global reinsurance groups—was that the lowest average rating across all 40 was ‘A-’. While the reinsurance industry has come to expect ‘A’ or even ‘AA’ ratings, these are notably high by normal credit rating standards.
Not surprisingly this month’s European list (which includes some reinsurers who are relatively small in absolute terms and who often lack significant international diversification) features several ‘sub A’ range carriers.
Reinsurer buyer and broker attitudes to desired rating levels vary depending on the context. Since, for reinsurers, both size and geographic diversification play a key role in the criteria of all four of the major agencies, it is inevitable that some of the central and eastern European carriers struggle to get into the ‘A’ range at this stage of their development.
ratings, cedants, Litmus, Stuart Shipperlee