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A Probit Analysis of Best Ratings

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  • Raja Bouzluita
  • Arthur J. Young

Abstract

In 1991, the A.M. Best Company changed the schedules and procedures for assigning ratings to property-liability insurers. An explanation of this change is of interest to consumers, regulators, and management. This study uses ordered probit to test for a downshift in the average ratings. The results of the analysis show that there has been a movement toward lower ratings and that the return on surplus is more important with the new ratings. The results are robust with respect to alternative estimation procedures.

Suggested Citation

  • Raja Bouzluita & Arthur J. Young, 1998. "A Probit Analysis of Best Ratings," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 21(1), pages 23-34.
  • Handle: RePEc:wri:journl:v:21:y:1998:i:1:p:23-34
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    File URL: http://www.insuranceissues.org/PDFs/212BY.pdf
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    1. repec:eee:jbfina:v:84:y:2017:i:c:p:107-122 is not listed on IDEAS
    2. Guglielmo Maria Caporale & Mario Cerrato & Xuan Zhang, 2016. "Analysing the Determinants of Credit Risk for General Insurance Firms in the UK," CESifo Working Paper Series 5971, CESifo Group Munich.
    3. repec:bec:imsber:v:9:y:2017:i:3:p:36-70 is not listed on IDEAS

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