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Financial Stability Ratings® (FSRs) - Search Tips


Financial Stability Ratings® (FSRs)

Q.  What is a Financial Stability Rating® (FSR)?

Q.  To whom does Demotech assign Financial Stability Ratings® (FSRs)?

Q.  Why should a Company finalize a Financial Stability Rating® (FSR)?

Q.  Who accepts Financial Stability Ratings® (FSR)?

Q.  What is the process to finalize a Financial Stability Rating® (FSR)?

Q.  Where can I find the Financial Stability Rating® (FSR) for a particular company?

Q.  Why don't all companies finalize their Financial Stability Rating® (FSR)?

Q.  How do I contact a company listed on Demotech's website?

Q.  How current is a company's Financial Stability Rating® (FSR)?

Q.  Where can I find definitions of each Financial Stability Rating® (FSR)?

Q.  Can I predetermine my Company's Financial Stability Ratings® (FSR)?

Q.  How do I contact a Rating Analyst?

 

Comparative Financial Observations™ (CFOs)

Q.  What is a Comparative Financial Observation™ (CFOs)?

Q.  Which companies have CFOs assigned to them?

Q.  Can one determine what FSR is applicable to a company with a CFO?

 

Title Insurance

Q.  What is the Demotech Performance of Title Insurance Companies?

Q.  How can I order the Demotech Performance of Title Insurance Companies?

Q.  Where does Demotech obtain their information for the Demotech Performance of Title Insurance Companies?

 

Actuarial Opinions

Q.  How can I go about obtaining an actuarial opinion from Demotech?

 

Relevant Terms

Admitted Assets

Assumed Reinsurance Premium

Ceded Reinsurance Premium

Direct Premium Written

Gross Premium Written

Group

Jurisdictions

National Association of Insurance Commissioners (NAIC)

NAIC Company Number

Net Premium Written

Nonadmitted Assets

Policyholders' Surplus

Premiums Earned

Unearned Premiums

Written Premium




Financial Stability Ratings® (FSRs) - Search Tips

FSR Search Tips

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Financial Stability Ratings® (FSRs)

Q.  What is a Financial Stability Rating®(FSR)?

A.  An FSR summarizes Demotech, Inc.'s opinion as to the financial stability of a risk-bearing entity.  It is assigned after an extensive process of financial analysis.  FSRs are based upon an insurer's financial information.


Q.  To whom does Demotech assign Financial Stability Ratings®(FSRs)?

A.  Generally, Demotech provides Preliminary Financial Stability Ratings® (PFSR) to nearly all Property & Casualty insurers and Title underwriters that file annual and quarterly statements with the National Association of Insurance Commissioners (NAIC).

Demotech presents the insurers with their PFSR.  Insurers are provided an opportunity to finalize the PFSR or submit additional information.

The FSRs on our website are displayed for those companies that choose to finalize.  The company information listed on our website, which is presented for all companies, is public information.


Q.  Why should a Company finalize a Financial Stability Rating® (FSR)?

A.  Our FSRs are accepted by virtually all mortgage lenders, many umbrella insurance markets and Government Sponsored Enterprises.  Insurers with acceptable FSRs satisfy hazard insurance requirements in addition to qualifying for personal, farm and commercial umbrella insurance coverage.  Furthermore, FSRs present an opportunity for properly priced, reasonably reserved insurers to demonstrate this achievement through an independent, third-party evaluation.


Q.  Who accepts Financial Stability Ratings® (FSR)?

A.  For Property & Casualty insurers, Financial Stability Ratings® (FSRs) of A or better are accepted by Fannie Mae, Freddie Mac and HUD.  For Title underwriters, FSRs of S or better are accepted by Fannie Mae, and virtually all mortgage lenders.


Q.  What is the process to finalize a Financial Stability Rating®?

A.  Our Preliminary Data Request requirements vary based on a number of factors, including:

  1. Type of insurance company (ex. Established P&C, Title underwriter, Risk Retention Group, newly capitalized insurer, public entity insurance pool, etc.).
  2. Years in business.  In addition to evaluating established insurers, Demotech has an established and proven process to evaluate newly capitalized insurance companies.

Typical information requested includes, but is not limited to:

Services include the review process, report drafting and report finalization as well as twelve months of support related to inquiries from agents, insureds, prospective insureds and interested third parties.


