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ARCHIVE | Criteria | Insurance | General: New Insurance Run-Off Payment Assessments Evaluate Capacity To Pay After An Entity Closes Feb 08
Standard & Poors, Feb 2008
Abstract
The nature of the insurance industry makes it difficult to simply close an operation. An insurer may cease to write new risks but could spend years, sometimes decades, settling the liabilities that arise from the policies written before it closed its doors. Where the whole of the portfolio is closed to new business, the insurance entity is said to be 'in run-off' and must then settle all future liabilities from the resources it has available. In this situation, the entity which has ceased trading has limited ability to fund any shortfalls in its provisioning from future profits and may be unable to raise additional capital to fund deficits. Liabilities arising from some classes of non-life insurance are also difficult to...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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