I said in my previous comment that I trust no ratings firm. Where was AM Best during the Poe fiasco? Let’s not even begin to talk about hedge funds with mortgage backed securities. Is Demotech perfect? Nope. Are they on par with the others? Probably.
So, are you saying that Demotech giving everyone an A rating will eventually get all these companies rated by a “real” rating organization like AM Best? Is that the “right” thing that Demotech is doing? Best downgraded Argus and Tower Hill this year, but Demotech still has both of them rated as A companies.
Seems to me that Demotech is aiding thinly capitalized companies mislead consumers and mortgage companies. Why don’t they have B,C,D,E, or F ratings? Everyone is an A or they are “withdrawn.” That in itself is a scam. I’d bet if you asked most consumers who are told their company has an A rating, they would say that they expect their are other companies out there rated B,C,D,E, or F through Demotech. There aren’t. Do you think agents tell their clients that Demotech has 3 primary ratings – all which include the letter A?
What percentage of Demotech rated companies have an A rating? 100% according to their website – I just looked it up.
Just think about their ratings system itself. AM best downgrades Argus and Tower Hill because of concerns regarding their financial stability. Demotech can’t lower their A ratings to demonstrate concern about a deteriorating financial condition. So, what do they do, they “suspend” their A rating, usually after the OIR has taken over the companies. 100% of the companies on Demotech’s list of Florida companies are A rated. That’s just wrong.
At least AM Best actually downgrades these companies as concerns arise. Is AM Best always right – absolutely not. But I would say they are heads and tails better than Demotech.
American Keystone was downgraded to “S” and downgraded again to “M” before they had their rating pulled. Edison has elected not to have their rating renewed, most likely because of an inevitable downgrade.
There’s no reason that a well re-insured company shouldn’t get an “A” rating. Reinsurance was the problem with Coral (Didn’t have enough from Wilma) and the problem with American Keystone (they couldn’t afford the bill). Any company that’s well re-insured and doesn’t rely heavily on the CAT fund probably deserves the higher ratings.
Go to Demotech’s website and look up Florida company ratings. There is not one on there with an M, S, L or any other letter. Let me know if you find one – I didn’t see one.
CFO Alex sink shut down People’s Trust for a number of reasons, including inadequate reinsurance. This is an 18 month old company, just like Magnolia.
Edison chooses not to get their rating renewed??? so…they are paying for an A rating? Doesn’t that sound like the only companies that Demotech rates are companies willing to pay the $6000 fee, knowing they will get an A rating? It’s a marketing toll, not a valid rating organization providing any true sense of the financial stability of an insurer.
Just what does it take for a company to get downgraded by Demotech? Do they have to be right on the brink of bankruptcy?
I’m going to explain this one more time and that’s it. American Keystone WAS downgraded to “S” and then to “M” before being shut down. Demotech withdrew the A rating of the Poe companies long before Best caught on.
Additionally, just like when someone doesn’t like their AM Best rating, they can choose to not have a rating. Look at what Federated National did when they were downgraded to a C. No one would want to see an S or M affiliated with their company just like they wouldn’t want to see a C associated with their company.
Unless you work for AM Best, I would suggest taking a long look at all of the ratings agency track records. It’s abysmal to say the least. I’m not going to pick on just one of them. As I said before, I will inspect the financials and reinsurance agreements with my own two eyes before I’ll work with a company.
Demotech is the only firm that will even look at newer carriers. AM Best or the others won’t. If a new carrier can’t meet the Demotech grade, the carrier opts out of the rating. What’s wrong with that? What you should be concerned about is a carrier operating without any rating or scrutiny, not the ones Demotech or others have rated. Also any rating is only as good as the cooperation and integrity of the insurance carrier management– if they are incompetent or choose to be devious and withhold information, blame the company, not the rating firms.
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I said in my previous comment that I trust no ratings firm. Where was AM Best during the Poe fiasco? Let’s not even begin to talk about hedge funds with mortgage backed securities. Is Demotech perfect? Nope. Are they on par with the others? Probably.
So, are you saying that Demotech giving everyone an A rating will eventually get all these companies rated by a “real” rating organization like AM Best? Is that the “right” thing that Demotech is doing? Best downgraded Argus and Tower Hill this year, but Demotech still has both of them rated as A companies.
