Defaults And Downgrades Rise But Remain Historically Low

In 2024, eight financial services entities that were rated by S&P Global Ratings at the start of the year defaulted, including one confidential issuer (see chart 1). The total numbers are similar to 2023. The default rate went slightly down to 0.33% in 2024 from 0.38% in 2023, and a long-term average of 0.52%.

Of the seven financial services entities publicly rated at the start of 2024 and defaulted over the course of the year, all were at the lower end of speculative grade, reflecting the general trend that most entities that default are rated below 'B' when they default. Compared with 2023 when there were two defaults rated investment-grade at the start of the year, the investment grade default rate dropped to 0.0% in 2024 from 0.12% in 2023.

Six out of the financial services publicly rated defaults in 2024 were entities rated 'CCC' and below when they defaulted. One issuer was not rated at the time of the default. There was a swift transition of the ratings of these entities one year prior to default, when most of them were rated in the 'B' rating category.

Two of the seven entities were from the U.S., one each were from the United Kingdom, Canada, Colombia, Mexico, and France. As was the case in 2022-2023, most of the defaults involved nonbank financial institutions (NBFIs) and weaknesses specific to these financial institutions.

Half the defaults in 2024 were due to missed payments, while half the defaults in 2023 were because of distressed exchanges. Weaker borrowers were less favorably positioned to absorb higher borrowing costs--these entities faced a shortage of funds and missed a payment due. Out of the rest of last year's defaults, two were due to distressed exchanges, one due to bankruptcy procedures, and one confidential default.

Despite eight defaults across financial services, the same as last year, credit quality remained balanced, while an increase in upgrades outpaced downgrades in 2024 compared with 2023 levels. This caused the ratio of downgrades to upgrades to fall to 0.36x from 0.57x. The ratio remains below the average of 1.85x and the maximum of 8.06x seen during the 1981-2024 period.

We have identified a clear negative correspondence between ratings and defaults: the higher the issuer credit rating, the lower the observed default frequency. This indicates that credit ratings remain effective indicators of relative credit risk for financial services issuers.

We show the relationship between ratings and defaults with the Gini ratio, a measure of the rank-ordering power of ratings over a given time horizon (see table 1). This measure shows the ratio of actual rank-ordering performance to theoretically perfect rank ordering.

In 2024, the one-year financial services Gini coefficient increased to 96.2%, up from 78.1% in 2023; it's also well above the long-term weighted average of 80.4% (see chart 2). There were no investment-grade defaults last year, helping to push the Gini ratio up nearly 20 percentage points from 2023.

The three-year Gini coefficient rose to 82.0% from 77.9%, the five-year Gini coefficient fell to 78.7% from 84.1%, and the seven-year Gini coefficient fell to 83.9% from 86.2%. These weighted-average Gini ratios are weighted by yearly issuer counts since 1981 (see Appendix III for details).

By comparing financial and nonfinancial annual average Gini coefficients from 1981 to 2024, we see that the rank ordering of defaults and ratings in both sectors declined over that time frame, with a weighted-average Gini ratio for financials of 80.37% over one year, compared with 59.74% over seven years (see table 1). This trend is expected, since longer time horizons allow for more credit deterioration from higher rating levels.

Table 1

Gini coefficients for financial and nonfinancial issuer ratings (1981-2024)
	--Time horizon--
		One-year	Three-year	Five-year	Seven-year
Financials	Weighted average	80.37	70.41	63.89	59.74
	Average	83.63	76.97	70.20	65.00
	Standard deviation	(19.61)	(14.63)	(16.79)	(17.39)
Nonfinancials	Weighted average	80.74	71.88	68.45	65.98
	Average	84.48	76.55	72.45	69.51
	Standard deviation	(5.83)	(5.10)	(5.20)	(4.89)
The numbers in parentheses are standard deviations. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Default Observations In 2024

• The speculative-grade default rate for financial services rose to 1.50% in 2024 from 1.23% in 2023, with seven speculative-grade defaults in 2024, compared with six in 2023, despite a 4% decrease in the number of speculative-grade issuers.
• There were eight defaults in total. Six of the eight defaults in 2024 were rated 'CCC' or below just prior to default, one defaulted issuer was not rated, and one was a confidential rating. A year prior to default, most of the issuers were rated in lower speculative grade, at 'B' rating category and below.
• Among the entities that defaulted in 2024, the average time to default was 5.62 years from the initial rating, and 6.4 years historically.
• In 2024 there were no investment-grade defaults, compared with two in 2023.

Table 2

Global financial services default summary
Year	Total defaults	Rated defaults	Investment-grade defaults	Speculative-grade defaults	Default rate (%)	Investment-grade default rate (%)	Speculative-grade default rate (%)
1981		0	0	0	0.00	0.0	0.0
1982	2	2	0	2	1.54	0.0	11.8
1983	2	2	1	1	1.21	0.7	5.0
1984		0	0	0	0.00	0.0	0.0
1985	1	1	0	1	0.43	0.0	3.3
1986	1	0	0	0	0.00	0.0	0.0
1987		0	0	0	0.00	0.0	0.0
1988	6	5	0	5	1.09	0.0	7.1
1989	10	10	3	7	1.95	0.7	10.4
1990	5	4	0	4	0.71	0.0	6.8
1991	10	10	0	10	1.66	0.0	13.7
1992	11	9	0	9	1.35	0.0	13.0
1993	2	2	0	2	0.27	0.0	3.4
1994	1	1	1	0	0.12	0.1	0.0
1995	4	4	0	4	0.43	0.0	6.6
1996	1	0	0	0	0.00	0.0	0.0
1997	3	3	2	1	0.26	0.2	1.4
1998	11	11	1	10	0.83	0.1	9.0
1999	7	6	4	2	0.44	0.3	1.5
2000	12	10	3	7	0.69	0.2	3.6
2001	24	13	2	11	0.88	0.2	5.4
2002	15	10	1	9	0.66	0.1	4.1
2003	8	6	1	5	0.38	0.1	1.9
2004	6	4	1	3	0.24	0.1	1.1
2005	2	1	0	1	0.06	0.0	0.35
2006	2	2	0	2	0.11	0.0	0.67
2007	3	3	0	3	0.16	0.0	0.95
2008	25	20	13	7	1.00	0.8	2.12
2009	33	27	8	19	1.32	0.5	5.60
2010	17	13	0	13	0.66	0.0	3.69
2011	8	8	1	7	0.40	0.1	1.89
2012	8	5	0	5	0.25	0.0	1.27
2013	4	3	0	3	0.15	0.0	0.66
2014	6	3	0	3	0.14	0.0	0.60
2015	15	12	0	12	0.55	0.0	2.26
2016	16	16	1	15	0.72	0.1	2.63
2017	6	6	0	6	0.27	0.0	1.06
2018	9	6	0	6	0.27	0.0	1.07
2019	10	9	0	9	0.41	0.0	1.62
2020	6	6	0	6	0.27	0.0	1.09
2021	4	3	0	3	0.14	0.0	0.55
2022	7	7	0	7	0.32	0.0	1.30
2023	8	8	2	6	0.38	0.1	1.23
2024	8	7	0	7	0.33	0.0	1.50
Includes the bank, NBFI, and insurance sectors. Total defaults include companies that were no longer rated one year prior to default. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 3

2024 Global rated financial services defaults
Company	Reason for default	Country	Sector	Amount of debt outstanding (Mil.$)	Default date	Rating one year prior to default	Rating three years prior to default	First rating	Date of first rating
Resolute Investment Managers Inc.	Distressed Exchange	USA	NBFI	991	01/02/2024	B	B+	B+	6/12/2015
AFE S.A.	Distressed Exchange	UK	NBFI	-	02/15/2024	B	B	BB-	9/14/2017
Avison Young (Canada) Inc.	Missed Principal/Interest	Canada	NBFI	-	02/23/2024	B-	B-	B+	12/5/2016
Curo Group Holdings Corp.	Missed Interest	USA	NBFI	1,000	03/05/2024	-	-	CCC+	5/23/2023
Credivalores - Crediservicios SAS	Chapter 7	Colombia	NBFI	-	05/16/2024	CCC+	B	B+	11/14/2014
Operadora de Servicios Mega, S.A. de C.V. SOFOM, E.R.	Missed Interest	Mexico	NBFI	-	09/11/2024	B	BB-	BB	1/29/2020
iQera Group SAS	Missed Principal	France	Bank	663	10/02/2024	B	B+	BB-	11/28/2018
Excludes defaults of confidentially rated issuers. NBFI--Nonbank financial institution. Sources: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence's CreditPro®

Financial services issuers are more prone to have fewer defaults than nonfinancial corporate issuers (see chart 3). In 2024, financial services comprised only 5.5% of total corporate defaults. The overall financial services default rate was down in 2024 from 2023 levels. While the financial services default rate was 0.33% in 2024, the default rates for nonfinancial corporates was 2.61%. Even at the worst period of the global financial crisis in 2008-2009, the overall financial services default rate remained below 1.5%.

In 2024, banks and insurance companies had default rates below their long-term averages while it was higher for NBFIs.

The following are the publicly rated financial services defaults in 2024.

• Mexico-based NBFI, Operadora de Servicios Mega, S.A. de C.V. SOFOM, E.R. failed to make an interest payment on its $352 million senior unsecured notes due Feb. 11, 2025, during the 30-day grace period that ended Sept. 11, 2024.
• U.S.- based Curo Group Holdings Corp. has not made interest payments on its senior 1.5-lien secured notes and junior second-lien notes. Subsequently Curo Group Holdings Corp. filed for Chapter 11 bankruptcy protection.

• Colombia- based Credivalores - Crediservicios SAS defaulted under Chapter 7 bankruptcy procedures. At the moment of default the rating of the entity was withdrawn.

• U.S.- based Resolute Investment Managers Inc. completed a partial debt-for-equity exchange and restructured its $535 million first-lien term loan due April 2024. It also completed a full debt-for-equity exchange of its $89 million second-lien term loan due April 2025.

• Canada- based Avison Young (Canada) Inc. failed to make required quarterly principal and interest payments on its senior secured term loan.

• U.K.-based AFE S.A. completed debt restructuring of its outstanding debt and the acquisition by funds managed by AGG Capital Management Ltd (AGG).

• France-based iQera Group SAS missed the principal payment of its senior secured notes due on Sept. 30, 2024.

In 2024, default rates for banks and insurance companies were below their long-term averages (which go back to 1981) and their 10-year averages (see table 4). The 10-year average default rates for banks and insurance companies were 0.41% and 0.05%, respectively, while the rate for nonfinancial entities during that same period was 2.06%. The average default rate for insurance companies between 1981 and 2024 remains the lowest of any financial or nonfinancial sectors.

With NBFIs leading defaults in 2024, the default rate jumped to 1.16% from 0.97% in 2023. The 2024 default rate is above the 10-year average of 0.81% and close to the long-term weighted average of 1.01%.

Table 4

Global annual default rates by sector (%)
	Bank	NBFI	Insurance	Nonfinancial
1981	0.00	0.00	0.00	0.16
1982	0.00	2.78	2.94	1.18
1983	0.00	0.00	4.76	0.72
1984	0.00	0.00	0.00	1.06
1985	0.00	0.00	1.49	1.24
1986	0.00	0.00	0.00	2.12
1987	0.00	0.00	0.00	1.18
1988	1.91	0.00	0.00	1.46
1989	1.77	6.90	0.58	1.72
1990	1.31	0.00	0.00	3.43
1991	2.22	0.00	1.35	3.86
1992	2.15	0.00	0.72	1.55
1993	0.29	0.00	0.32	0.75
1994	0.00	0.00	0.29	0.85
1995	0.23	1.77	0.26	1.35
1996	0.00	0.00	0.00	0.76
1997	0.00	1.27	0.22	0.81
1998	1.35	1.69	0.00	1.53
1999	0.17	0.57	0.66	2.89
2000	0.00	0.54	1.44	3.24
2001	0.90	3.08	0.16	4.93
2002	0.73	0.93	0.48	4.83
2003	0.00	1.29	0.48	2.59
2004	0.13	0.00	0.47	1.03
2005	0.00	0.42	0.00	0.85
2006	0.00	0.00	0.28	0.64
2007	0.00	1.09	0.00	0.48
2008	1.04	2.57	0.37	2.21
2009	1.26	3.72	0.47	5.77
2010	0.24	2.84	0.24	1.52
2011	0.12	1.18	0.36	1.01
2012	0.12	0.85	0.12	1.59
2013	0.24	0.28	0.00	1.47
2014	0.11	0.50	0.00	0.95
2015	1.22	0.00	0.12	1.73
2016	0.78	1.76	0.11	2.73
2017	0.23	0.83	0.00	1.65
2018	0.12	1.01	0.00	1.36
2019	0.46	0.81	0.12	1.70
2020	0.23	0.60	0.12	3.87
2021	0.23	0.20	0.00	1.17
2022	0.36	0.75	0.00	1.27
2023	0.37	0.97	0.00	2.50
2024	0.13	1.16	0.00	2.61
Average	0.46	0.96	0.43	1.87
Weighted average	0.44	1.01	0.23	1.97
Median	0.20	0.59	0.12	1.49
Standard deviation	0.64	1.33	0.87	1.27
Minimum	0.00	0.00	0.00	0.16
Maximum	2.22	6.90	4.76	5.77
NBFI--Nonbank financial institution. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Financial Services Rating Trends In 2024

Ratings on financial services companies remain quite stable over different time horizons. Since 2019 the stability rate holds above 80%. Only 16.8% of entities had a rating change in 2024, compared with close to 24% 10 years earlier (see table 5).

