What’s New: In Brief (December 03, 2009)

The Risk and Insurance Management Society (RIMS) strongly supports legislation that would form the first federal office of insurance in the United States.
The proposed office would be the first centralized authority on insurance matters. It would enable the federal government to gain insurance expertise and speak with one voice on international insurance policy, a RIMS release says.
RIMS also views the legislation as a precursor to the society’s long-held support of an optional federal charter for commercial property and casualty insurers and reinsurers.

Mutual insurance companies have remained more stable during the economic downturn than publicly traded companies, reports Fitch Ratings.
In its report, Weathering the Crisis: A Corporate Governance Perspective, Fitch Ratings says that as of mid-year 2009, more than 50% of U.S. mutual insurers were rated ‘AA’ or above.
In contrast, only 16% of U.S. stock-owned insurers remained at this level.
“The ratings resilience of mutual companies during the credit crisis provides insight into the potential financial strength benefits of aligning risk-return preferences of management and risk-averse stakeholders (e.g. policyholders),” a Fitch Ratings release says.
“Another example of this relationship is that insurers that demutualized during the late 1990s and early 2000s experienced downward ratings migration post-demutualization.”
Fitch Ratings says it is not recommending one form of ownership over another from a credit perspective.
“But it does point to an interplay between corporate governance and financial strength.”