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LIFE INSURERS NEED MORE RIGOROUS RATING STANDARDS, FITCH SAYS -- FITCH FINANCIAL WIRE --

 LIFE INSURERS NEED MORE RIGOROUS RATING STANDARDS, FITCH SAYS
 -- FITCH FINANCIAL WIRE --
 NEW YORK, March 12 /PRNewswire/ -- Fitch has developed a more rigorous and probing rating methodology for life insurance companies.
 In addition to standard rating procedures, Fitch's new methodology employs a more detailed analysis of a sampling of commercial mortgage investments, in some cases including on-site inspections of properties, in-depth testing of bond portfolios and other assets, and an actuarial analysis of an insurer's ability to manage the relationship between assets and liabilities.
 Though this analysis is more time-consuming and costly than ordinary claims-paying ratings, Fitch believes these methods will help avoid rating surprises and reduce the likelihood of losses like those recently experienced by policyholders and investors. This proposed approach is under discussion with certain life insurers.
 Many life insurance failures stem from poor asset quality. This can result in capital deficiencies followed by liquidity pressures from the unexpected acceleration of investment contract and policy liabilities. The result is a crisis of confidence and potential "run on the bank" by policyholders and investors.
 This in-depth analysis will more accurately assess factors such as profitability, capital adequacy, and the carrier's susceptibility to severe liquidity pressures to measure an insurer's financial strength for users of claims-paying ability ratings.
 Details appear in a Fitch Research report, "Life Insurance Ratings Without Surprises," released this week.
 -0- 3/12/92
 /CONTACT: David P. Wells, 212-908-0517, or Byron Klapper, 212-908-0565, for Fitch/ CO: ST: IN: INS SU: RTG


GK -- NY036 -- 7728 03/12/92 11:05 EST
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Publication:PR Newswire
Date:Mar 12, 1992
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