Table 5

Summary of annual financial services companies rating action trends (%)
Year	Issuers as of Jan. 1 (#)	Upgrades	Downgrades*	Defaults	Withdrawn ratings	Changed ratings	Unchanged ratings	Downgrade-to-upgrade ratio
1981	126	10.32	11.11	0.00	2.38	23.81	76.19	1.08
1982	130	6.92	16.92	1.54	1.54	26.92	73.08	2.44
1983	165	5.45	10.91	1.21	4.24	21.82	78.18	2.00
1984	197	5.08	17.26	0.00	1.02	23.35	76.65	3.40
1985	231	6.93	6.93	0.43	3.90	18.18	81.82	1.00
1986	344	6.10	10.76	0.00	4.36	21.22	78.78	1.76
1987	402	6.22	14.93	0.00	2.74	23.88	76.12	2.40
1988	458	9.83	12.45	1.09	4.15	27.51	72.49	1.27
1989	514	7.00	10.12	1.95	2.53	21.60	78.40	1.44
1990	566	2.83	22.79	0.71	1.77	28.09	71.91	8.06
1991	602	3.49	22.59	1.66	2.82	30.56	69.44	6.48
1992	667	6.30	14.54	1.35	2.10	24.29	75.71	2.31
1993	730	9.45	8.49	0.27	3.56	21.78	78.22	0.90
1994	804	7.96	11.94	0.12	3.36	23.38	76.62	1.50
1995	936	6.52	13.03	0.43	2.46	22.44	77.56	2.00
1996	1,027	9.54	7.69	0.00	6.23	23.47	76.53	0.81
1997	1,147	7.41	6.28	0.26	7.15	21.10	78.90	0.85
1998	1,331	6.76	12.40	0.83	9.69	29.68	70.32	1.83
1999	1,364	6.60	9.16	0.44	7.77	23.97	76.03	1.39
2000	1,441	7.49	8.74	0.69	6.87	23.80	76.20	1.17
2001	1,474	4.61	12.21	0.88	7.67	25.37	74.63	2.65
2002	1,525	6.16	18.43	0.66	6.75	32.00	68.00	2.99
2003	1,570	6.56	11.46	0.38	6.31	24.71	75.29	1.75
2004	1,633	9.55	4.90	0.24	6.49	21.19	78.81	0.51
2005	1,689	16.64	4.91	0.06	6.69	28.30	71.70	0.30
2006	1,766	17.33	2.43	0.11	6.91	26.78	73.22	0.14
2007	1,890	18.04	4.71	0.16	6.14	29.05	70.95	0.26
2008	1,996	7.36	14.93	1.00	6.01	29.31	70.69	2.03
2009	2,048	3.52	20.26	1.32	8.98	34.08	65.92	5.76
2010	1,983	7.41	8.98	0.66	6.05	23.10	76.90	1.21
2011	1,999	11.11	17.31	0.40	6.75	35.57	64.43	1.56
2012	2,004	5.39	13.22	0.25	6.54	25.40	74.60	2.45
2013	2,043	9.59	9.15	0.15	5.68	24.57	75.43	0.95
2014	2,108	8.59	9.30	0.14	5.55	23.58	76.42	1.08
2015	2,185	6.32	11.53	0.55	5.63	24.03	75.97	1.83
2016	2,226	6.60	8.45	0.72	6.78	22.55	77.45	1.28
2017	2,222	8.24	7.74	0.27	7.74	23.99	76.01	0.94
2018	2,182	8.62	6.46	0.27	6.00	21.36	78.64	0.75
2019	2,196	7.83	3.14	0.41	5.15	16.53	83.47	0.40
2020	2,199	1.73	10.78	0.27	5.41	18.19	81.81	6.24
2021	2,188	6.90	3.52	0.14	5.07	15.63	84.37	0.51
2022	2,176	6.11	3.68	0.32	6.43	16.54	83.46	0.60
2023	2,109	7.44	4.22	0.38	4.03	16.07	83.93	0.57
2024	2,094	9.50	3.44	0.33	3.53	16.81	83.19	0.36
Weighted average		8.00	9.42	0.46	5.92	23.80	76.20	1.64
Average		7.71	10.55	0.52	5.20	23.99	76.01	1.85
Median		6.97	10.44	0.38	5.65	23.81	76.19	1.33
Standard deviation		3.29	5.18	0.49	2.07	4.61	4.61	1.73
Minimum		1.73	2.43	0.00	1.02	15.63	64.43	0.14
Maximum		18.04	22.79	1.95	9.69	35.57	84.37	8.06
Includes the bank, nonbank financial institution, and insurance sectors. This table compares the net change in ratings from the first to the last day of each year. All intermediate ratings are disregarded. *Excludes downgrades to 'D', which are shown separately in the "Defaults" column. Sources: S&P Global Market Intelligence's CreditPro and S&P Global Ratings Credit Research & Insights.

In general, financial services entities have tended to see more downgrades than upgrades over the long term (1981-2024); in 29 of the 44 examined years, the downgrade-to-upgrade ratio was above one. But in recent years, the trend has reversed. Upgrades have generally outnumbered downgrades since 2017 (with the exception of 2020, when the downgrade-to-upgrade ratio was 6.2x).

The financial services downgrade rate reduced to 3.44% in 2024 from 4.22%, despite rising macroeconomic risks across regions and sectors. In addition, since early 2022, borrowing costs remained elevated despite some reduction in interest rates in the second half of 2024. Positive rating movements in 2024 were driven by idiosyncratic country and industry-specific factors.

But upgrades outpaced downgrades last year, with the upgrade rate ending 2024 at 9.50%, up from 7.44% in 2023. This led to a lower downgrade-to-upgrade ratio in 2024 (0.36x) compared with 2023 (0.57x).

Credit stability--indicating the share of unchanged ratings over the course of the year--reduced to 83.19% in 2024 from 83.93%. This metric has stayed above 80% for the past six years, after having fallen below that level since 1986.

Persistent inflation, tighter financing conditions, and lower economic growth all affected the credit performance of rated financial institutions in 2024. Banks accounted for the largest share of financial services downgrades last year (44%), followed by NBFIs (31%) and insurance companies (25%). The emerging and frontier markets accounted for 44% of the downgrades, followed by Europe (28%) and other developed markets (25%) and the rest (3%), from the U.S.

Banks

Banks were the largest of the three financial services subsectors in 2024, with 795 rated issuers at the start of the year. The stability rate rose in 2024 to 79.37% from 77.50%.

The upgrade rate was close to 2023 levels in 2024, reaching 12.33%, slightly down from 12.48%. At the same time, the downgrade rate declined at a faster pace to 4.03% from 5.44%. The default rate also edged lower, to 0.33% from 0.44% on the back of one default in 2024. (See Appendix I for detailed statistics by sector.)

Banks in the emerging and frontier markets accounted for 40% of the downgrades in 2024, followed by European banks (25%) and U.S. banks (22%). Solid profitability as a result of higher net interest income helped banks in the developed markets to absorb higher operating and credit costs. Banks in the emerging markets have largely benefited from higher interest rates, which are reflected in higher margins, but sluggish economic growth in emerging markets affected credit expansion and might weaken asset quality. Potential further declines in deposits, funding cost pressures, unrealized losses, commercial real estate exposures, and economic uncertainty were the other key challenges for banks globally that we identified (see "Global Banks Outlook 2025: Cautiously Confident," Nov. 14, 2024).

Insurance

Insurance was the second-largest financial services subsector, starting 2024 with 782 rated issuers. Insurance issuers saw their downgrade rate reduced to 2.30% in 2024 from 2.43%. However, that rate is still relatively low compared with the downgrade rates of the other financial services subsectors. Insurance also tends to have the highest stability rate, with 87.34% of ratings unchanged in 2024, and a historical average of 79.62%.

Insurers are clearly exposed to macroeconomic and financial market pressures, but enhanced risk management practices have gained ground over the past decade—with a focus on asset and liability management, strategic asset allocation, and sector and obligor concentration limits. Those practices--combined with capital buffers and product redesign--have led to ratings stability, even in recent times of stress.

In 2024, U.S. issuers led downgrades in insurance segments such as property/casualty, life, and mutual insurance, as higher inflation weighed on underwriting results. Over time, strains have worsened in some of these segments as higher interest rates weakened balance sheets and our views of companies' capital adequacy.

NBFI

NBFIs made up the smallest of the three financial services subsectors, with 517 rated issuers at the start of 2024. NBFIs saw their upgrade rate rise to 7.74% (from 5.21%) and downgrade rate fall to 4.26% (from 5.02%). The default rate rose to 1.16% in 2024, from 0.97% followed by six defaults in this subsector.

In 2024, the U.S. led NBFI downgrades, accounting for 43%, followed by Europe (35%).

NBFIs are vulnerable to disruptions in funding access given geopolitical tensions, slowing economies, and spiking interest rates. These entities tend to rely more on market funding, and they don't benefit from access to central bank credit lines. Tighter financing conditions may in some cases prove more challenging, even if many have used the abundant market liquidity of past years to push out debt maturities.

Investment-Grade Issuers Dominate Among Financial Institutions

Financial services issuers accounted for 2,094 of the rated issuers globally at the start of 2024, while nonfinancial issuers accounted for 4,737 of the rated issuers. As of Jan. 1, 2024, 78% of financial services issuers were rated investment grade, compared with just 41% of nonfinancial issuers. In the last 10 years the share of investment-grade issuers rose from 74% of all rated financial institutions to 78%, though far below it peaks in the 1990s where the share was above 90%.

In 2024, more financial services issuers were rated in the 'A' category (40.2%) than in any other single rating category, similarly to 2023 (40%), but higher than its 15-year average (roughly 38%). This was followed by issuers rated in the 'BBB' category (27.9%), and issuers rated in the 'BB' category (12.5%). The 'B' rating category accounted for 8% of rated entities, and entities rated 'CCC+' or below made up 1.5%. There were only three 'AAA' issuers--a number that has remained stable since 2018--but has gradually decreased from 113 in 1995.

Through 2023 the median rating of financial services entities rated by S&P Global Ratings--which include banks, NBFIs, and insurance companies--maintained a median rating level of 'BBB+' since 2014 (for definitions, see Appendix I). However in 2024 it rose to 'A-' from 'BBB+' because of a number of upgrades of financial institutions to 'A-' and above rating categories, mostly due to improved intrinsic metrics of specific entities. This is despite increasing global pressures and uncertainty from rising geopolitical risks, tighter financing conditions, and, more recently, persistent inflation. The median rating for nonfinancial companies was speculative grade, at 'BB', which went down from the median rating of 'BBB-' 20 years ago. Since then the median rating of nonfinancial companies was 'BB' on average.

The insurance sector had the highest median rating ('A') among financial services, while banks and NBFIs had median ratings of 'BBB+' and 'BBB', respectively. In the last 44 years, the sharpest decline in the median rating was for banks (from 'AA') followed by NBFIs (from 'A'). However, since 2016, the median rating has been stable for all of the financial services sectors.

The emerging and frontier markets account for 53% of speculative-grade financial services issuers, followed by the U.S. (33%), Europe (9%), and other developed markets (5%).

Lower sovereign credit ratings are a significant factor. Although sovereign ratings don't act as a ceiling on issuer credit ratings, an issuer rated higher than the sovereign must be able to withstand a sovereign default. Government-related entities are typically more subject to country risk and negative sovereign intervention risk than private-sector entities since they usually have direct links to governments. Some issuers have explicit or implicit links to their respective sovereign, or have an eligible guarantee from a parent or sovereign. In all cases, the issuer credit rating is subject to any sovereign-related considerations.

In developed markets like Europe and the U.S., the number of speculative-grade financial services entities reflects primarily the number of speculative-grade NBFIs rather than banks and insurance companies, which are mostly investment-grade rated.

Financial Services Rating Trends: Shifting Dynamics

Since 1981, the number of rated financial services issuers has grown significantly. In the 1980s and 1990s, the number of banks and insurance companies flourished and added to the growth. In the past 20 years, the number of financial services issuers grew by 20%, primarily because of NBFIs and insurance companies.

Over the last 20 years the rated bank numbers dropped only by 1%, however, in between we observed peaks in numbers, such as in 2015-2016 when there were close to 900 rated banks. The number decreased and there were 786 at the end of 2024. Since 2015, the rated bank numbers went down by 12%, this was a continuous decline in numbers except just a few years when numbers increased. During this period banks have adjusted to rising capital requirements and new regulatory requirements since the global financial crisis. Heightened regulatory requirements led to the closure of weaker banks and to market consolidation, contributing to a decline in the number of rated banks.

NBFIs, meanwhile, have grown as new nonbank lenders, finance companies, and business development companies have entered the market causing the number of rated NBFIs to jump close to 22% in the last 10 years. Over the same period, the number of rated banks and insurance companies has contracted by 12% and 10%, respectively (see chart 8).

At the end of 2024, 32% of NBFIs were rated speculative grade, compared with 26% of banks, and just 10.9% of insurers (see chart 9). NBFIs are prone to be unregulated or more lightly regulated than banks, and they often don't benefit from central bank access. As a result, they're generally rated lower than regulated banks and insurance companies.

