Definition
Pengyuan International’s insurer financial strength rating (IFSR) is a globallycomparable, forward-looking opinion about an insurance operating company’sability to repay its policyholder obligations on time and in full. Not only isthe IFSR relevant to investors looking to assess an insurance company’sfinancial status, but it is also of significant value to insurance clients,intermediaries and other credit counterparties.

The IFSR is nota recommendation to purchase insurance policies from any insuranceprovider.  Furthermore, the IFSR does not address situations where thelegitimacy of a specific insurance claim or group of insurance claims is undercommercial, legal or regulatory dispute during the normal course of business.


Scope
The IFSRapplies to insurance operating companies that engage in the following businesslines:

  • Lifeand annuities;

  • Property& casualty (“P&C”);

  • Lifeand/or P&C reinsurance;

  • Healthinsurance.

However, it excludes insurers thatoperate in:

  • Mortgageinsurance; and

  • Creditand guarantee insurance.


RatingScale
The IFSR follows a rating scale from AAA to D. The IFSR rating scale and thecharacteristics commonly associated with insurers in each rating category areshown in the table below.

The AAA to BBBcategories are assigned to insurance organizations that we expect to have an“Extremely Strong” to “Adequate” ability to honor their policyholderobligations on time, namely: AAA (Extremely Strong), AA (Very Strong), A(Strong) and BBB (Adequate). +/- modifiers may be added to the AA, A and BBBrating levels to further distinguish creditworthiness within a particularlevel.

The BB to Ccategories are assigned to insurers that we believe have a “MarginallyAdequate” to “Highly Vulnerable” ability to repay their policyholderliabilities on time and in full. These categories consist of BB (MarginallyAdequate), B (Weak), CCC (Very Weak) and CC (Extremely Weak). +/- modifiersmay  accompany the BB, B and CCC rating categories to provide moregranularity on the credit quality within each category.

In addition,the RS designation is assigned to insurers that are currently under regulatorysupervision due to their failure to meet the relevant authorities’ solvency orother prudential requirements.

The D designation is assigned to insurance firms that have defaulted on theirpolicyholder liabilities.


Pengyuan International reserves the right of final interpretation of its products and services.

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