Demotech Explains Its Financial Stability Ratings

Demotech believes that financial stability can be independent of size and that small, well-managed property/casualty insurers can often be more financially stable than larger, highly leveraged insurers. Its Financial Stability Ratings are a leading indicator of the financial stability of an insurance company and the likelihood of an insurer’s survival.

Financial Stability Ratings of A” Double Prime; (Unsurpassed); A’ Prime (Unsurpassed); and A (Exceptional) are accepted by the major participants in the secondary mortgage marketplace. Demotech also issues ratings of S (Substantial), M (Moderate) and L (Licensed), with the L being its lowest rating for carriers whose financial ability is limited.

The Demotech model is quantitative. It is based on reported financial information and analytical information. Qualitative considerations such as “quality of management” are not factored into its rating process.

A list of companies with a Financial Stability Rating can be found at www.demotech.com.