The share of banks rated investment grade rose to 74% as of Dec. 31, 2024, from 68.8% at the end of 2017. Credit quality in the banking sector has continually improved in recent years as banks have strengthened their balance sheets and expanded their bail-in-eligible capital reserves amid favorable economic trends (see chart 9).

Meanwhile, the number of investment-grade insurers has been strong—89.1% of the total rated universe of insurance companies in 2024, higher than the 10-year average of 88%, and close to 89% in 2015. Insurers are less exposed to confidence sensitivity than banks, but are not immune to it.

Transition Rates And Ratings Performance For 2024

Our analysis of transition rates in 2024 suggests that ratings behavior remains consistent with long-term trends, with a negative correspondence between ratings and the observed frequency of default.

Investment-grade financial services issuers globally tend to have greater ratings stability (as measured by the frequency of rating transitions) than their speculative-grade counterparts (see table 6). For instance, 96.54% of issuers rated 'A' at the beginning of 2024 were still rated 'A' on Dec. 31, 2024, whereas the comparable share for issuers rated 'B' was only 82.18%.

Table 6

2024 One-year financial services companies transition rates by region (%)
From / to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Global
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	94.23	2.40	0.00	0.00	0.00	0.00	0.00	3.37
A	0.00	1.07	96.54	0.72	0.00	0.00	0.00	0.00	1.67
BBB	0.00	0.00	4.50	91.35	0.87	0.00	0.00	0.00	3.29
BB	0.00	0.00	0.00	4.21	85.82	1.92	0.38	0.00	7.66
B	0.00	0.00	0.00	0.57	7.47	82.18	2.30	1.15	6.32
CCC/C	0.00	0.00	0.00	0.00	0.00	3.13	71.88	15.63	9.38
U.S. and tax havens
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	94.74	1.05	0.00	0.00	0.00	0.00	0.00	4.21
A	0.00	1.39	97.56	0.35	0.00	0.00	0.00	0.00	0.70
BBB	0.00	0.00	4.23	91.55	1.41	0.00	0.00	0.00	2.82
BB	0.00	0.00	0.00	5.33	84.00	2.67	0.00	0.00	8.00
B	0.00	0.00	0.00	0.00	0.00	89.71	2.94	1.47	5.88
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	42.86	28.57	28.57
Europe
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	93.75	1.56	0.00	0.00	0.00	0.00	0.00	4.69
A	0.00	0.74	95.94	0.37	0.00	0.00	0.00	0.00	2.95
BBB	0.00	0.00	6.32	86.32	0.00	0.00	0.00	0.00	7.37
BB	0.00	0.00	0.00	12.50	65.63	0.00	3.13	0.00	18.75
B	0.00	0.00	0.00	0.00	37.50	43.75	6.25	6.25	6.25
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	66.67	33.33	0.00
Emerging and frontier markets
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
A	0.00	0.00	98.53	0.00	0.00	0.00	0.00	0.00	1.47
BBB	0.00	0.00	4.07	92.76	0.90	0.00	0.00	0.00	2.26
BB	0.00	0.00	0.00	1.38	92.41	0.69	0.00	0.00	5.52
B	0.00	0.00	0.00	1.18	9.41	81.18	1.18	0.00	7.06
CCC/C	0.00	0.00	0.00	0.00	0.00	4.55	86.36	4.55	4.55
Other developed
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	91.67	8.33	0.00	0.00	0.00	0.00	0.00	0.00
A	0.00	2.07	93.79	2.76	0.00	0.00	0.00	0.00	1.38
BBB	0.00	0.00	5.66	92.45	0.00	0.00	0.00	0.00	1.89
BB	0.00	0.00	0.00	6.67	73.33	13.33	0.00	0.00	6.67
B	0.00	0.00	0.00	0.00	14.29	85.71	0.00	0.00	0.00
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	100.00	0.00
Includes the bank, nonbank financial institution, and insurance sectors. N/A--Not applicable. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

No 'AAA' rated financial institutions were downgraded in 2024. However, the number of 'AAA' rated financial institutions has been dwindling in recent years. At the start of 2008, before the global financial crisis, there was a total of 74 'AAA' rated financial services issuers globally. By the beginning of 2024, there were just three.

All three financial services issuers are government-related entities, which allows S&P Global Ratings to rate them equivalently to, or give additional notches of support from, to their respective parents.

• Nederlandse Waterschapsbank N.V. (Netherlands): The issuer credit rating is in line with our rating on the Netherlands (AAA/Stable/A-1+) since we expect the bank to continue playing a vital role in providing low-cost, stable financing to the Dutch public sector, such as social housing providers, local and regional governments, and water authorities.

• Public Sector Pension Investment Board (Canada): The stand-alone credit profile of 'aaa' reflects our view of the fund's operational independence from the Canadian government, high operational effectiveness, well-diversified portfolio, strong liquidity position, management and governance, and low leverage. In addition, the 'AAA' issuer credit rating reflects our opinion that there's a moderately high likelihood that the Canadian government would provide extraordinary support in the event of financial distress.

• Zuercher Kantonalbank (Switzerland): The bank benefits from its close ties--including full ownership and a statutory guarantee--with the financially strong Canton of Zurich (AAA/Stable/--). The bank materially benefits from its superior stand-alone creditworthiness in conjunction with the full ownership by the canton and the extremely high likelihood of timely and sufficient support from the canton, if it's ever needed.

Annual Default Rates And Ratings Performance

All of our ratings performance studies have found a clear correlation between ratings and defaults: The higher the rating, the lower the observed frequency of default, and vice versa. Over each time span, lower ratings correspond to higher default rates.

We found that the same was true when we broke out the data by rating as well as by region. As the Gini ratios show, the ability of financial services ratings to serve as effective measures of relative risk remains intact, particularly across larger pools of issuers.

Many default studies, including this one, also look at transition rates, which gauge the degree to which ratings move--either up or down--over a particular time period. Transition studies have repeatedly confirmed that higher ratings tend to be more stable and speculative-grade ratings generally have more volatility.

Some issuers default after S&P Global Ratings no longer rates them. We make our best effort to capture such defaults in the database, and we include an entity in the annual default rate calculations if it was rated as of Jan. 1 in the year of default. If, however, S&P Global Ratings withdrew the rating prior to Jan. 1 of the year of default, we do not include the issuer in the default rate calculation in that year.

Although defaulters not rated (NR) are not always captured in the default rate calculations for the year of default, we do capture them in the longer-term cumulative default rate statistics, tied back to the year in which defaulters were last rated.

The path to default for financial services entities has been more gradual in recent years

Financial services entities typically have lower average default rates and account for fewer defaults annually than nonfinancial entities. However, the path to default for financial issuers can be relatively swift. Financial institutions are typically more confidence-sensitive than nonfinancial companies, and the loss of confidence from stakeholders (such as counterparties or funding sources) can contribute to a rapid decline in liquidity and credit quality.

From 1981-2024 financial institutions that defaulted had a median rating of 'BBB-' seven years prior to default, which fell to 'BB+' (speculative grade) six years before default. Starting from four years before the default, the defaulters experienced a relatively steep descent into default, with the median rating dropping to 'B+' one year before default.

By contrast, financial services entities that defaulted in the last three years typically had a much more gradual path to default from a much lower rating level. These issuers had a median rating of 'B+' seven years before default, and the median fell to 'B' over two years before default (see chart 10). Notably, the trailing-12-quarter median default rate for financial services entities is based on a much smaller subsample of just 22 issuers, while the full history (1981-2024) covers 339 issuers.

Financial services entities with higher initial ratings, should they default, often to have a longer time between the initial rating and the eventual default. The time to default for a defaulting issuer generally correlates with the initial rating. For the entities that defaulted in 2024, the average time to default was 5.62 years from the initial rating, and 6.4 years historically. This compares with the average time to default of 5.80 years for nonfinancial corporate entities.

For the entire pool of defaulters (1981-2024), the average time to default for financial services entities that were originally rated in the 'AA' category was 13.56 years, while those initially rated in the 'B' category defaulted 4.58 years later, on average (see table 7). Note that the standard deviation of the time to default is also generally smaller for lower ratings.

We treat cases where an issuer emerges from a prior default (including from distressed exchanges) as a separate entity, with a new initial rating that is first recorded after the default event.

Table 7

Time to default from original rating for global financial services defaulters (1981-2024)
Original rating	Defaults	Average years from original rating*	Median years from original rating	Standard deviation of years from original rating
AAA	5	15.44	7.61	11.88
AA	20	13.56	10.06	8.90
A	29	8.86	6.78	6.42
BBB	57	8.17	6.50	5.84
BB	75	6.14	5.02	5.27
B	111	4.58	3.03	4.06
CCC/C	42	3.05	1.25	3.99
Includes the bank, nonbank financial institution, and insurance sectors. *Or Dec. 31, 1980, whichever is later. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®

While no financial services issuer has ever defaulted from the 'AAA' rating level over a one-year horizon throughout the 44-year span of our study, there have been five financial services entities that eventually defaulted after receiving an initial rating of 'AAA'.

One of these was Ally Financial Inc., formerly known as GMAC Financial, a subsidiary of General Motors Co. The issuer credit rating on this company was lowered to 'SD' from 'CC' following a distressed debt exchange in December 2008. While this issuer was initially rated 'AAA', it was downgraded to 'AA+' in 1981, more than 27 years in advance of its eventual default in 2008. While GMAC Financial was an NBFI at the time of default, the reorganized entity, Ally Financial, has since become a bank holding company.

The four other 'AAA' rated defaulters were from the insurance sector. These insurers' defaults occurred as their asset values fell or as liabilities climbed following recessions.

Three North American life insurers (Mutual Benefit Life Insurance Co., Executive Life Insurance Co. CA, and Confederation Life Insurance Co.) defaulted between 1992 and 1994 because of a combination of illiquid assets and insufficient liquidity to meet maturing liabilities. These companies had asset portfolios with heavy concentrations of speculative-grade bonds, real estate investments, or commercial real estate loans, which lost value and were increasingly illiquid following the 1991-1992 U.S. recession. As policyholders lost confidence in these insurers, they accelerated withdrawals, which exacerbated the companies' inability to meet liabilities.

The remaining defaulter was bond insurer Ambac Assurance Corp., downgraded to 'SD' in 2009 because of financial weakness fom being exposed to the U.S. subprime housing sector.

S&P Global Ratings subsequently made adjustments to its global insurance criteria to address issues that caused these failures, including through introducing the capital model in 1994 and, more recently, through updates to most of the criteria for financial services companies following the global financial crisis.

Since 2011, S&P Global Ratings has further updated and revised the methodology and assumptions that it applies to determine the ratings on financial services companies. Rating methodologies and assumptions were revised in 2011 and 2019 (including a capital model update) for bond insurance, in 2013 and 2019 for insurance companies (including life, health, and property/casualty), in 2014 for NBFIs, and in 2015 and 2019 for mortgage insurance. On Nov. 15, 2023, S&P Global Ratings published "Insurer Risk-Based Capital Adequacy--Methodology And Assumptions," which provides criteria for analyzing the risk-based capital adequacy of insurers and reinsurers. S&P Global Ratings applies the output from these criteria in our insurance framework to assess capital and earnings--a key rating factor for insurers.

S&P Global Ratings updated its rating methodology and assumptions for banks in 2011. The revised criteria also consider the relationship of a country's banking industry to its financial system as a whole.

The Banking Industry Country Risk Assessment (BICRA) criteria were also updated in 2011, providing a framework to compare global banking systems, including the role of government supervision, regulation, and systemwide support programs. We use BICRA to determine a bank's anchor, the starting point in assigning an issuer credit rating.

In December 2021, S&P Global Ratings published revised criteria for financial institutions. They enhanced the consistency of our terminology and approaches, incorporated relevant developments since the publication of the previous articles (including newer or emerging risks), and enabled S&P Global Ratings to communicate more clearly about the drivers of rating changes.

Higher-rated entities had fewer defaults than lower-rated ones

The lower frequency of defaults among higher-rated entities and the higher rate of default among lower-rated entities have remained true over time (see chart 11).

The relationship between default rates and ratings is most apparent through the cumulative rates, with the lowest rating categories having default rates far in excess of those in the investment-grade categories.

The lowest investment-grade rating category, 'BBB', has a one-year weighted long-term average default rate (since 1981) of 0.19%. The average default rate is more than double that for the 'BB' category (0.55%), is even higher for the 'B' category (2.22%), and higher yet for the 'CCC+' or below rating category (16.55%).

The default rates for the 'B' category increased in 2024 to 1.15%, and for 'CCC+' or below decreased to 15.63%, from 1.04% and 16.0%, respectively. The 'BB' category remained at 0% in 2024 and 2023, lower than its long-term weighted average of 0.55%. For all the rating categories the default rates were lower than their respective long-term weighted averages.

For financial services, the pool of issuers rated in each speculative-grade rating category is often relatively small, particularly for the 'CCC' and below rating category. As of Jan. 1, 2025, speculative-grade ratings accounted for only 21.96% of financial services issuers, and the and below rating category accounted for roughly 1.5%.

Given the small base of ratings (particularly in earlier years), the default rate for entities rated 'CCC+' and below has climbed to as high as 100% (in 1982, when there was only one financial services issuer rated CCC+ and below at the beginning of the year), while the 'B' category default rate peaked at 25% in 1982, with one default (see table 8).

