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Posted on 18 Mar 02
NAIFA's strategic partner, Standard and Poor's, announced that it has enhanced the method it uses to analyze insurance companies. The changes, effective corresponding with the 2001 statement year, allow S&P to better assess the risk associated with new asset and liability classes.
While the changes will help creditors, investors and policyholders better evaluate the financial standing of these insurers, S&P representatives say they will have little or no effect on the insurers' credit ratings.
Mark Puccia, Rodney Clark and Jose Siberon of S&P's Financial Services Ratings' Division reviewed the changes made to S&P's risk-based capital adequacy and liquidity models:
S&P revised its capital adequacy model following changes made by the National Association of Insurance Commissioners (NAIC) Life Risk-Based Capital Model regulation, which differentiated between the risks in individual and group disability products. S&P made further changes in the model based on interest-rate risk and risks related to guaranteed living benefit options and guaranteed investment contracts.
The liquidity model has been updated several times since its inception in the early 1990s to reflect new asset and liability classes. In addition, S&P frequently fine tunes its methodology.
Further details are available in two reports on S&P's website. Go to http://www.standardandpoors.com/ResourceCenter/RatingsCriteria/Insurance and click on "U.S. Life Insurance Capital Adequacy Model Revised to Reflect New Regulations" and "Updated U.S. Life Insurance Liquidity Model Reflects New Asset and Liability Classes."
"For nearly 140 years, Standard and Poor's has set the standard with its thorough and objective financial analysis. I think the changes they announced this week once again demonstrate their commitment to keeping ahead of their competition," said Arthur D. Kraus, CLU, ChFC, NAIFA's chief executive officer. "It's for these reasons that NAIFA partnered with S&P. They are the best and most thorough in the business. And we wanted NAIFA members to have, at their fingertips, access to this information so they could best serve their clients."
NAIFA and S&P announced their partnership at NAIFA's Annual Convention and Career Conference last September, along with a new website exclusively for NAIFA members. Called NAIFA Advisor (www.naifaadvisor.com), the site, sponsored by NAIFA and Standard & Poor's, features S&P's abundant research offerings in equities and insurance rankings. NAIFA Advisor offers a full range of S&P's analysis of mutual funds, stocks, capital markets, and insurance company ratings. The site allows subscribers to find new investment ideas, screen stocks or funds, run NASD-approved hypothetical illustrations, access Standard & Poor's corporate research reports, look up insurer financial strength, and more. When NAIFA Advisor was unveiled, Dan Connell, Executive Managing Director of Retail Market Services at Standard & Poor's, said: "NAIFA Advisor will set the standard for financial information and value-added analysis in the insurance agent advisory community. With access to such well-known Standard & Poor's products as FundAdvisor, MarketScope, Stock Reports and Corporate Profiles, members using this site will have access to the same research tools as institutional investors and traders in investment banks, a powerful offering for their clients."
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