Demotech, Inc.: Adequately Reinsured Insurers Will Not Be Penalized for Honoring Catastrophe Losses

Columbus, Ohio, June 28, 2011:  From April 2010 through June 20, 2011 there were 82 domestic catastrophes.  During this fourteen month period domestic insurers have protected consumers against catastrophe situations such as earthquakes, flooding, an oil spill, severe weather, tornados, tropical storms, seasonal storms, and wildfires.  These catastrophes have resulted in billions of dollars of insured losses being submitted to insurers.

Despite 82 domestic catastrophes during the past fourteen months Demotech, Inc. will not be downgrading adequately reinsured carriers for honoring meritorious claims.  Demotech’s position is that as long as the insurers that they review and rate have properly utilized reinsurance to protect their balance sheets, carriers will not be downgraded solely because losses related to catastrophes have adversely impacted short-term earnings.

Joe Petrelli; President, Demotech states:  ‘Property and casualty insurers exist to protect consumers.  If the companies we review and rate have adequately protected their balance sheets, by purchasing sufficient reinsurance protection, we will not penalize them for doing their job.  Similarly, reinsurers that have utilized retrocessions to protect their balance sheets from catastrophe exposure will not be downgraded due to a degradation of their short-term earnings.’

A list of the domestic catastrophes from April 2010 through June 20, 2011 can be found at www.demotech.com.  For information on all facets of Demotech’s rating philosophy, visit https://www.demotech.com/financial-stability-ratings/ or contact jpetrelli@demotech.com or bkoestler@demotech.com.

About Demotech, Inc.

Demotech, Inc. is a financial analysis firm located in Columbus, Ohio.  Since 1985, Demotech has been serving the insurance industry by providing actuarial consulting and accurate and proven Financial Stability Ratings® (FSRs) for Property & Casualty insurance companies and Title underwriters.  FSRs are a leading indicator of the financial stability of a company.  Demotech has a proven track record of predicting financial stability in the insurance industry and has been leveling the playing field by offering FSRs to insurers of all sizes.