Table 8

Global financial services annual default rates by rating category (%)
	AAA	AA	A	BBB	BB	B	CCC/C
1981	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1982	0.00	0.00	0.00	0.00	0.00	25.00	100.00
1983	0.00	0.00	0.00	3.45	5.88	0.00	N/A
1984	0.00	0.00	0.00	0.00	0.00	0.00	N/A
1985	0.00	0.00	0.00	0.00	4.76	0.00	N/A
1986	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1987	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1988	0.00	0.00	0.00	0.00	2.33	17.39	0.00
1989	0.00	0.00	0.69	3.85	0.00	11.76	62.50
1990	0.00	0.00	0.00	0.00	2.56	13.33	20.00
1991	0.00	0.00	0.00	0.00	4.76	15.79	41.67
1992	0.00	0.00	0.00	0.00	0.00	5.88	66.67
1993	0.00	0.00	0.00	0.00	2.94	0.00	14.29
1994	0.00	0.00	0.36	0.00	0.00	0.00	0.00
1995	0.00	0.00	0.00	0.00	0.00	20.00	0.00
1996	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1997	0.00	0.00	0.00	0.97	0.00	5.00	0.00
1998	0.00	0.00	0.00	0.38	3.17	15.56	33.33
1999	0.00	0.28	0.39	0.38	0.00	4.35	0.00
2000	0.00	0.00	0.39	0.37	0.00	4.23	40.00
2001	0.00	0.00	0.20	0.34	5.36	3.70	20.00
2002	0.00	0.00	0.00	0.32	0.81	5.41	17.39
2003	0.00	0.00	0.00	0.28	0.00	2.04	13.04
2004	0.00	0.00	0.18	0.00	0.68	0.94	4.17
2005	0.00	0.00	0.00	0.00	0.64	0.00	0.00
2006	0.00	0.00	0.00	0.00	0.58	0.90	0.00
2007	0.00	0.00	0.00	0.00	1.15	0.82	0.00
2008	0.00	0.49	0.68	1.32	1.62	1.56	11.76
2009	0.00	0.00	0.25	1.22	0.54	9.23	24.00
2010	0.00	0.00	0.00	0.00	2.65	0.75	24.14
2011	0.00	0.00	0.00	0.21	0.00	3.18	11.11
2012	0.00	0.00	0.00	0.00	0.48	0.60	13.64
2013	0.00	0.00	0.00	0.00	0.00	1.06	5.26
2014	0.00	0.00	0.00	0.00	0.00	0.47	5.71
2015	0.00	0.00	0.00	0.00	0.00	2.58	22.22
2016	0.00	0.00	0.00	0.17	0.00	3.28	31.82
2017	0.00	0.00	0.00	0.00	0.00	0.80	16.67
2018	0.00	0.00	0.00	0.00	0.00	1.20	18.75
2019	0.00	0.00	0.00	0.00	0.00	1.53	41.67
2020	0.00	0.00	0.00	0.00	0.00	1.57	66.67
2021	0.00	0.00	0.00	0.00	0.00	1.22	0.00
2022	0.00	0.00	0.00	0.00	1.02	0.45	13.04
2023	0.00	0.00	0.00	0.34	0.00	1.04	16.00
2024	0.00	0.00	0.00	0.00	0.00	1.15	15.63
Minimum	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Maximum	0.00	0.49	0.69	3.85	5.88	25.00	100.00
Weighted long-term average	0.00	0.03	0.07	0.19	0.55	2.22	16.55
Median	0.00	0.00	0.00	0.00	0.00	1.21	13.64
Standard deviation	0.00	0.08	0.17	0.80	1.63	6.18	22.61
Includes the bank, NBFI, and insurance sectors. N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

By contrast, the relationship is slightly more discontinuous when we examine rating transitions across modifiers (the plus or minus after a rating) or by sector, but these variations are likely a result of sample-size considerations, and we do not consider them to be significant (see table 9 for default rates by rating level and Appendix I for default rates by sector).

Additionally, when examining default rates by rating level, there are few higher-than-expected default rates for some investment-grade ratings in certain years. In 1983, the default rate for 'BBB-' rated financial services issuers climbed to 16.67%. Notably, this rate reflected the default of just one issuer, and the default rate for the 'BBB' category as a whole in 1983 was just 3.45%.

Since 1981, no financial services issuers rated 'AAA' or 'AA+' have defaulted over a one-year horizon. However, over this period, three financial services issuers rated either 'AA' or 'AA-' defaulted:

• General American Life Insurance Co.: After aggressively growing its guaranteed investment contract product line in prior years, the company did not have sufficient liquidity and was taken under administrative supervision in 1999 following a spike in surrender rates on the contracts.
• Lehman Brothers Inc.: The company filed for Chapter 11 bankruptcy protection in 2008 following the deterioration of its U.S. subprime housing assets.
• BluePoint Re: The company was taken over by its regulatory authority in 2008 as projected losses mounted on subprime and second-lien residential mortgage-backed security and asset-backed security collateralized debt obligations that it had reinsured.

In the last 20 years, there were a total of 25 defaults of investment-grade financial institutions, 84% of them were observed in 2008 and 2009, with 13 and 8 defaults, respectively, because of the global financial crisis. The number of investment-grade defaults is still low compared with the number of defaults of speculative-grade issuers, which accounted for 85% of the total number of defaults in the last 20 years compared with 96% in the last 10 years. The latest default of investment-grade issuers was in 2023. One year before their defaults, Silicon Valley Bank and its parent, SVB Financial Group, were rated investment grade. These were the first investment-grade defaults in financial services since 2016, and the first in our universe of corporate ratings since 2019.

Table 9

Global financial services annual default rates by rating modifier (%)
	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C
1981	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A	0.00	N/A	0.00
1982	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	0.00	0.00	0.00	100	100.00
1983	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67	14.29	0.00	0.00	0.00	0.00	N/A	N/A
1984	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A	N/A
1985	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	11.11	0.00	0.00	0.00	0.00	0.00	N/A
1986	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00
1987	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1988	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	5.88	9.09	0.00	50	0.00
1989	0.00	0.00	0.00	0.00	0.00	0.00	2.70	6.25	4.55	0.00	0.00	0.00	0.00	0.00	12.50	100.00	62.50
1990	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	8.33	0.00	0.00	0.00	16.67	25	20.00
1991	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	11.76	0.00	0.00	0.00	28.57	25.00	41.67
1992	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	0.00	0.00	0.00	33	66.67
1993	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	9.09	0.00	0.00	0.00	0.00	14.29
1994	0.00	0.00	0.00	0.00	1.12	0.00	0.00	0	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A	0.00
1995	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	9.09	28.57	50.00	0.00
1996	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00
1997	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.27	1.54	0.00	0.00	0.00	0.00	0.00	0.00	33.33	0.00
1998	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	1.27	0.00	10.00	0.00	11.11	28.57	0	33.33
1999	0.00	0.00	0.00	0.60	0.00	0.52	0.76	0.00	1.04	0.00	0.00	0.00	0.00	8.70	0.00	0.00	0.00
2000	0.00	0.00	0.00	0.00	0.00	0.59	0.75	0	0.00	1.28	0.00	0.00	0.00	6.25	3.70	0	40.00
2001	0.00	0.00	0.00	0.00	0.00	0.56	0.00	0.00	0.84	0.00	0.00	2.44	17.24	0.00	6.67	7.14	20.00
2002	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	1.18	2.27	0.00	0.00	8.82	0.00	8	17.39
2003	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.72	0.00	0.00	0.00	0.00	0.00	7.14	0.00	13.04
2004	0.00	0.00	0.00	0.00	0.00	0.53	0.00	0	0.00	0.00	0.00	1.67	0.00	2.50	0.00	0	4.17
2005	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.50	0.00	0.00	0.00	0.00
2006	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	1.69	0.00	0.00	0.00	0.00	3	0.00
2007	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.82	1.82	1.89	0.00	0.00	0.00
2008	0.00	0.00	0.58	0.51	0.46	0.36	1.27	1	2.19	1.64	4.35	0.00	0.00	0.00	3.70	0	11.76
2009	0.00	0.00	0.00	0.00	0.00	0.68	0.00	0.55	0.60	2.82	0.00	1.92	0.00	9.09	13.33	4.88	24.00
2010	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	3.03	2.13	2.63	0.00	0.00	2	24.14
2011	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.69	0.00	0.00	0.00	1.75	4.84	2.63	11.11
2012	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	1.79	1.47	0.00	0	13.64
2013	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.51	5.26
2014	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	0.00	1.37	0.00	0	5.71
2015	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	5.26	0.94	1.96	22.22
2016	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.56	0.00	0.00	0.00	0.00	1.19	1.04	9	31.82
2017	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.99	1.39	16.67
2018	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	0.00	0.00	2.30	1	18.75
2019	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	6.35	41.67
2020	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	0.00	1.33	1.83	1	66.67
2021	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.23	0.00	2.70	0.00
2022	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	2.17	1.27	0.00	0	13.04
2023	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.47	0.41	0.00	0.00	0.00	0.00	0.00	0.00	3.57	16.00
2024	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0	0.00	0.00	0.00	0.00	0.00	0.00	3.17	0	15.63
Minimum	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Maximum	0.00	0.00	0.58	0.60	1.12	0.68	2.70	6.25	4.55	16.67	14.29	10.00	17.24	11.11	28.57	100.00	100.00
Weighted long-term average	0.00	0.00	0.03	0.04	0.03	0.09	0.09	0.09	0.22	0.30	0.57	0.42	0.65	1.72	2.04	3.23	16.55
Median	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.68	13.64
Standard deviation	0.00	0.00	0.09	0.12	0.18	0.19	0.47	0.96	0.80	2.55	3.40	2.07	2.77	3.31	7.80	24.35	22.61
Includes the bank, NBFI, and insurance sectors. N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Average Transition Tables And Cumulative Default Rates

This study--in line with previous default studies--confirms that over the long term (1981-2024), higher ratings are more stable than lower ratings. For financial services entities, the highest rating categories ('AAA', 'AA', and 'A') each displayed stability rates of 87% or higher for a one-year horizon.

Of these three rating categories, the 'A' category had the highest rate of stability, at 90.27% (meaning that 90.27% of 'A' rated issuers remained within that rating category over one year). The stability rates for the 'AAA' and 'AA' categories were slightly lower but still very high, at 87.32% and 88.02%, respectively.

In comparison, the 'B' category had a notably lower stability rate of 76.94% over one year (see table 10).

When we examine rating transitions by rating level, the general relationship between rating and stability tends to hold (see table 11). 'A+' rated issuers were still rated 'A+' one year later 81.46% of the time, and 'A-' rated issuers were still rated 'A-' one year later 79.50% of the time.

These long-term relationships also broadly hold when transition rates are calculated over longer time horizons and when broken out by region, though there are exceptions, largely because of sample-size considerations, which we do not consider significant (see table 12).

Over the long term (1981-2024), heightened ratings stability is broadly consistent with higher ratings. A key observation when analyzing transition matrices that present averages computed over multiple static pools is that the standard deviations associated with each transition point in the matrix are large relative to the averages (outside of stability rates).

