Issue 10 2023

Issue 10 2023, Acquisition International | 37 INNOVATIVE SOLUTIONS FOR FINANCIAL RATINGS emotech has been navigating challenges for the insurance industry and individual insurers for nearly four decades. It was the first of its kind to rate and review independent, regional, and specialty Property and Casualty insurance companies. It has since expanded its clientele to health maintenance organizations, public entity liability insurance pools, Title underwriters, and health care sharing ministries. Demotech is a Nationally Recognised Statistical Rating Organisation in the Classification of Insurance Companies courtesy of the United States Securities and Exchange Commission. Insurers can be assured that its procedures and processes are rigorously monitored. The company understands that a carrier’s focus area, the proper execution of a dependable business model, and the inclusion of an appropriate reinsurance program are significant factors when assigning ratings. Developed in 2011, Demotech’s Company Classification System lists the eleven basic business models that the company have recognized to date. All businesses are given a company classification based on factors such as financial leverage, management stability, and market presence. The size of the enterprise is not always a relevant indicator of their financial stability. A Financial Stability Rating (FSR) summarises Demotech’s opinion of an insurer regardless of economic conditions or fluctuations in the insurance market. The rating process provides an objective baseline for assessing solvency based upon changes in financial stability, as shown in an insurer’s balance sheet. FSRs are calculated through a series of quantitative ratios and considerations which comprise the Financial Stability Analysis Model. Demotech considers that balance sheet strength and financial integrity are crucial determiners of long-term financial stability. Its original vision statement states Demotech’s mission to become the leading provider of innovative solutions to financial analysis issues by focusing its resources on opportunities for industry growth. Demotech research has introduced tech-enabled claim instigation, a union of litigation funding, legal marketing, litigation platforms, and search engine optimisation to secure contested claims. In recent years, claim inflation has been causing problems in the industry with higher losses for companies. When businesses cannot control claim frequency, they are unable to attain rate adequacy. Demotech’s research analyses data to help its clients better understand the causes of claim inflation affecting the financial landscape today, particularly in the U.S. Demotech prides itself on its experienced, highly qualified team who review and issue FSRs with a proven record of assessing the longterm solvency of businesses. The company’s inclusive services have served to level the playing field for small to mid-sized Property and Casualty insurance companies and Title underwriters. Its innovation has resulted in many firsts for the industry such as its model for assigning FSRs based on balance sheet strength and financial integrity, its continuous analysis evaluating FSRs relative to insurer survival rates, and the development of a procedure to review and rate insurance start-up companies. Today, Demotech rates and reviews more insurance carriers in the U.S. than eight of the other nine nationally recognised statistical rating organisations combined. As the business continues to experience growth, it looks forward to providing its pioneering solutions to financial analysis issues for years to come. Demotech is honoured to have received this year’s award for Best Independent Insurance Rating Agency – USA. Contact: Joseph Petrelli Company: Demotech, Inc. Web Address: Established in 1985, Demotech Inc. is a financial analysis firm that provides Financial Stability Ratings (FSRs) for Property and Casualty insurance companies, Title underwriters, and other risk-bearing entities. With an established track record of predicting financial stability in the insurance industry, Demotech Inc. is on a mission to become the leading provider of innovative solutions to financial analysis issues. D Aug23206