Litigation

What does Ratings Outlook from A.M. Best Mean?

By John Darer

This morning this author received a communication which stated:

"On December 23, A.M. Best removed "under review with negative implications"  and affirmed the A+ (Superior) financial strength ratings of The Hartford's operating companies. Please see the press release and key messages file attached ".Download A.M. Best Press Release and Key Messages

While the message suggested to look at the attachment those that do not would miss the fact that a "negative outlook" was assigned by AM Best. The above is somewhat misleading in that it suggests that a rating is affirmed and all is well with the world. That is not exactly what the press release says.

What is Ratings Outlook?

Best's interactive Ratings (A++ to D) are assigned a Rating Outlook that indicates the potential direction of a company's rating for an intermediate period, generally defined as the next 12 to 36 months. Rating Outlooks appear in the rating rationale section of a company's AM Best Credit reports

At a time when the ratings services are being called into question by federal regulators, don't you think care should be taken not to parse the ratings analysis in such a way as to create an appearance of "half truths" in what could reasonably be foreseen to be used in marketing the insurance products of the company being rated?

Full post as published by Structured Settlements 4Real on December 24, 2008 (boomark / email).