Moody's Investors Service's system of rating insurers has always been based on more than just capital requirements, the agency said yesterday in a teleconference held to respond to market reaction to recent rating decisions.

Discussing its move to put triple-A rated insurers Assured Guaranty Corp. and Financial Security Assurance Inc. on review for a possible downgrade, Moody's said that an insurer's capital adequacy - which the market tends to focus on - counts as just one part in its rating criteria. The agency said franchise value and strategy, portfolio characteristics, profitability, and financial flexibility all factor into any rating decision.

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