Q.  Where can I find the Financial Stability Rating® (FSR) for a particular company?

A.  You can search our site to view our companies.


Q.  Why don't all companies finalize their Financial Stability Rating® (FSR)?

A.  Our stable PFSRs (A or better) are earned by and assigned to approximately 70% of the insurers we review.  Other rating agencies assign acceptable designations to more than 90% of the insurers they review.

Although Demotech provides Preliminary Financial Stability Ratings® (PFSR) to nearly all Property & Casualty insurers and Title underwriters that file annual financial statements with the National Association of Insurance Commissioners (NAIC), many of these insurers have established relationships with other rating agencies.  Further, Demotech believes that the adequacy of loss and loss adjustment expense (L&LAE) reserves is a critical component of financial stability.  Insurers with chronic or material adverse L&LAE reserve development are ineligible for PFSRs of A or better.

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Q.  How do I contact a company listed on Demotech's website?

A.  We cannot provide contact information for insurers that do not finalize their FSR.  All of the information we have available is published on our website.

For those companies that have finalized their FSR, we provide a link to their website.

Q.  How current is a company's Financial Stability Rating® (FSR)?

A.  Only current and accurate FSRs are posted on our website.  These FSRs reflect ongoing review and analysis of up to date company information.  Due to reporting, submission and processing lags, the posted financial information is not necessarily reflective of the information used in our analysis.

Q.  Where can I find definitions of each Financial Stability Rating® (FSR)?

A.  The definitions of FSRs can be accessed a couple of different ways.  When viewing a company's information page, simply click on the FSR Seal and you will be linked to the definition of that FSR.

To view the complete listing of rating definitions, you can navigate to the Financial Stability Rating® page from the top navigation bar, and then click on "P&C FSR Definitions" or "Title FSR Definitions" found on the left navigation bar.

Q.  Can I predetermine my Company's Financial Stability Ratings® (FSR)?

A.  Demotech utilizes a proprietary Financial Stability Analysis Model to assign Preliminary Financial Stability Ratings®.  When necessary, our Model is supplemented by our on-site management Audit Process.  The combination of these two analysis procedures has resulted in our enviable record of assigning Financial Stability Ratings® with the ability to discern an insurer's long-term solvency.

This being said, insurers assigned a Comparative Financial Observation™ (CFO) of Average (yellow) or Above (green) have been scrutinized to assess their liquidity of their invested assets, adequacy of loss and LAE reserves and their utilization of reinsurance.  These three insurance fundamentals are important facets of our overall Financial Stability Ratings® assignment process.

Q.  How do I contact a Rating Analyst?

A.  Contact Demotech regarding a Financial Stability Ratings® here.

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Comparative Financial Observations™ (CFOs)

Q.  What is a Comparative Financial Observation™ (CFO)?

A.  Comparative Financial Observations™ (CFOs) represent Demotech's assessment of property and liability insurance companies.  CFOs are based on the insurance fundamentals for these organizations.

CFOs are not a replacement, substitute or any other approximation for a Financial Stability Rating®.

You can learn more about the CFO definitions here.

Q.  Which companies have CFOs assigned to them?

A.  Demotech assigns CFOs to property and liability companies that have not finalized their Preliminary Financial Stability Rating® (PFSR).

Q.  Can one determine what FSR is applicable to a company with a CFO?

A.  No.  Comparative Financial Observations (CFOs) summarize an assessment of an individual property and casualty company against industry results across a limited number of insurance fundamentals.  Learn more about CFOs here.

A CFO is not a replacement, substitute or approximation for a Financial Stability Rating® (FSR) and does not represent an official statement or opinion by Demotech about a company.

Organizations that finalize a Financial Stability Rating® (FSR) undergo additional assessments and ongoing monitoring.  Carriers that have a secured an FSR of A or better have demonstrated a commitment to financial stability.  Click to learn more about the Fannie Mae, Freddie Mac and HUD acceptance of FSRs.

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Title Insurance

Q.  What is the Demotech Performance of Title Insurance Companies?

A.  Demotech Performance of Title Insurance Companies is a publication that presents a composite financial view of the underwriters providing title insurance coverage.  Our publication features detailed statutory financial information, market share summaries, comparative ratios and analysis for Title underwriters representing more than 99% of the industry.  The publication also includes Financial Stability Ratings® for each rated title underwriter.