Table 10

Global average transition rates for financial services (1981-2024) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One-year
AAA	87.32	9.33	0.32	0.04	0.08	0.04	0.08	0.00	2.79
	(10.13)	(9.61)	(0.95)	(0.22)	(0.36)	(0.23)	(0.47)	(0.00)	(2.63)
AA	0.41	88.02	7.47	0.31	0.02	0.02	0.03	0.03	3.69
	(0.54)	(6.19)	(5.49)	(0.60)	(0.07)	(0.07)	(0.15)	(0.11)	(1.74)
A	0.02	1.88	90.27	3.20	0.15	0.05	0.01	0.07	4.35
	(0.12)	(1.63)	(4.49)	(2.50)	(0.41)	(0.13)	(0.04)	(0.16)	(2.05)
BBB	0.01	0.16	4.07	85.88	2.77	0.33	0.09	0.19	6.52
	(0.07)	(0.44)	(2.76)	(5.06)	(2.33)	(0.78)	(0.23)	(0.44)	(1.97)
BB	0.00	0.07	0.16	5.43	78.55	4.29	0.59	0.55	10.36
	(0.00)	(0.24)	(0.60)	(3.90)	(7.31)	(3.07)	(1.42)	(1.12)	(4.33)
B	0.00	0.02	0.07	0.37	6.17	76.94	3.19	2.22	11.01
	(0.00)	(0.18)	(0.53)	(0.74)	(3.97)	(6.90)	(3.16)	(3.11)	(3.87)
CCC/C	0.00	0.00	0.00	0.00	1.01	15.37	49.16	16.55	17.91
	(0.00)	(0.00)	(0.00)	(0.00)	(3.60)	(12.12)	(20.23)	(15.18)	(10.93)
Three-year
AAA	65.55	23.44	1.58	0.32	0.12	0.08	0.16	0.20	8.54
	(16.65)	(16.29)	(2.13)	(1.10)	(0.43)	(0.34)	(0.57)	(0.52)	(5.98)
AA	0.96	69.02	17.45	1.51	0.15	0.13	0.03	0.16	10.58
	(1.00)	(11.19)	(8.31)	(1.63)	(0.31)	(0.32)	(0.09)	(0.27)	(3.89)
A	0.06	4.40	74.53	6.76	0.77	0.17	0.08	0.29	12.95
	(0.16)	(3.38)	(9.18)	(3.11)	(1.14)	(0.43)	(0.18)	(0.47)	(4.80)
BBB	0.02	0.44	9.94	65.25	4.66	0.81	0.24	0.86	17.78
	(0.13)	(0.96)	(5.61)	(9.12)	(2.68)	(0.89)	(0.54)	(1.20)	(4.29)
BB	0.00	0.09	0.64	12.17	49.97	6.96	0.77	2.22	27.18
	(0.00)	(0.33)	(1.31)	(6.16)	(11.26)	(3.74)	(1.38)	(3.33)	(6.19)
B	0.00	0.00	0.22	1.34	12.12	48.65	4.07	6.61	26.99
	(0.00)	(0.00)	(0.80)	(2.15)	(5.95)	(9.29)	(2.90)	(6.18)	(5.91)
CCC/C	0.00	0.00	0.19	0.37	1.31	24.30	13.27	24.67	35.89
	(0.00)	(0.00)	(3.09)	(2.50)	(3.43)	(15.60)	(15.01)	(16.01)	(14.36)
Five-year
AAA	48.46	30.97	4.30	0.69	0.04	0.20	0.12	0.53	14.69
	(17.24)	(17.62)	(3.71)	(1.46)	(0.24)	(0.54)	(0.40)	(0.85)	(8.42)
AA	1.19	55.57	23.04	2.53	0.28	0.22	0.04	0.42	16.70
	(1.18)	(11.84)	(7.67)	(2.14)	(0.44)	(0.52)	(0.18)	(0.73)	(4.79)
A	0.09	5.65	63.00	8.33	1.23	0.24	0.13	0.55	20.78
	(0.20)	(3.89)	(10.63)	(3.05)	(1.32)	(0.39)	(0.26)	(0.71)	(6.02)
BBB	0.06	0.71	12.77	51.59	4.81	0.93	0.31	1.57	27.24
	(0.21)	(1.55)	(5.55)	(9.84)	(2.47)	(0.77)	(0.55)	(1.78)	(5.55)
BB	0.00	0.16	1.27	14.10	33.69	6.71	0.51	3.88	39.67
	(0.00)	(0.55)	(2.23)	(5.95)	(10.07)	(3.62)	(1.40)	(4.83)	(5.96)
B	0.00	0.05	0.38	2.13	12.78	33.34	3.61	9.54	38.17
	(0.00)	(0.53)	(1.05)	(3.01)	(5.79)	(8.83)	(2.64)	(7.33)	(7.44)
CCC/C	0.00	0.00	0.20	0.41	3.48	19.47	3.48	28.69	44.26
	(0.00)	(0.00)	(3.24)	(1.37)	(5.69)	(11.84)	(6.03)	(17.02)	(13.92)
10-Year
AAA	22.98	38.27	8.54	2.00	0.08	0.29	0.08	0.94	26.82
	(12.29)	(16.38)	(4.95)	(2.61)	(0.29)	(0.64)	(0.31)	(1.12)	(9.14)
AA	1.01	34.44	28.23	4.05	0.33	0.30	0.02	1.01	30.61
	(1.13)	(9.66)	(6.21)	(2.34)	(0.37)	(0.39)	(0.08)	(1.14)	(5.37)
A	0.13	6.58	44.30	8.74	1.48	0.39	0.10	1.30	36.98
	(0.35)	(3.04)	(8.75)	(2.68)	(1.24)	(0.42)	(0.20)	(1.18)	(5.72)
BBB	0.06	1.17	13.37	31.40	4.10	1.13	0.33	3.25	45.21
	(0.22)	(2.34)	(3.07)	(7.23)	(1.66)	(0.48)	(0.53)	(2.41)	(4.78)
BB	0.06	0.11	2.94	14.20	13.78	6.07	0.17	7.05	55.63
	(0.36)	(0.31)	(2.92)	(4.72)	(6.82)	(2.80)	(0.37)	(7.61)	(6.21)
B	0.00	0.00	0.90	4.41	8.94	15.18	1.47	15.31	53.80
	(0.00)	(0.00)	(2.29)	(4.64)	(3.62)	(6.91)	(2.03)	(8.59)	(8.69)
CCC/C	0.00	0.00	0.24	1.22	5.35	6.81	4.38	30.17	51.82
	(0.00)	(0.00)	(3.54)	(2.16)	(6.62)	(7.79)	(8.11)	(15.98)	(13.45)
Includes the bank, nonbank financial institution, and insurance sectors. Note: The numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 11

Average one-year transition rates for global financial services by rating modifier (1981-2024) (%)
Rating	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C	D	NR
AAA	87.32	6.99	1.70	0.65	0.08	0.20	0.04	0.00	0.04	0.00	0.04	0.04	0.00	0.00	0.04	0.00	0.08	0.00	2.79
	(10.13)	(8.62)	(2.25)	(1.08)	(0.52)	(0.66)	(0.19)	(0.00)	(0.22)	(0.00)	(0.31)	(0.19)	(0.00)	(0.00)	(0.23)	(0.00)	(0.47)	(0.00)	(2.63)
AA+	1.57	80.60	10.96	3.02	0.63	0.38	0.19	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.64
	(2.58)	(14.96)	(10.00)	(4.68)	(2.94)	(1.20)	(0.59)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(3.07)
AA	0.40	1.38	80.38	9.48	2.79	1.03	0.34	0.26	0.14	0.06	0.03	0.03	0.00	0.00	0.00	0.00	0.09	0.03	3.56
	(0.77)	(2.05)	(12.39)	(8.89)	(3.61)	(1.75)	(0.83)	(0.65)	(0.58)	(0.29)	(0.15)	(0.15)	(0.00)	(0.00)	(0.00)	(0.00)	(0.36)	(0.13)	(2.38)
AA-	0.06	0.11	3.52	80.28	9.32	1.73	0.51	0.19	0.11	0.00	0.00	0.00	0.00	0.02	0.02	0.00	0.00	0.04	4.09
	(0.20)	(0.36)	(4.71)	(8.90)	(5.97)	(2.96)	(0.89)	(0.64)	(0.33)	(0.00)	(0.00)	(0.00)	(0.00)	(0.10)	(0.11)	(0.00)	(0.00)	(0.14)	(2.30)
A+	0.00	0.11	0.32	4.42	81.46	7.17	1.29	0.39	0.28	0.07	0.01	0.07	0.00	0.01	0.00	0.00	0.00	0.03	4.37
	(0.00)	(0.37)	(0.68)	(3.88)	(8.50)	(4.78)	(1.78)	(0.65)	(0.61)	(0.38)	(0.15)	(0.47)	(0.00)	(0.15)	(0.00)	(0.00)	(0.00)	(0.15)	(2.44)
A	0.01	0.05	0.15	0.44	6.45	80.27	5.84	1.49	0.51	0.21	0.04	0.04	0.00	0.01	0.04	0.00	0.01	0.09	4.37
	(0.08)	(0.25)	(0.50)	(0.75)	(3.54)	(7.62)	(4.22)	(1.99)	(0.79)	(0.55)	(0.22)	(0.13)	(0.00)	(0.08)	(0.19)	(0.00)	(0.07)	(0.20)	(2.76)
A-	0.06	0.01	0.06	0.20	0.47	8.01	79.50	4.94	1.37	0.57	0.13	0.09	0.10	0.06	0.03	0.00	0.01	0.09	4.31
	(0.47)	(0.10)	(0.19)	(0.56)	(0.70)	(4.76)	(7.43)	(3.13)	(1.75)	(1.08)	(0.53)	(0.28)	(0.36)	(0.23)	(0.15)	(0.00)	(0.10)	(0.33)	(2.20)
BBB+	0.00	0.00	0.07	0.13	0.35	0.66	8.01	76.55	6.51	1.24	0.35	0.20	0.09	0.07	0.07	0.02	0.09	0.09	5.48
	(0.00)	(0.00)	(0.34)	(0.50)	(0.57)	(1.58)	(5.19)	(7.96)	(4.39)	(1.95)	(0.89)	(0.77)	(0.73)	(1.03)	(0.56)	(0.10)	(0.46)	(0.40)	(2.96)
BBB	0.00	0.02	0.06	0.08	0.12	0.33	0.95	9.30	75.43	5.14	1.16	0.43	0.24	0.20	0.08	0.02	0.08	0.22	6.15
	(0.00)	(0.33)	(0.34)	(0.54)	(0.51)	(0.88)	(1.42)	(5.75)	(8.31)	(4.38)	(1.70)	(0.82)	(0.81)	(0.53)	(0.38)	(0.11)	(0.24)	(0.54)	(2.77)
BBB-	0.03	0.03	0.03	0.03	0.05	0.16	0.22	0.98	9.75	71.93	5.31	1.42	0.46	0.41	0.08	0.14	0.11	0.30	8.56
	(0.25)	(0.17)	(0.16)	(0.29)	(0.41)	(0.73)	(0.69)	(1.41)	(4.95)	(8.28)	(4.47)	(2.36)	(1.25)	(1.44)	(0.46)	(0.72)	(0.31)	(0.95)	(3.44)
BB+	0.00	0.00	0.00	0.10	0.10	0.14	0.10	0.29	1.39	11.10	65.17	6.79	2.25	0.77	0.29	0.24	0.53	0.57	10.19
	(0.00)	(0.00)	(0.00)	(0.51)	(0.40)	(1.01)	(0.94)	(0.95)	(2.65)	(6.08)	(9.27)	(6.93)	(2.48)	(1.26)	(0.85)	(0.59)	(1.91)	(1.90)	(5.20)
BB	0.00	0.00	0.05	0.05	0.00	0.05	0.10	0.26	0.52	2.09	10.02	65.52	7.09	1.36	0.83	0.16	0.78	0.42	10.69
	(0.00)	(0.00)	(0.36)	(0.33)	(0.00)	(0.94)	(0.56)	(0.87)	(1.84)	(3.80)	(6.49)	(10.91)	(7.32)	(2.45)	(2.00)	(0.87)	(2.40)	(1.38)	(5.84)
BB-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.05	0.14	0.37	2.10	9.15	67.88	6.02	2.19	0.75	0.47	0.65	10.22
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.66)	(0.49)	(2.07)	(3.34)	(7.44)	(11.72)	(5.08)	(3.20)	(2.53)	(1.54)	(2.19)	(6.18)
B+	0.00	0.00	0.00	0.00	0.00	0.00	0.06	0.00	0.12	0.30	0.42	2.26	11.69	62.02	7.83	2.31	1.07	1.72	10.21
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.82)	(0.00)	(0.40)	(1.20)	(1.68)	(3.35)	(6.83)	(8.69)	(5.30)	(3.22)	(2.41)	(2.80)	(5.39)
B	0.00	0.00	0.00	0.06	0.00	0.06	0.00	0.12	0.06	0.23	0.18	0.18	1.46	9.81	62.68	8.53	2.69	2.04	11.92
	(0.00)	(0.00)	(0.00)	(0.47)	(0.00)	(0.47)	(0.00)	(0.52)	(0.30)	(0.53)	(0.92)	(1.49)	(3.06)	(7.13)	(8.43)	(6.54)	(3.23)	(4.49)	(5.59)
B-	0.00	0.00	0.00	0.00	0.00	0.09	0.00	0.09	0.17	0.00	0.09	0.17	0.35	2.36	12.41	63.11	7.08	3.23	10.84
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(1.73)	(0.00)	(1.49)	(0.93)	(0.00)	(0.58)	(1.07)	(0.91)	(4.21)	(8.69)	(13.32)	(9.26)	(6.94)	(5.63)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.17	0.34	0.51	1.01	1.52	12.84	49.16	16.55	17.91
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(2.07)	(2.38)	(1.92)	(3.28)	(3.82)	(11.04)	(20.23)	(15.18)	(10.93)
Includes the bank, nonbank financial institution, and insurance sectors. Note: The numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 12

