According to the report, key rating considerations are:
Strategy/Franchise Strength
• Management strength
• Scale and market share
• Track record of acquisition and organic growth strategies
Sensitivity to the Insurance Pricing Cycle
• Commission versus fee-based revenues
• Effect of insurance pricing cycle and economic trends
• Diversified earnings streams
Earnings Performance
• Growth and stability of earnings and profit margins
• Historical results versus industry peers
Funding and Capital
• Ability to access funds
• Debt levels relative to earnings and cash flow
• Debt service capacity
The principal focus is on the estimation of potential funding needs of qualified defined benefit plans, given the regulatory requirements to fund such plans, in relation to cash flow generation. Funding requirements for qualified defined benefit plans are governed under the Pension Protection Act of 2006 as amended by the Worker, Retiree, and Employer Recovery Act of 2008, as well as under other legislation and rules.
The updated criteria report is available