Date of Last Revision

2023-05-02 23:26:12


Applied Mathematics

Degree Name

Bachelor of Science

Date of Expected Graduation

Spring 2017


This paper examines the Financial Strength Rating for insurers conducted by A.M. Best. This study specifically analyzes if the Outlook, another financial stability measure assigned by A.M. Best, has any significant effect on the Financial Strength Rating. This is important because this is the first known study which looks to analyze the Outlook and any effect it may have on A.M. Best ratings and insurance companies. In order to examine the Outlook effect on A.M. Best Financial Strength Ratings, insurer specific financial and operational data are collected from the statutory annual statements filed with the National Association of Insurance Commissioners (NAIC) for the years 1996 through 2015. Various insurance variables such as the insurer’s NAIC number, A.M. Best Financial Strength Rating, A.M. Best Outlook, financial size, and type of company (stock, mutual, or other) are used in t-test and regression analysis. This paper draws conclusions such as a negative Outlook will lead to a decrease in FSR in the current year, the following year, or two years after the negative Outlook is given while a positive Outlook can lead to an increase in FSR in the year following the Outlook or two years of receiving the positive Outlook, however, it is unlikely that the insurer will see an FSR increase in the same year the positive Outlook is given.

Research Sponsor

Dr. Jill Bisco

First Reader

Dr. Curtis Clemons

Second Reader

Sarah Coleman



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