Average one-year financial services transition rates by major region (1981-2024) (%)
Rating	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
U.S.
AAA	88.25	8.80	0.31	0.06	0.13	0.06	0.06	0.00	2.33
	(13.31)	(12.52)	(1.34)	(0.34)	(0.56)	(0.35)	(0.35)	(0.00)	(2.52)
AA	0.49	88.19	6.98	0.36	0.04	0.04	0.06	0.06	3.79
	(0.70)	(7.54)	(6.16)	(0.78)	(0.15)	(0.14)	(0.24)	(0.22)	(2.18)
A	0.04	2.03	89.96	3.27	0.23	0.09	0.02	0.10	4.26
	(0.19)	(1.91)	(5.17)	(2.92)	(0.58)	(0.26)	(0.08)	(0.29)	(2.67)
BBB	0.02	0.24	3.81	86.12	2.39	0.51	0.18	0.30	6.43
	(0.12)	(0.61)	(2.44)	(6.02)	(2.59)	(1.21)	(0.38)	(0.69)	(2.62)
BB	0.00	0.20	0.34	6.92	75.32	5.35	1.13	0.83	9.91
	(0.00)	(0.66)	(0.92)	(6.04)	(10.08)	(4.32)	(2.34)	(1.51)	(5.18)
B	0.00	0.06	0.17	0.46	5.52	76.77	4.01	2.56	10.45
	(0.00)	(0.42)	(0.94)	(1.31)	(5.22)	(10.71)	(4.60)	(4.24)	(5.98)
CCC/C	0.00	0.00	0.00	0.00	2.27	12.73	39.09	28.18	17.73
	(0.00)	(0.00)	(0.00)	(0.00)	(5.81)	(14.22)	(21.91)	(24.81)	(16.33)
Europe
AAA	86.42	9.49	0.33	0.00	0.00	0.00	0.16	0.00	3.60
	(10.12)	(9.51)	(1.36)	(0.00)	(0.00)	(0.00)	(1.04)	(0.00)	(5.05)
AA	0.28	86.76	8.92	0.41	0.00	0.00	0.00	0.00	3.63
	(0.89)	(8.14)	(7.60)	(1.03)	(0.00)	(0.00)	(0.00)	(0.00)	(2.60)
A	0.01	2.06	89.17	3.40	0.13	0.00	0.00	0.04	5.18
	(0.07)	(2.27)	(5.50)	(3.77)	(0.41)	(0.00)	(0.00)	(0.13)	(2.52)
BBB	0.00	0.15	6.54	80.45	3.16	0.15	0.08	0.04	9.43
	(0.00)	(2.04)	(4.22)	(7.89)	(4.40)	(0.51)	(0.35)	(0.22)	(4.64)
BB	0.00	0.00	0.27	7.26	70.43	4.17	0.81	0.13	16.94
	(0.00)	(0.00)	(1.60)	(6.57)	(13.10)	(5.17)	(3.54)	(0.57)	(11.00)
B	0.00	0.00	0.00	1.72	11.17	66.19	1.72	2.01	17.19
	(0.00)	(0.00)	(0.00)	(4.92)	(9.93)	(15.38)	(3.18)	(4.86)	(13.96)
CCC/C	0.00	0.00	0.00	0.00	0.00	13.04	50.00	21.74	15.22
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(26.80)	(46.29)	(27.13)	(30.91)
Emerging and frontier markets
AAA	86.36	4.55	0.00	0.00	0.00	0.00	0.00	0.00	9.09
	(35.13)	(21.32)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(29.42)
AA	0.56	89.27	7.34	0.00	0.00	0.00	0.00	0.00	2.82
	(3.07)	(15.13)	(13.03)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(5.94)
A	0.00	0.77	93.46	3.51	0.00	0.05	0.00	0.00	2.21
	(0.00)	(1.10)	(4.78)	(4.50)	(0.00)	(0.23)	(0.00)	(0.00)	(1.43)
BBB	0.00	0.03	2.06	89.35	3.67	0.18	0.00	0.10	4.62
	(0.00)	(0.15)	(2.37)	(6.13)	(4.75)	(1.09)	(0.00)	(0.50)	(2.39)
BB	0.00	0.00	0.00	3.90	82.60	3.87	0.19	0.41	9.02
	(0.00)	(0.00)	(0.00)	(3.98)	(6.96)	(3.34)	(0.82)	(1.54)	(5.83)
B	0.00	0.00	0.00	0.20	6.10	79.16	2.66	1.72	10.16
	(0.00)	(0.00)	(0.00)	(0.44)	(5.44)	(6.59)	(3.92)	(3.25)	(4.50)
CCC/C	0.00	0.00	0.00	0.00	0.00	18.06	57.19	5.69	19.06
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(15.93)	(22.08)	(8.96)	(13.76)
Other developed
AAA	83.73	12.70	0.40	0.00	0.00	0.00	0.00	0.00	3.17
	(17.37)	(16.70)	(2.57)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(7.88)
AA	0.37	89.80	6.27	0.00	0.00	0.00	0.00	0.00	3.56
	(1.61)	(7.65)	(6.54)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(3.62)
A	0.00	1.72	91.50	2.35	0.06	0.03	0.00	0.06	4.28
	(0.00)	(2.25)	(6.99)	(4.37)	(0.44)	(0.22)	(0.00)	(1.07)	(3.84)
BBB	0.00	0.14	6.15	84.71	1.40	0.28	0.00	0.21	7.12
	(0.00)	(1.93)	(8.67)	(9.69)	(3.26)	(1.41)	(0.00)	(0.77)	(4.79)
BB	0.00	0.00	0.27	6.20	77.63	2.70	0.54	0.81	11.86
	(0.00)	(0.00)	(1.25)	(8.32)	(15.27)	(4.53)	(2.13)	(3.65)	(10.45)
B	0.00	0.00	0.00	0.00	8.33	64.58	3.47	6.25	17.36
	(0.00)	(0.00)	(0.00)	(0.00)	(13.05)	(26.25)	(6.76)	(12.54)	(24.79)
CCC/C	0.00	0.00	0.00	0.00	3.13	9.38	40.63	28.13	18.75
	(0.00)	(0.00)	(0.00)	(0.00)	(17.97)	(21.49)	(42.93)	(32.08)	(26.84)
Includes the bank, nonbank financial institution, and insurance sectors. Note: The numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Lower Ratings Are Consistent With Higher Default Vulnerability

Lower ratings continue to exhibit higher default rates over each time span (as in the one- to 15-year time horizons shown in table 13). This generally also holds true across regions, though some exceptions occur when the number of defaults is low or when the underlying population of issuers is very small--such as in the highest and lowest rating categories, or at a specific rating level (see tables 14 and 15).

Investment-grade issuers seldom default, so the number of defaults in these rating categories is particularly low. This small sample size can result in historical default rates that seem counterintuitive. The cumulative default rates by rating level do not imply, for example, that 'AAA' rated companies are riskier than 'AA+' rated companies over a horizon of less than 10 years, but rather that companies at both rating levels are highly unlikely to default. Each of the rating levels from 'AAA' to 'A-' exhibits a 15-year cumulative default rate below 2.0%.

Table 13

Global financial services average cumulative default rates (1981-2024) (%)
	--Time horizon (years)--
Rating	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10	Y11	Y12	Y13	Y14	Y15
AAA	0.00	0.04	0.20	0.36	0.53	0.69	0.77	0.85	0.89	0.93	0.97	1.02	1.06	1.10	1.14
AA	0.03	0.09	0.16	0.28	0.41	0.54	0.63	0.73	0.82	0.91	0.97	1.02	1.07	1.13	1.17
A	0.07	0.16	0.28	0.40	0.52	0.64	0.77	0.86	0.95	1.05	1.13	1.20	1.27	1.33	1.40
BBB	0.19	0.51	0.85	1.20	1.48	1.74	1.98	2.20	2.43	2.62	2.84	3.06	3.30	3.57	3.84
BB	0.55	1.32	2.14	2.93	3.68	4.40	4.91	5.25	5.54	5.79	6.07	6.30	6.38	6.42	6.46
B	2.22	4.65	6.55	7.99	9.18	10.26	11.05	11.91	12.82	13.69	14.52	15.02	15.41	15.79	16.06
CCC/C	16.55	21.56	24.55	26.51	27.76	28.80	30.06	31.15	31.60	32.07	32.07	32.63	33.53	34.16	34.49
Investment grade	0.09	0.24	0.41	0.60	0.77	0.93	1.07	1.21	1.33	1.44	1.55	1.65	1.75	1.86	1.97
Speculative grade	2.07	3.72	5.09	6.20	7.16	8.04	8.70	9.29	9.82	10.33	10.79	11.15	11.40	11.60	11.75
All rated	0.46	0.88	1.27	1.63	1.94	2.22	2.46	2.66	2.85	3.02	3.19	3.32	3.45	3.57	3.68
Includes the bank, NBFI, and insurance sectors. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 14

Global financial services average cumulative default rates by rating modifier (1981- 2024) (%)
	--Time horizon (years)--
Rating	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10	Y11	Y12	Y13	Y14	Y15
AAA	0.00	0.04	0.20	0.36	0.53	0.69	0.77	0.85	0.89	0.93	0.97	1.02	1.06	1.10	1.14
AA+	0.00	0.06	0.06	0.06	0.06	0.06	0.06	0.14	0.22	0.30	0.38	0.47	0.56	0.65	0.75
AA	0.03	0.06	0.15	0.36	0.57	0.76	0.94	1.10	1.24	1.33	1.40	1.47	1.54	1.61	1.68
AA-	0.04	0.12	0.20	0.30	0.40	0.53	0.57	0.64	0.72	0.79	0.84	0.87	0.90	0.93	0.93
A+	0.03	0.04	0.13	0.20	0.26	0.31	0.38	0.46	0.52	0.58	0.64	0.71	0.78	0.86	0.97
A	0.09	0.21	0.33	0.48	0.57	0.72	0.87	0.95	1.08	1.20	1.26	1.32	1.39	1.46	1.53
A-	0.09	0.22	0.37	0.51	0.71	0.87	1.04	1.17	1.23	1.34	1.48	1.55	1.63	1.66	1.69
BBB+	0.09	0.26	0.44	0.67	0.83	0.99	1.21	1.40	1.60	1.78	2.04	2.26	2.49	2.73	3.00
BBB	0.22	0.57	0.81	1.11	1.42	1.81	2.05	2.30	2.51	2.64	2.77	2.95	3.10	3.23	3.36
BBB-	0.30	0.78	1.49	2.11	2.52	2.76	3.00	3.26	3.53	3.82	4.09	4.39	4.76	5.29	5.73
BB+	0.57	0.92	1.65	2.35	3.02	3.67	4.24	4.44	4.58	4.74	4.99	5.18	5.28	5.28	5.28
BB	0.42	1.29	2.09	2.45	3.01	3.47	3.82	4.26	4.75	5.10	5.28	5.49	5.49	5.49	5.49
BB-	0.65	1.73	2.66	3.95	4.98	6.03	6.66	7.04	7.29	7.56	7.96	8.29	8.41	8.55	8.69
B+	1.72	3.82	5.68	6.83	7.55	8.31	9.05	9.76	10.43	11.05	11.61	11.97	12.37	12.66	12.82
B	2.04	4.17	5.75	7.02	8.02	9.27	9.95	11.06	12.29	13.43	13.82	13.82	13.82	13.82	13.82
B-	3.23	6.62	9.03	11.17	13.38	14.70	15.75	16.47	17.28	18.17	20.10	21.59	22.57	23.64	24.54
CCC/C	16.55	21.56	24.55	26.51	27.76	28.80	30.06	31.15	31.60	32.07	32.07	32.63	33.53	34.16	34.49
Investment grade	0.09	0.24	0.41	0.60	0.77	0.93	1.07	1.21	1.33	1.44	1.55	1.65	1.75	1.86	1.97
Speculative grade	2.07	3.72	5.09	6.20	7.16	8.04	8.70	9.29	9.82	10.33	10.79	11.15	11.40	11.60	11.75
All rated	0.46	0.88	1.27	1.63	1.94	2.22	2.46	2.66	2.85	3.02	3.19	3.32	3.45	3.57	3.68
Includes the bank, NBFI, and insurance sectors. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 15