Seems to me that Demotech is aiding thinly capitalized companies mislead consumers and mortgage companies. Why don’t they have B,C,D,E, or F ratings? Everyone is an A or they are “withdrawn.” That in itself is a scam. I’d bet if you asked most consumers who are told their company has an A rating, they would say that they expect their are other companies out there rated B,C,D,E, or F through Demotech. There aren’t. Do you think agents tell their clients that Demotech has 3 primary ratings – all which include the letter A?
What percentage of Demotech rated companies have an A rating? 100% according to their website – I just looked it up.
Still think they are doing the right thing?
On par with what others? AM Best? No way.
Just think about their ratings system itself. AM best downgrades Argus and Tower Hill because of concerns regarding their financial stability. Demotech can’t lower their A ratings to demonstrate concern about a deteriorating financial condition. So, what do they do, they “suspend” their A rating, usually after the OIR has taken over the companies. 100% of the companies on Demotech’s list of Florida companies are A rated. That’s just wrong.
At least AM Best actually downgrades these companies as concerns arise. Is AM Best always right – absolutely not. But I would say they are heads and tails better than Demotech.
American Keystone was downgraded to “S” and downgraded again to “M” before they had their rating pulled. Edison has elected not to have their rating renewed, most likely because of an inevitable downgrade.
There’s no reason that a well re-insured company shouldn’t get an “A” rating. Reinsurance was the problem with Coral (Didn’t have enough from Wilma) and the problem with American Keystone (they couldn’t afford the bill). Any company that’s well re-insured and doesn’t rely heavily on the CAT fund probably deserves the higher ratings.
According to this document, http://www.demotech.com/02_objects/pdfs/papers/20050801_fsr_study.pdf, Demotech rates company at A”, A’, A, S, M and L, with about 70% of the companies at A or better. Companies must agree with the rating to be finalized.
With Best, according to my key rating guide, 95% of the P&C companies that it reviews at Secure!!!!!!!
Yes, based on this I still think that they are doing a good job.
My original link did not have the .pdf part. Fascinating stuff, great discussion.
http://www.demotech.com/02_objects/pdfs/papers/20050801_fsr_study.pdf
My original link did not have the .pdf part. Fascinating stuff, great discussion.
http://www.demotech.com/02_objects/pdfs/papers/20050801_fsr_study.pdf
Go to Demotech’s website and look up Florida company ratings. There is not one on there with an M, S, L or any other letter. Let me know if you find one – I didn’t see one.
CFO Alex sink shut down People’s Trust for a number of reasons, including inadequate reinsurance. This is an 18 month old company, just like Magnolia.
Edison chooses not to get their rating renewed??? so…they are paying for an A rating? Doesn’t that sound like the only companies that Demotech rates are companies willing to pay the $6000 fee, knowing they will get an A rating? It’s a marketing toll, not a valid rating organization providing any true sense of the financial stability of an insurer.
Just what does it take for a company to get downgraded by Demotech? Do they have to be right on the brink of bankruptcy?
I’m going to explain this one more time and that’s it. American Keystone WAS downgraded to “S” and then to “M” before being shut down. Demotech withdrew the A rating of the Poe companies long before Best caught on.
Additionally, just like when someone doesn’t like their AM Best rating, they can choose to not have a rating. Look at what Federated National did when they were downgraded to a C. No one would want to see an S or M affiliated with their company just like they wouldn’t want to see a C associated with their company.
Unless you work for AM Best, I would suggest taking a long look at all of the ratings agency track records. It’s abysmal to say the least. I’m not going to pick on just one of them. As I said before, I will inspect the financials and reinsurance agreements with my own two eyes before I’ll work with a company.
Demotech is the only firm that will even look at newer carriers. AM Best or the others won’t. If a new carrier can’t meet the Demotech grade, the carrier opts out of the rating. What’s wrong with that? What you should be concerned about is a carrier operating without any rating or scrutiny, not the ones Demotech or others have rated. Also any rating is only as good as the cooperation and integrity of the insurance carrier management– if they are incompetent or choose to be devious and withhold information, blame the company, not the rating firms.