Compare 4 different rating agencies (A.M.Best; Fitch Ratings; Moody’s investor’s Service; Standard & Poor’s (S&P))

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Compare 4 different rating agencies (A.M.Best; Fitch Ratings; Moody’s investor’s Service; Standard & Poor’s (S&P)), please point out the pros and cons of each rating agencies.

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Expert Solution

Each rating agencies use different ratings to define very strong, strong, weak position of the companies.

Since each ratings agency use different standards to rate or rating scale, and also it differ in the companies they rate, we can't say one rating agency is better than the other. But we can say the pros and cons of all these types of ratings for a company.

Pros:

1. They help good institutions to get better ratings.

2. They provide a fair risk return ratio.

3. They warn investors of risky business.

4. They give institutions an incentive to improve.

Cons:

1. There can be conflict of interest.

2. Evaluation is highly subjective.

3. Ratings aren't always accurate.

jeff jeffy answered 1 year ago

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