Global financial services average cumulative default rates by major region (1981-2024) (%)
	--Time horizon (years)--
Rating	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10	Y11	Y12	Y13	Y14	Y15
U.S.
AAA	0.00	0.06	0.25	0.44	0.63	0.82	0.88	0.94	1.01	1.07	1.13	1.19	1.26	1.32	1.38
AA	0.06	0.13	0.25	0.43	0.61	0.80	0.95	1.12	1.25	1.39	1.48	1.56	1.63	1.71	1.79
A	0.10	0.27	0.50	0.74	0.95	1.17	1.37	1.53	1.67	1.84	2.00	2.13	2.26	2.36	2.47
BBB	0.30	0.83	1.40	1.95	2.41	2.80	3.18	3.56	3.94	4.24	4.54	4.80	5.07	5.42	5.76
BB	0.83	2.21	3.75	5.14	6.18	7.52	8.42	9.16	9.80	10.40	11.03	11.53	11.70	11.79	11.89
B	2.56	5.94	8.60	10.34	11.99	13.46	14.21	14.94	15.94	16.81	17.65	18.04	18.33	18.64	18.81
CCC/C	28.18	34.75	39.04	40.94	42.40	43.86	46.32	47.81	47.81	47.81	47.81	47.81	47.81	47.81	47.81
Investment grade	0.14	0.37	0.66	0.97	1.23	1.48	1.71	1.92	2.11	2.29	2.46	2.60	2.74	2.88	3.03
Speculative grade	3.09	5.62	7.81	9.38	10.70	12.10	13.05	13.85	14.58	15.24	15.90	16.32	16.52	16.68	16.79
All rated	0.57	1.14	1.69	2.17	2.59	2.99	3.31	3.59	3.85	4.09	4.31	4.48	4.63	4.78	4.92
Other developed
AAA	0.00	0.00	0.40	0.80	1.20	1.61	2.02	2.42	2.42	2.42	2.42	2.42	2.42	2.42	2.42
AA	0.00	0.06	0.06	0.13	0.20	0.27	0.27	0.27	0.34	0.42	0.50	0.58	0.66	0.75	0.75
A	0.06	0.06	0.06	0.06	0.10	0.14	0.26	0.35	0.39	0.44	0.44	0.44	0.44	0.44	0.44
BBB	0.21	0.50	0.88	1.27	1.44	1.61	1.70	1.79	1.79	1.79	1.89	2.01	2.13	2.25	2.25
BB	0.81	1.65	2.24	2.86	3.50	3.84	4.19	4.19	4.19	4.19	4.19	4.19	4.19	4.19	4.19
B	6.25	11.38	15.26	20.25	23.00	25.96	27.00	28.14	28.14	28.14	28.14	28.14	28.14	28.14	28.14
CCC/C	28.13	34.38	37.50	37.50	37.50	37.50	37.50	37.50	37.50	37.50	37.50	37.50	37.50	37.50	37.50
Investment grade	0.08	0.15	0.25	0.37	0.46	0.55	0.64	0.72	0.77	0.81	0.86	0.91	0.96	1.02	1.02
Speculative grade	3.84	6.13	7.73	9.42	10.53	11.47	11.96	12.21	12.21	12.21	12.21	12.21	12.21	12.21	12.21
All rated	0.36	0.61	0.82	1.05	1.22	1.37	1.49	1.59	1.62	1.67	1.71	1.76	1.81	1.86	1.86
Europe
AAA	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
AA	-	0.03	0.06	0.13	0.20	0.27	0.31	0.34	0.38	0.38	0.38	0.38	0.38	0.38	0.38
A	0.04	0.09	0.14	0.17	0.20	0.24	0.29	0.31	0.33	0.36	0.36	0.36	0.36	0.39	0.42
BBB	0.04	0.12	0.12	0.16	0.16	0.35	0.50	0.67	0.84	1.02	1.29	1.64	2.04	2.39	2.77
BB	0.13	0.27	0.42	0.58	1.74	2.10	2.29	2.29	2.29	2.29	2.29	2.29	2.29	2.29	2.29
B	2.01	3.50	5.09	6.45	7.18	7.58	8.02	8.50	9.05	9.67	10.43	10.43	10.43	10.43	10.43
CCC/C	21.74	37.85	47.41	57.43	57.43	57.43	57.43	57.43	57.43	57.43	57.43	57.43	57.43	57.43	57.43
Investment grade	0.03	0.08	0.11	0.15	0.18	0.26	0.32	0.37	0.42	0.46	0.51	0.57	0.63	0.70	0.77
Speculative grade	1.58	2.77	3.74	4.66	5.65	6.00	6.26	6.40	6.55	6.72	6.92	6.92	6.92	6.92	6.92
All rated	0.15	0.29	0.39	0.50	0.60	0.69	0.77	0.83	0.89	0.94	0.99	1.05	1.11	1.17	1.24
Emerging and frontier markets
AAA	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
AA	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
A	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
BBB	0.10	0.23	0.40	0.62	0.81	0.92	0.99	1.03	1.08	1.13	1.18	1.24	1.31	1.39	1.49
BB	0.41	0.88	1.37	1.89	2.33	2.71	3.03	3.18	3.29	3.35	3.42	3.49	3.49	3.49	3.49
B	1.72	3.33	4.53	5.51	6.30	7.04	7.85	8.79	9.69	10.59	11.42	12.06	12.57	13.02	13.40
CCC/C	5.69	7.49	8.27	9.10	10.45	11.35	11.80	12.74	13.70	14.73	14.73	16.13	18.33	19.88	20.68
Investment grade	0.06	0.15	0.26	0.39	0.52	0.59	0.64	0.66	0.69	0.73	0.76	0.80	0.85	0.91	0.97
Speculative grade	1.22	2.23	3.03	3.76	4.39	4.95	5.49	6.01	6.50	6.97	7.35	7.74	8.08	8.36	8.57
All rated	0.63	1.16	1.61	2.04	2.42	2.74	3.03	3.31	3.57	3.83	4.05	4.27	4.47	4.65	4.79
Includes the bank, NBFI, and insurance sectors. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Gini Ratios And Lorenz Curves

A quantitative analysis of the performance of S&P Global Ratings' credit ratings shows that ratings on financial services issuers correlate with the level of default risk across several time horizons. To measure ratings performance, we plotted the cumulative share of defaulters against the cumulative share of issuers by rating in a Lorenz curve to visually render the accuracy of the rank ordering (see Appendix III). Over the long term, the global weighted-average one-year Gini coefficient for banks is 82.29%, followed by the 76.01% Gini coefficient for NBFIs, and the 73.61% Gini coefficient for insurance companies (see table 16).

Table 16

Global average gini coefficients for financials by sector (1981-2024)
		--Time Horizon--
Sector		One-year	Three-year	Five-year	Seven-year
Banks	Weighted average	82.29	75.07	71.06	67.58
	Average	87.48	82.32	77.53	72.56
	Standard deviation	(14.79)	(15.13)	(18.19)	(21.41)
NBFI	Weighted ave.	76.01	67.26	62.65	60.16
	Average	80.94	74.07	67.00	62.55
	Standard deviation	(19.97)	(18.85)	(22.90)	(21.71)
Insurance	Weighted average	73.61	55.27	42.69	38.43
	Average	80.34	71.87	60.99	55.63
	Stanard deviation	(25.37)	(24.97)	(27.53)	(29.77)
Numbers in parentheses are standard deviations. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

As expected, the Gini coefficients decline over time because with longer time horizons, there's greater opportunity for credit degradation among higher-rated entities. In the one-year global Lorenz curve, 80.36% of defaults occurred in the speculative-grade rating categories, while speculative-grade ratings constituted only 18.59% of all financial services ratings. In the five-year Lorenz curve, speculative-grade issuers constituted 63.89% of defaulters and only 17.74% of the entire sample. If the rank ordering of ratings had little predictive value, the cumulative share of defaulting corporate entities and the cumulative share of all entities at each rating would be nearly the same, producing a Gini ratio of zero (see charts 12-14).

The quick deterioration of Gini ratios also reflects issuers' vulnerability to a loss of confidence, even among highly rated entities (as also shown in the path to default in chart 3).

Among the three financial services sectors, insurance companies exhibit Gini ratios that are lower over three or more years, reflecting, in part, the smaller number of insurance companies that eventually defaulted.

Appendix I: Detailed Default And Transition Statistics By Financial Services Sector

Bank rating action trends and ratings performance

Table 17

Summary of annual bank rating action trends (%)
Year	Issuers as of Jan. 1 (#)	Upgrades	Downgrades *	Defaults	Withdrawn ratings	Changed ratings	Unchanged ratings	Downgrade-to-upgrade ratio
1981	57	8.77	10.53	0.00	0.00	19.30	80.70	1.20
1982	60	5.00	18.33	0.00	0.00	23.33	76.67	3.67
1983	85	7.06	14.12	0.00	4.71	25.88	74.12	2.00
1984	101	3.96	25.74	0.00	0.99	30.69	69.31	6.50
1985	119	7.56	7.56	0.00	2.52	17.65	82.35	1.00
1986	204	5.39	12.25	0.00	3.43	21.08	78.92	2.27
1987	225	5.33	19.56	0.00	3.56	28.44	71.56	3.67
1988	262	13.74	11.83	1.91	4.58	32.06	67.94	0.86
1989	283	7.07	13.43	1.77	3.53	25.80	74.20	1.90
1990	305	1.64	32.79	1.31	2.30	38.03	61.97	20.00
1991	316	2.85	25.95	2.22	3.80	34.81	65.19	9.11
1992	325	6.46	12.00	2.15	2.77	23.38	76.62	1.86
1993	343	12.83	10.50	0.29	4.08	27.70	72.30	0.82
1994	366	8.47	8.47	0.00	3.83	20.77	79.23	1.00
1995	442	6.11	10.86	0.23	3.39	20.59	79.41	1.78
1996	479	7.10	6.68	0.00	7.72	21.50	78.50	0.94
1997	524	5.34	7.44	0.00	7.82	20.61	79.39	1.39
1998	593	5.90	16.02	1.35	14.67	37.94	62.06	2.71
1999	581	4.99	8.26	0.17	8.61	22.03	77.97	1.66
2000	628	8.92	6.21	0.00	6.05	21.18	78.82	0.70
2001	666	5.11	6.46	0.90	8.56	21.02	78.98	1.26
2002	683	7.03	13.91	0.73	5.86	27.53	72.47	1.98
2003	716	9.36	4.19	0.00	5.31	18.85	81.15	0.45
2004	763	12.71	2.62	0.13	6.55	22.02	77.98	0.21
2005	785	21.91	4.33	0.00	9.04	35.29	64.71	0.20
2006	796	23.62	0.88	0.00	7.29	31.78	68.22	0.04
2007	831	23.47	3.73	0.00	5.78	32.97	67.03	0.16
2008	864	7.41	15.74	1.04	5.09	29.28	70.72	2.13
2009	872	2.29	24.31	1.26	8.83	36.70	63.30	10.60
2010	835	7.54	9.34	0.24	6.71	23.83	76.17	1.24
2011	816	17.65	25.86	0.12	6.37	50.00	50.00	1.47
2012	823	4.50	17.62	0.12	7.05	29.28	70.72	3.92
2013	842	6.65	13.42	0.24	4.16	24.47	75.53	2.02
2014	873	6.99	12.71	0.11	4.01	23.83	76.17	1.82
2015	900	5.78	17.11	1.22	5.56	29.67	70.33	2.96
2016	895	7.37	11.62	0.78	6.70	26.48	73.52	1.58
2017	864	11.11	9.38	0.23	7.75	28.47	71.53	0.84
2018	842	10.57	7.84	0.12	4.04	22.57	77.43	0.74
2019	875	9.49	2.63	0.46	5.26	17.83	82.17	0.28
2020	871	1.15	12.51	0.23	4.71	18.60	81.40	10.90
2021	856	7.48	4.67	0.23	4.21	16.59	83.41	0.63
2022	841	7.61	3.33	0.36	7.37	18.67	81.33	0.44
2023	809	12.48	5.44	0.37	4.20	22.50	77.50	0.44
2024	795	12.33	4.03	0.13	4.15	20.63	79.37	0.33
Weighted average		9.20	10.53	0.44	5.96	26.13	73.87	2.23
Average		8.55	11.64	0.46	5.29	25.95	74.05	2.54
Median		7.24	10.69	0.20	4.90	23.83	76.17	1.43
Standard deviation		5.15	7.27	0.64	2.64	6.91	6.91	3.70
Minimum		1.15	0.88	0.00	0.00	16.59	50.00	0.04
Maximum		23.62	32.79	2.22	14.67	50.00	83.41	20.00
This table compares the net change in ratings from the first to the last day of each year. All intermediate ratings are disregarded. *Excludes downgrades to 'D', which are shown separately in the "Defaults" column. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®

Table 18

Global 2024 one-year transition rates for banks by region (%)
From / to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Global
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	92.31	5.77	0.00	0.00	0.00	0.00	0.00	1.92
A	0.00	1.06	95.39	1.42	0.00	0.00	0.00	0.00	2.13
BBB	0.00	0.00	3.63	91.53	0.81	0.00	0.00	0.00	4.03
BB	0.00	0.00	0.00	5.04	85.71	0.84	0.00	0.00	8.40
B	0.00	0.00	0.00	1.32	11.84	76.32	2.63	1.32	6.58
CCC/C	0.00	0.00	0.00	0.00	0.00	5.88	88.24	0.00	5.88
U.S. and tax havens
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
A	0.00	2.33	97.67	0.00	0.00	0.00	0.00	0.00	0.00
BBB	0.00	0.00	1.67	95.00	0.00	0.00	0.00	0.00	3.33
BB	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00
B	0.00	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00
CCC/C	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Europe
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	93.10	3.45	0.00	0.00	0.00	0.00	0.00	3.45
A	0.00	0.00	96.77	0.81	0.00	0.00	0.00	0.00	2.42
BBB	0.00	0.00	4.69	85.94	0.00	0.00	0.00	0.00	9.38
BB	0.00	0.00	0.00	15.00	65.00	0.00	0.00	0.00	20.00
B	0.00	0.00	0.00	0.00	50.00	25.00	12.50	12.50	0.00
CCC/C	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Emerging and frontier markets
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
A	0.00	0.00	96.36	0.00	0.00	0.00	0.00	0.00	3.64
BBB	0.00	0.00	4.17	92.71	2.08	0.00	0.00	0.00	1.04
BB	0.00	0.00	0.00	2.22	91.11	0.00	0.00	0.00	6.67
B	0.00	0.00	0.00	1.56	7.81	81.25	1.56	0.00	7.81
CCC/C	0.00	0.00	0.00	0.00	0.00	5.88	88.24	0.00	5.88
Other developed
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	85.71	14.29	0.00	0.00	0.00	0.00	0.00	0.00
A	0.00	3.33	90.00	5.00	0.00	0.00	0.00	0.00	1.67
BBB	0.00	0.00	6.25	90.63	0.00	0.00	0.00	0.00	3.13
BB	0.00	0.00	0.00	25.00	25.00	25.00	0.00	0.00	25.00
B	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00
CCC/C	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
N/A--Not applicable. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 19

