A.M Best special report: life/health rating upgrades outnumbered downgrades in 2004.In 2004, the life/health insurance industry experienced improved operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before and balance sheet strength, with A.M. Best Co.'s rating upgrades outnumbering downgrades by a slight margin. A.M. Best's year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. ratings outlook for the industry was stable. A combination of poor earnings or problems at a parent/affiliate company was cited in 58% of the downgrades within the life/annuity segment last year. Health insurance rating downgrades were driven by poor operating performance due mainly to large underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. losses and substantial declines in their capital base.
Rating Outlook, Life/Annuity
And Health--2004
Positive 5%
Negative 14%
Stable 81%
Note: Table made from pie chart.
Source: A.M. Best Co., ratings as of Dec. 31, 2004.
Rating Changes, Life/Annuity and
Health Rating Units--2003-2004
2003 2004
Total Upgrades 20 40
Total Downgrades 53 35
Life/Annuity Upgrades 14 21
Health Upgrades 6 19
Life/Annuity Downgrades 47 24
Health Downgrades 6 11
Note: Table made from bar graph.
Note: Multicompany groups are treated as one unit.
Source: A.M. Best Co.
Reasons for Life/Annuity Rating Actions--2004
Upgrades
Increased Parent Consideration 1
Improved Results of Parent 1
Improved Earnings 7
Improved Capitalization 5
Change in Ownership 7
Downgrades
Weak Capitalization 5
Problem at Parent/Affiliate Company 7
Poor Earnings 7
Loss of Core Status 5
Note: Table made from bar graph.
Note: Multicompany groups are treated as one unit.
Source: A.M. Best Co.
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