S&P REVIEWS METHODOLOGY ON INSURANCE RATINGS

Rating agency Standard & Poor's is reviewing the assumptions and methodologies that it uses to assign global-scale ratings to insurers. Credit analyst Rodney Clark said that the reassessment, which does not include S&P's methodology with mortgage and bond insurers, was intended "to enhance the transparency of our methodology and the comparability of ratings on insurers globally with those in other sectors". S&P expects that a significant majority of insurers will see either no change to their ratings or a move of no more than one notch. It said that "we expect to provide guidance about the scoring of each element of a newly introduced "business risk profile" and a "financial risk profile" for each insurer. The combination of the two would typically anchor the final rating". In addition, a new Insurance Industry Country Risk Assessment, addressing the risks that insurers face operating in specific sectors and countries, would become a key element of the Business Risk Profile. However, it would probably not be as significant as a similar country risk assessment already applied to the banking industry " stemming from our view that systemic factors play a smaller role in the creditworthiness of insurers than for banks", S&P said.