Kroll Bond Rating Agency (KBRA) releases research on the dangers of overreliance on proprietary rating agency capital models for the insurance industry.

The report describes several cautionary tales for financial institutions that prioritized rating agency model optimization over prudent risk management, noting that the credit profiles of (re)insurance entities are too diverse and complex to be adequately evaluated by a single external model framework. KBRA’s holistic rating approach incorporates multiple perspectives of risk, including capital models used internally by (re)insurers, which allows management to focus on where it should: how to operate their business most effectively.

Click here to view the report.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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