Got Equities? An Unfulfilled Opportunity for P&C Companies to Improve Ratings and Long-Term Financial Performance

Abstract

A primary reason that insurance companies allocate very small portions of their portfolios to equities is the concern that even modest allocations will reduce their ratings. This article shows that contrary to the conventional wisdom, the highest-rated companies have higher allocations to equities. It provides likely explanations for this relationship of higher allocation to equities and higher ratings.