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Introduction (partial) "As risk-bearing institutions, insurers can, and do, fail if risks are not managed adequately, even though the incidence of failure has in general been low. For this reason, it's worthwhile to look at the recurring issues that have caused, and still are causing, failures of rated and unrated insurers and explain how our observations inform our ratings criteria. When we refer to insurer failures, we are talking about company defaults, liquidations, or regulatory takeovers--or "near miss" situations where these would have occurred if the company had not received external support. In this article, we consider cases dating back as far as the 1980s because considering a shorter time frame of events can give an overly optimistic view of the strength of the sector …"

Additional Nematrian Commentary This paper considers cases of insurance company failures since the 1980s and explores the factors that seem to have contributed to these failures. Prevalent factors, often reinforcing each other include: Poor liquidity management; Under-pricing and under-reserving; A high tolerance for investment risk; Management and governance issues; Difficulties related to rapid growth and/or expansion into non-core activities; and Sovereign-related risks.

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