Supervision Quality To Affect Ratings

The Chicago office of Fitch Ratings says the firm will be incorporating information about regulatory strictness into insurance company credit and financial strength evaluations.[@@]

Fitch will be classifying the regulatory efforts of countries as “Strong,” “Moderate” or “Weak,” by looking at the countries’ efforts to monitor capital levels and give policyholders priority over other creditors in liquidations.

Companies in countries with especially strong policyholder protection efforts probably will end up with higher insurance subsidiary “issuer default ratings” but lower “recovery ratings” at the parent-company level, Fitch says.