Moody’s Early Warning Alerts for Credit Risk Management

This document is a case study detailing how Moody’s Early Warning Alerts assisted a major US insurer in avoiding losses amounting to $50 million. The case outlines the challenges faced by the client due to outdated credit frameworks, which hindered the prediction of financial concerns. It describes the innovative credit risk solution provided by Moody’s, which includes features such as Probability of Default (PD) levels and early warning risk quadrants. The solution enabled the credit team to identify subtle signs of credit deterioration, facilitating informed decision-making. The document further explains the functionality of Moody’s PD models, which cover a wide range of firms and provide timely updates on credit risk. Additionally, it highlights the automated workflow that improved efficiency and the intuitive Early Warning System that uncovered both risks and opportunities. The successful implementation of these solutions led to significant financial benefits for the client.