Rating Agencies Are On The Mark, But Reserving Practices Are Way Off
It's hard not to read news about property-casualty insurers whose financial strength ratings tumble from "A" to "B" in a heartbeat, only to have their hearts stop beating soon after, without wondering what's going on.
The most recent examples are Legion Insurance Company and Villanova Insurance Company, both owned by Mutual Risk Management Group. The companies, whose A.M. Best ratings were kicked down to "B" from "A-minus" in mid-February, were put into rehabilitation by the Pennsylvania insurance commissioner just five weeks later.
The timing of the events raises questions about cause and effect.
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