SEC Worries About Rating Analyst Overload

NRSRO Data

In 2022, 10 rating agencies were operating as NRSROs. Those 10 NRSROs issued 2.2 million ratings of all kinds in 2021, or 1.2% more than they issued in 2020, according to SEC data.

The number of insurance ratings fell 1.3%, to 20,962.

The SEC classified three of the firms — S&P Global Ratings, Moody’s Investors Service and Fitch Ratings — as large, based on U.S. rating services revenue, and seven as medium or small.

The SEC thinks of A.M. Best Rating Services as being a medium NRSRO, but it pointed out that Best ranked first in the insurance rating category in 201, with 7,286 insurance-related ratings, or 35% of all insurance ratings.

S&P ranked second, with 6,919 ratings.

Small and medium SROs collected 6.7% of reported NRSRO revenue in 2021, up from 5.9% in 2021.

Problems

In accounts of enforcement actions and exam findings, SEC officials noted that the rating agencies sometimes have had problems with matters such as recordkeeping; credit rating formula errors; accidentally information to the wrong people; failing to publish information that should be public; and letting rating services sales reps communicate with the rating analysts.

Pictured: Heena Abhyankar, Carmi Margalit and Neil Stein talked about the business conditions facing U.S. life and annuity issuers Jan. 26, at a conference in New York. (Photo: Allison Bell/ALM)