Q.  How can I order the Demotech Performance of Title Insurance Companies?

A.  There are multiple means to place an order.  Place an order online or (800) 354-7207

Q.  Where does Demotech obtain their information for the Demotech Performance of Title Insurance Companies?

A.  The data included in the publication is comprised of the Title underwriters' "Form 9" annual and quarterly statements.  The financial information was not based upon generally accepted accounting principles.

Demotech maintains this information in an expanding and searchable database.  Our Form 9 database contains information beyond that which is included in Demotech Performance of Title Insurance CompaniesContact us if you are interested in learning more about the information and analysis Demotech can provide to meet your unique needs.

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Actuarial Opinions

Q.  How can I go about obtaining an actuarial opinion from Demotech?

A.  Contact Joseph L. Petrelli, President.

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Relevant Terms

Admitted Assets
The assets permitted by state law to be included in an insurance company's financial statements.  These assets are an important factor when regulators measure insurance company solvency, and are generally considered to be assets that can be readily converted to fulfill current and future obligations.  Admitted assets include bonds, stocks, mortgages, real estate, cash, contract loans, other invested assets and accounts receivable.


Assumed Reinsurance Premium
The premium from policies an insurer accepts, in whole or in part, from another insurance company.


Ceded Reinsurance Premium
The premium from policies an insurer transfers, in whole or in part, to another insurance company.


Direct Premium Written
The premium associated with a policy issued by the primary insurer to the insured.


Gross Premium Written
The total direct premium written and reinsurance assumed as recorded by the primary insurer.  Formula: Direct Premium Written + Reinsurance Assumed = Gross Premium Written


Group
Group refers to the distinctive NAIC Group, or family, to which a company belongs.


Jurisdictions
Jurisdictions indicate an authorized insurer of a particular state or jurisdiction.  Each state or jurisdiction can issue a license, or Certificate of Authority, to each qualified insurer submitting an application to write business in the respective state or jurisdiction.


National Association of Insurance Commissioners (NAIC)
An organization of insurance regulators whose primary purpose is to protect the interests of insurance consumers.  The NAIC also promotes competitive markets, promulgates industry accounting rules and procedures, and performs market conduct examinations of insurers.


NAIC Company Number
A distinctive number assigned to insurance companies for identification and reporting purposes.  The NAIC company number is assigned by the National Association of Insurance Commissioners.


Net Premium Written
The total premium for a primary insurer consisting of direct premium written and reinsurance assumed, less reinsurance ceded.  Formula: Direct Premium Written + Reinsurance Assumed – Reinsurance Ceded = Net Premium Written


Negative Net Premium Written
In certain cases, it is possible for a company to show negative Net Premium Written.  The nature and timing of reinsurance transactions, which may affect Gross Premium Written or Net Premium Written, can result in a temporary situation of negative Net Premium Written.  While this situation is atypical, other contributing factors could be the assumption and ceding of premium related to the sharing of risk between companies.  Negative Net Premium Written could also be attributed to a company discontinuing operations, the cancellation or commutation of a specific reinsurance agreement, the assumption of a block of premium by a startup company, or other uncommon events.


If you are a policyholder insured by a company with negative Net Written Premium, you can take some comfort in the fact that this means that the insurance company has likely prepaid its reinsurance including its coverage for catastrophe losses, so that policyholders are protected.


Nonadmitted Assets
The assets excluded from the insurance company's financial statements, as they do not support the solvency of the insurer.  Nonadmitted assets include, but are not limited to, furniture, supplies, automobiles and uncollected premiums.


Policyholders' Surplus
Under statutory accounting, the capital and surplus of an insurance company are collectively referred to as surplus as regards policyholders or policyholders' surplusPolicyholders' surplus, which is equivalent to owners' equity for a noninsurance entity, is equal to net admitted assets, or admitted assets minus liabilities.  Using the term policyholders' surplus instead of owners' equity emphasizes the priority given to satisfying policyholders' obligations.


Premiums Earned
Premiums earned represent the portion of insurance premiums written applicable to the expired period of the policy term.


Unearned Premiums
Unearned premiums represent the portion of insurance premiums written that has not yet been earned and is attributable to unexpired coverage (the insurer's remaining contractual obligation).  When the premium is written, the entire amount of the premium is unearned.  As policies age, the unearned premium amount decreases, and written premiums become premiums earned.


Written Premium
The amount an insurance company receives for insurance protection provided through an issued policy.


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