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Impairment Is Not Limited to Traditional Insurers


Over the years, captive insurers, state funds, risk-retention groups and other alternative insurance organizations have all made the list of impaired companies.


When you look at the reasons for their impairment, they are the same as for the rest of the universe. They grew too fast, they had deficient loss reserves and, number one, under pricing.


Carole Ann King, A.M. Best Company


A.M. Best’s published list of four decades of impaired insurers contains the names of 65 nontraditional insurers, Carol Ann King said.


“But when you look at that in terms of their impairment rate, which is the ratio of impairments to the number of companies in that universe, their impairment rate is higher than for stocks and mutuals,” King said. “The reason for that, we believe, is because they typically take on higher-risk exposures.”


Copyright © 2010 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


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