The Fitch Rating Financial Holding Group has worked to make Fitch Rating an industry leader in financial holding company (“FHC”) credit rating coverage. The Group has developed a unique procedure for assessing FHCs and assigning them both issuer and issue rating. The essential analytic basis for the issuer rating recognizes the significant ties that the FHC has to its operating subsidiaries, while simultaneously considering some of the unique characteristics and attributes of the FHC as a stand alone legal entity. These attributes may vary significantly from country to country and, in certain situations, from company to company within a particular country.
Ratings for FHCs are highly correlated to the ratings of the company’s main operating bank or other operating subsidiaries. Relevant rating methodologies are applied to assess each main operating subsidiary’s financial strength. The analysts also conduct “Parent only” financial analyses on quantitative aspects of a FHC such as financial leverage, debt servicing, and cash flow. Qualitative factors of the FHC are evaluated such as strategy, quality of management, environment in which it operates, and the most likely future development of its group franchise. Final rating determinations are made by committees comprised of lead analysts and independent members, including Fitch senior management.
Ratings guidelines are applied to:
> Issuer Default and short-term foreign currency ratings
> Issuer Default and short-term local currency ratings
> National ratings for emerging markets (non-comparable across borders)
