For five years, Frederick Mutual has partnered with Demotech, Inc. for our annual Financial Stability Rating® (FSR). Frederick Mutual has trusted the reliability of Demotech, Inc. due to its sound and pragmatic rating practices. In 1989, Demotech, Inc. became the first to review and rate independent, regional and specialty insurance companies. Excerpts from an analysis by Michael Cohen, Principal, Cohen Strategic Consulting, previously a vice president at A. M. Best, summarize The Demotech difference:
There are three major factors that differentiate Demotech’s approach to ratings from those of the other rating agencies:
1. Demotech calibrates its opinion to the likelihood of an insurer having positive surplus 18 months out … other agencies use less specific, subjective adjectives to describe claims paying ability (i.e. “strongest”, “very strong”, “strong”, “adequate”, etc.).
2. Demotech does not view an insurer’s size as an explicit rating factor. Their view is based on their research indicating that when insurers with manageable operating leverage and a conservative investment strategy secure appropriate reinsurance, smaller size does not correlate with increased risk of potential impairment.
3. Consistent with its perspective on size, Demotech views an appropriate reinsurance program as an integral component of an insurer’s business model and plan. In contrast to the larger rating agencies which often view reinsurance as the “cession of potential profit,” Demotech views reinsurance and the concurrent protection of carrier surplus as a necessity for independent, regional and specialty insurers to execute their business plans.
With more than 460 insurers reviewed and rated country wide, as of 7/11/2022, Demotech, Inc. is registered with the U.S.Securities and Exchange Commission (SEC) as a national recognized statistical rating organization (NRSRO) in the class of ratings for insurance companies. Visit www.demotech.com for additional information.
With 180 years in business, and an A, Exceptional FSR, Frederick Mutual believes in the robust, thorough and objective review that Demotech, Inc. provides for insurance companies. Frederick Mutual believes in the Demotech difference.