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Press Release

Jun 12, 2019 18:56 UTC

Best’s Special Report: Best’s Impairment Rate and Rating Transition Study — 1977 to 2018

OLDWICK, N.J.--(Business Wire)--AM Best’s latest special report on the long-term impairment rates of AM Best-rated U.S.-domiciled insurance companies states that three U.S. insurance companies became impaired in 2018, continuing a prolonged trend of low insurance industry impairments.

The Best’s Special Report, titled, “Best’s Impairment Rate and Rating Transition Study — 1977 to 2018,” marks AM Best’s 16th study and is aimed at estimating the risk of impairment of U.S. insurers. The analysis covers 41 one-year periods from Dec. 31, 1977, to Dec. 31, 2018, and includes only U.S. insurers that had at least one Financial Strength Rating (FSR) or one corresponding Long-Term Issuer Credit Rating (ICR) during the period. The report provides summary statistics related to impairments on the FSR scale (13 points) and the ICR scale (21 points) most familiar to users of debt market ratings.

Subsets of impairment-related data discussed in the report include:

  • Gross impairments, which encompass the broadest definition of impairments and include companies that AM Best has ceased rating by the time of impairment. Gross impairments further reduces cohorts of insurance carriers by withdrawn ratings, thus further boosting impairment rates;
  • Net impairments, which represent gross impairments, except insurers that became impaired after rating withdrawals are not counted and cohorts of insurers are not reduced for withdrawn ratings; and
  • Liquidations, which represent insurers counted in the net impairments that were eventually liquidated.

The report also addresses the issues related to comparing the AM Best impairment study with corporate default studies of other major Nationally Recognized Statistical Rating Organizations (NRSROs). These corporate default studies primarily reflect the defaults associated with senior unsecured debt obligations or their proxies. The report emphasizes that any comparisons between AM Best’s impairment studies and the corporate default studies of those NRSROs should be based on AM Best’s holding company ICRs or their proxies, which are effectively equivalent to AM Best’s senior unsecured debt ratings.

To access a copy of this report, please visit

AM Best will present a webinar, “Best’s Impairment Study 2018,” on Tuesday, June 18, 2019, at 10 a.m. (EDT). During the event, AM Best analysts will review the results published in this report and address the challenges in comparing corporate default studies of other NRSROs with AM Best’s impairment studies. To register for the complementary webinar, please visit

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Emmanuel Modu
Managing Director,
Insurance-Linked Securities
+1 908 439 2200, ext. 5356

Michael Porcelli, FSA
Insurance-Linked Securities
+1 908 439 2200, ext. 5548

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644

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