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6/25/2012
Regulatory Reliance on Credit Ratings

Prior to the financial crisis, state insurance regulators for many dates relied on a formulaic approach to translating NRSRO ratings of bonds for purposes of determining one significant component of Risk-Based Capital (RBC) for U.S. insurance companies, which is used by regulators to gauge an insurance companys health. This was considered appropriate given the long track record of performance of the NRSROs.