The volatility of the property-casualty market requires the segmentation of risk among reinsurers. With recent catastrophes underscoring this need, Standard & Poor's Rating Service has released a paper outlining its criteria for rating start-up reinsurers.
Ten years ago, the New York-based rating service said it did not rate start-up companies. S&P required five years of operating history before issuing a rating. Today, the service says it rates insurers with a shorter history, as well as new companies, but under strict rating rules.
The criteria, S&P said, require a five year business plan with detailed revenue expectations and other economic data. There must be management discussion about capitalization and the expectation that the insurer's capitalization plan will meet or exceed its rating for five years. Detailed biographies of management and board members are also required.
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