Credit Rating Agency

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Credit Rating Agency

A company that provides investors with assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. A high rating indicates low risk and may therefore encourage investors to buy a security. Additionally, banks may only invest in securities with a high rating from two or more credit rating agencies. The SEC recognizes 10 firms as credit rating agencies; Fitch, S&P, and Moody's are the three most prominent. However, the methods of credit ratings agencies have been subject to criticism. For example, most agencies gave high-risk mortgage-backed securities top ratings until they defaulted at the collapse of the housing bubble.
References in periodicals archive ?
Paris/London: Fitch Ratings, one of the three nationally recognized statistical rating organizations (NRSRO) designated by the U.S.
(2) While rating organizations do publish advisory rates for typical risks in given classes, these are only a starting point for individual, insurance companies, which set their own final price to the consumer.
If so, we expect international rating organizations to upgrade Turkey's rating."
First, the Federal Reserve Board proposed a rule that would require a certain minimum level of experience among statistical rating organizations that rate the eligibility of assets pledged as collateral to the TALF.
Both Allen and Christ are unconvinced of just how many people claim to have visited rating organizations' Web sites.
While there are more than 100 credit rating agencies operating worldwide, only five are currently designated as "Nationally Recognized Statistical Rating Organizations" (NRSROs) by the U.S.
to the NAIC's list of Nationally Recognized Statistical Rating Organizations at the group's Spring National Meeting.
Thus, for a significant portion of rate-making, property/casualty insurers rely on rating organizations. Rating organizations standardize risk classifications and products to facilitate the gathering and aggregation of data on past losses and their costs.
Only Standard & Poor's, owned by the McGraw-Hill Companies (42 percent); Moody's (38 percent); and Fitch, owned by European investors (14 percent); together with the first newcomer in ten years, Dominion Bond Rating Service, are registered by their supervisor, the Securities and Exchange Commission, as "Nationally Recognized Statistical Rating Organizations" to do business in the globally dominant U.S.
There are various rating organizations to confirm the financial wherewithal of commercial insurance companies.
Seoul/Hong Kong: Fitch Ratings, one of the three nationally recognized statistical rating organizations (NRSRO) designated by the U.S.
As Cunningham noted in her column, only five credit rating agencies are currently designated as "Nationally Recognized Statistical Rating Organizations" (NRSROs) by the SEC.