Financial stability can be independent of size. Small, well-managed Property & Casualty insurers are more financially stable than larger, highly leveraged insurers.
Financial Stability Ratings® (FSRs) are a leading indicator of the financial stability of Property and Casualty insurers. Our rating process provides an objective baseline for assessing solvency based upon changes in financial stability, as manifested in an insurers' balance sheet. FSRs are based upon a series of quantitative ratios and considerations which together comprise our Financial Stability Analysis Model.
Developed in 1988, Demotech, Inc.'s Financial Stability Analysis Model was the first model universally applied to Property & Casualty insurers of all sizes. Our quantitative model was utilized before risk-based capital, dynamic financial analysis or enterprise risk management was introduced on an industry-wide basis. This model remains the primary determinant of a Financial Stability Rating®.
Demotech reviews and assigns Financial Stability Ratings® to established Property & Casualty insurers as well as start-up insurers. The review of start-up insurers or insurers that have less than five years of representative historical operating history requires additional information to be submitted for assignment of a Financial Stability Rating®.