BI, Litmus Partner on Composite Insurer Ratings
•February 16, 2026
0
Companies Mentioned
Why It Matters
The composite view simplifies multi‑agency rating data, enabling investors, brokers and underwriters to assess insurer strength more efficiently. It also standardizes disparate rating scales, reducing analytical friction across the insurance market.
Key Takeaways
- •Combines four major agency ratings into single score
- •Maps composite score to common rating scale levels
- •Initial focus on North American commercial‑line insurers
- •Future tables will cover Europe, Bermuda, global reinsurance
- •Litmus provides analysis but not its own rating opinions
Pulse Analysis
The insurance industry relies on financial‑strength ratings from agencies such as A.M. Best, Fitch, Moody’s and S&P to gauge an insurer’s ability to meet policyholder obligations. However, each agency uses its own scale and outlook terminology, creating a fragmented landscape that can confuse investors and risk managers. Business Insurance’s new partnership with Litmus Analysis addresses this pain point by delivering a unified composite rating, the Litmus Composite Score (LCS), which aggregates the four agency opinions into a single, comparable metric.
Litmus’s methodology converts each agency’s rating into a numeric value, averages those values, and then maps the result back onto the most common rating scale across the agencies. The resulting LCS is further broken down into higher, middle, or lower positions within each rating tier, giving users a nuanced view of where an insurer sits relative to its peers. This approach offers several practical benefits: it reduces the time spent reconciling divergent scores, provides a clearer risk hierarchy for underwriting decisions, and supports more consistent portfolio monitoring for institutional investors.
Looking ahead, the partnership will broaden its coverage to include European commercial lines, Bermuda‑based carriers, and global reinsurers, each accompanied by Litmus’s expert commentary. While the composite score streamlines analysis, Litmus emphasizes that it does not replace the original agency ratings, which remain the authoritative source for regulatory and contractual purposes. Market participants can therefore leverage the LCS for quick comparative insights while still consulting the underlying agency reports for detailed due‑diligence, striking a balance between efficiency and rigor in insurance credit assessment.
BI, Litmus partner on composite insurer ratings
Business Insurance and insurance rating specialists Litmus Analysis have teamed up to provide a unique perspective on the ratings of the insurers and reinsurers that matter to readers. We’re starting with this initial table covering BI-selected North American commercial lines companies.
Significant insurance groups’ individual insurers are often rated by more than one agency for their ability to meet current and future policyholder obligations — financial strength ratings. Because ratings are forward-looking opinions, having a range of those opinions available seems logical. But that can also add complexity to rating user consideration, especially because across the four agencies with a major, global focus on rating insurers — A.M. Best, Fitch Ratings, Moody’s Ratings and S&P Global — three financial strength rating scales are deployed. Moreover, concepts such as trend-driven positive and negative rating outlooks and event-driven rating “reviews” or “watches” can add to usage complexity.
Over a decade ago, Litmus developed a proprietary approach to combining published financial strength ratings from these agencies into a numerical outcome described as the Litmus Composite Score. Numerical ranges of the LCS outcomes are then mapped back to specific points on the rating scale, using the most common scale across the agencies. The position within the LCS numerical range for each rating scale mapping level is identified as Higher, Middle or Lower.
BI and Litmus are partnering to provide periodic summaries across four groups of insurers and reinsurers selected by BI. In addition to North American commercial lines, there will be coverage of Europe, Bermuda and global reinsurance. Going forward, Litmus will provide a ratings-related discussion to accompany each chart.
For clarity, it should be noted that the LCS outcomes and their associated rating scale mappings do not reflect any form of Litmus’ own opinion of the named group or its individual insurers. While the Litmus team has over 100 years of experience working in the major agencies, Litmus is a consulting and advisory firm; it is not a rating agency and does not provide rating opinions. Rather, Litmus has used its rating agency experience to generate these averaged rating outcomes from the publicly issued rating opinions of the major agencies as of the date noted in the table.
Insurers and reinsurers within rated groups may be assigned different rating levels, and ratings do change. Each of the four agencies publishes its ratings and any changes to them on its public website. Readers of the table should refer to those sites for the most current rating opinions of any of the agencies on any rated unit owned by any group named in the table.
To find out more about the LCS calculation, please visit Litmus Composite Score at www.litmusanalysis.com or email Litmus at [email protected].
Stuart Shipperlee is head of analysis at Litmus Analysis in London. He can be contacted at [email protected].
0
Comments
Want to join the conversation?
Loading comments...