Global average transition rates for banks (1981-2024) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One-year
AAA	83.13	10.98	0.81	0.00	0.20	0.00	0.00	0.00	4.88
	(15.23)	(12.73)	(2.37)	(0.00)	(1.16)	(0.00)	(0.00)	(0.00)	(6.88)
AA	0.26	86.84	8.87	0.34	0.00	0.00	0.00	0.00	3.70
	(0.58)	(7.79)	(7.42)	(0.81)	(0.00)	(0.00)	(0.00)	(0.00)	(2.61)
A	0.02	1.89	89.30	3.96	0.21	0.04	0.00	0.03	4.54
	(0.23)	(1.92)	(6.16)	(4.09)	(0.74)	(0.15)	(0.00)	(0.12)	(2.84)
BBB	0.00	0.19	3.90	85.74	3.17	0.35	0.01	0.15	6.49
	(0.00)	(0.62)	(3.84)	(6.51)	(3.40)	(1.28)	(0.08)	(0.48)	(2.47)
BB	0.00	0.10	0.07	5.85	78.90	4.72	0.50	0.50	9.37
	(0.00)	(0.40)	(0.85)	(4.59)	(8.87)	(4.69)	(1.72)	(1.55)	(4.94)
B	0.00	0.00	0.04	0.27	6.61	78.87	3.13	2.41	8.67
	(0.00)	(0.00)	(0.62)	(0.78)	(5.66)	(9.01)	(5.05)	(4.69)	(4.33)
CCC/C	0.00	0.00	0.00	0.00	0.64	19.23	55.77	10.26	14.10
	(0.00)	(0.00)	(0.00)	(0.00)	(3.91)	(19.42)	(27.28)	(16.25)	(14.96)
Three-year
AAA	57.96	24.29	2.45	1.22	0.20	0.00	0.00	0.00	13.88
	(19.10)	(15.54)	(5.56)	(3.00)	(0.95)	(0.00)	(0.00)	(0.00)	(12.59)
AA	0.64	65.94	20.91	1.70	0.13	0.08	0.00	0.03	10.57
	(0.83)	(12.58)	(10.07)	(2.21)	(0.44)	(0.43)	(0.00)	(0.20)	(5.23)
A	0.02	4.61	72.11	8.41	1.21	0.25	0.06	0.17	13.16
	(0.27)	(4.07)	(10.52)	(4.89)	(2.21)	(0.65)	(0.25)	(0.44)	(5.55)
BBB	0.00	0.51	9.52	64.96	5.40	0.79	0.25	0.69	17.87
	(0.00)	(1.24)	(7.49)	(10.98)	(4.50)	(1.69)	(0.89)	(1.43)	(5.94)
BB	0.00	0.14	0.32	13.61	50.45	8.39	0.43	1.94	24.70
	(0.00)	(0.64)	(1.75)	(7.39)	(12.23)	(6.18)	(1.71)	(4.43)	(7.69)
B	0.00	0.00	0.00	0.82	13.23	52.04	4.91	6.20	22.80
	(0.00)	(0.00)	(0.00)	(1.99)	(9.16)	(12.33)	(4.89)	(9.36)	(8.17)
CCC/C	0.00	0.00	0.00	0.00	0.72	31.90	17.56	17.92	31.90
	(0.00)	(0.00)	(0.00)	(0.00)	(4.13)	(23.72)	(22.46)	(18.58)	(20.61)
Five-year
AAA	41.19	26.84	6.56	2.05	0.00	0.20	0.00	0.00	23.16
	(19.14)	(14.06)	(7.98)	(3.64)	(0.00)	(1.17)	(0.00)	(0.00)	(17.74)
AA	0.74	51.68	26.92	3.33	0.30	0.11	0.03	0.16	16.73
	(0.88)	(13.37)	(9.38)	(2.97)	(0.74)	(0.71)	(0.29)	(1.04)	(6.50)
A	0.01	6.03	59.69	10.69	1.94	0.32	0.06	0.34	20.91
	(0.06)	(4.72)	(11.89)	(5.17)	(2.61)	(0.63)	(0.19)	(0.66)	(6.83)
BBB	0.00	0.87	12.44	50.97	5.94	1.09	0.33	1.32	27.04
	(0.00)	(1.69)	(8.06)	(12.21)	(4.84)	(1.30)	(0.86)	(2.09)	(7.92)
BB	0.00	0.04	1.19	15.29	34.10	8.34	0.43	3.52	37.10
	(0.00)	(0.23)	(2.91)	(7.53)	(11.54)	(6.26)	(1.89)	(6.56)	(8.76)
B	0.00	0.11	0.00	1.80	13.91	37.05	4.83	8.97	33.33
	(0.00)	(0.95)	(0.00)	(3.39)	(8.85)	(12.82)	(4.63)	(11.26)	(10.36)
CCC/C	0.00	0.00	0.00	0.00	2.86	26.94	4.90	22.86	42.45
	(0.00)	(0.00)	(0.00)	(0.00)	(6.65)	(18.45)	(9.63)	(21.55)	(20.85)
10-Year
AAA	17.39	24.84	14.08	4.76	0.00	0.00	0.00	0.00	38.92
	(11.24)	(10.22)	(8.08)	(6.71)	(0.00)	(0.00)	(0.00)	(0.00)	(16.75)
AA	0.30	31.36	31.04	5.52	0.21	0.12	0.00	0.42	31.04
	(0.57)	(11.07)	(7.39)	(3.98)	(0.54)	(0.27)	(0.00)	(2.00)	(6.28)
A	0.00	6.94	39.82	11.88	2.01	0.51	0.00	0.86	37.99
	(0.00)	(4.06)	(9.26)	(5.46)	(2.35)	(0.71)	(0.00)	(1.15)	(6.91)
BBB	0.00	1.28	12.12	30.27	5.69	1.30	0.55	2.96	45.83
	(0.00)	(2.56)	(5.68)	(10.27)	(3.97)	(0.65)	(1.04)	(2.70)	(9.06)
BB	0.00	0.00	3.19	14.06	14.77	8.57	0.16	5.99	53.27
	(0.00)	(0.00)	(3.45)	(8.05)	(10.09)	(5.79)	(0.34)	(9.32)	(9.02)
B	0.00	0.00	0.23	3.59	10.77	18.42	2.26	14.60	50.12
	(0.00)	(0.00)	(0.93)	(4.40)	(5.27)	(10.28)	(2.48)	(13.86)	(11.13)
CCC/C	0.00	0.00	0.00	0.96	4.33	12.50	7.69	26.44	48.08
	(0.00)	(0.00)	(0.00)	(3.45)	(11.01)	(14.57)	(11.73)	(22.33)	(21.15)
Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 20

Average one-year transition rates for global banks by rating modifier (1981-2024) (%)
Rating	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C	D	NR
AAA	83.13	7.93	2.64	0.41	0.20	0.41	0.20	0.00	0.00	0.00	0.20	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.88
	(15.2)	(9.5)	(6.3)	(1.3)	(1.2)	(1.9)	(1.0)	(0.0)	(0.0)	(0.0)	(1.2)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(6.9)
AA+	1.82	76.59	14.32	3.18	0.68	0.68	0.23	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.50
	(4.0)	(19.1)	(15.9)	(7.4)	(2.4)	(2.5)	(1.3)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(5.2)
AA	0.17	1.88	76.62	11.77	3.84	1.45	0.17	0.43	0.00	0.17	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.50
	(0.9)	(4.8)	(18.6)	(13.8)	(6.6)	(3.0)	(0.7)	(1.4)	(0.0)	(0.9)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(4.0)
AA-	0.00	0.00	3.72	79.92	9.18	2.44	0.44	0.18	0.09	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.03
	(0.0)	(0.0)	(5.6)	(11.0)	(7.8)	(4.5)	(1.1)	(1.1)	(0.5)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(3.0)
A+	0.00	0.07	0.32	4.77	79.20	8.84	1.44	0.28	0.35	0.11	0.04	0.11	0.00	0.04	0.00	0.00	0.00	0.00	4.45
	(0.0)	(0.4)	(0.7)	(5.4)	(12.5)	(8.5)	(2.5)	(0.6)	(0.9)	(0.7)	(0.3)	(0.9)	(0.0)	(0.3)	(0.0)	(0.0)	(0.0)	(0.0)	(3.5)
A	0.00	0.03	0.06	0.45	6.82	77.89	7.02	2.16	0.45	0.26	0.03	0.00	0.00	0.03	0.03	0.00	0.00	0.06	4.72
	(0.0)	(0.3)	(0.4)	(1.3)	(6.4)	(9.9)	(5.9)	(3.1)	(1.1)	(0.8)	(0.1)	(0.0)	(0.0)	(0.2)	(0.2)	(0.0)	(0.0)	(0.2)	(3.9)
A-	0.07	0.00	0.07	0.24	0.45	9.18	76.53	5.95	1.67	0.87	0.24	0.10	0.14	0.03	0.00	0.00	0.00	0.03	4.42
	(0.9)	(0.0)	(0.3)	(0.8)	(0.9)	(7.8)	(11.7)	(5.6)	(3.0)	(2.1)	(1.0)	(0.5)	(0.5)	(0.2)	(0.0)	(0.0)	(0.0)	(0.2)	(3.0)
BBB+	0.00	0.00	0.08	0.15	0.19	0.61	7.72	76.09	7.03	1.29	0.49	0.30	0.08	0.11	0.08	0.04	0.04	0.11	5.59
	(0.0)	(0.0)	(0.5)	(0.5)	(0.8)	(2.3)	(6.5)	(10.6)	(5.9)	(2.9)	(1.5)	(1.3)	(0.6)	(1.7)	(0.4)	(0.2)	(0.2)	(0.4)	(3.8)
BBB	0.00	0.04	0.08	0.08	0.00	0.25	1.18	10.01	74.79	5.57	1.27	0.55	0.25	0.17	0.08	0.00	0.00	0.17	5.49
	(0.0)	(0.7)	(0.5)	(0.5)	(0.0)	(1.4)	(2.5)	(7.5)	(10.9)	(6.5)	(2.4)	(1.2)	(1.3)	(0.9)	(0.7)	(0.0)	(0.0)	(0.7)	(3.3)
BBB-	0.00	0.05	0.00	0.05	0.05	0.22	0.22	0.92	10.24	70.53	5.74	1.68	0.43	0.43	0.05	0.16	0.00	0.16	9.05
	(0.0)	(0.4)	(0.0)	(0.6)	(0.8)	(0.7)	(1.0)	(2.1)	(7.4)	(11.0)	(6.7)	(3.1)	(1.1)	(2.1)	(0.7)	(2.4)	(0.0)	(0.7)	(4.9)
BB+	0.00	0.00	0.00	0.20	0.00	0.10	0.00	0.50	1.29	13.53	61.19	7.96	2.09	0.80	0.40	0.40	0.60	0.60	10.35
	(0.0)	(0.0)	(0.0)	(0.9)	(0.0)	(0.8)	(0.0)	(1.6)	(4.6)	(8.7)	(12.0)	(9.7)	(3.3)	(1.7)	(1.3)	(1.1)	(2.8)	(1.9)	(6.6)
BB	0.00	0.00	0.00	0.11	0.00	0.11	0.00	0.11	0.11	1.49	11.58	65.36	8.18	1.49	0.74	0.32	0.53	0.21	9.67
	(0.0)	(0.0)	(0.0)	(0.7)	(0.0)	(2.3)	(0.0)	(0.7)	(0.7)	(3.6)	(8.6)	(14.1)	(9.8)	(3.9)	(2.9)	(1.8)	(2.3)	(1.2)	(7.4)
BB-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.19	0.38	2.44	9.40	68.80	6.48	2.35	0.75	0.38	0.66	8.18
	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.8)	(3.1)	(4.1)	(12.7)	(17.4)	(6.9)	(4.1)	(3.9)	(1.8)	(3.8)	(7.4)
B+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.24	0.24	0.60	1.92	12.81	62.28	7.07	2.87	0.84	1.92	9.22
	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.8)	(1.9)	(2.4)	(3.8)	(10.1)	(13.3)	(7.2)	(5.0)	(3.1)	(4.1)	(6.9)
B	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.14	0.00	0.14	0.27	0.14	1.77	11.73	61.66	11.05	2.05	1.77	9.28
	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.7)	(0.0)	(0.9)	(1.4)	(2.6)	(4.1)	(11.2)	(14.3)	(11.1)	(5.5)	(7.1)	(7.1)
B-	0.00	0.00	0.00	0.00	0.00	0.15	0.00	0.00	0.00	0.00	0.00	0.30	0.30	2.99	13.73	64.33	7.16	3.73	7.31
	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(2.3)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(1.8)	(1.1)	(5.9)	(10.7)	(16.2)	(12.6)	(7.5)	(6.1)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.32	0.00	0.32	1.28	1.60	16.35	55.77	10.26	14.10
	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(0.0)	(3.3)	(0.0)	(2.1)	(4.6)	(5.1)	(18.5)	(27.3)	(16.3)	(15.0)
Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 21

Average one-year transition rates by major region for banks (1981-2024)
Rating	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
U.S.
AAA	73.20	15.46	2.06	0.00	1.03	0.00	0.00	0.00	8.25
	(27.07)	(21.03)	(4.06)	(0.00)	(5.89)	(0.00)	(0.00)	(0.00)	(18.25)
AA	0.08	85.48	9.11	0.56	0.00	0.00	0.00	0.00	4.76
	(0.41)	(12.10)	(9.28)	(1.40)	(0.00)	(0.00)	(0.00)	(0.00)	(5.43)
A	0.03	2.11	88.33	4.13	0.35	0.10	0.00	0.03	4.92
	(0.38)	(2.81)	(8.11)	(6.04)	(1.20)	(0.31)	(0.00)	(0.22)	(4.81)
BBB	0.00	0.30	3.51	85.70	2.33	0.59	0.00	0.38	7.19
	(0.00)	(0.78)	(3.76)	(8.02)	(3.70)	(2.10)	(0.00)	(1.30)	(4.23)
BB	0.00	0.56	0.37	7.62	71.56	6.51	1.49	0.93	10.97
	(0.00)	(2.29)	(1.98)	(8.16)	(15.67)	(8.64)	(3.43)	(3.49)	(9.76)
B	0.00	0.00	0.44	0.44	8.37	64.76	8.37	6.17	11.45
	(0.00)	(0.00)	(1.97)	(2.08)	(12.83)	(22.65)	(11.45)	(10.68)	(18.09)
CCC/C	0.00	0.00	0.00	0.00	3.85	9.62	38.46	26.92	21.15
	(0.00)	(0.00)	(0.00)	(0.00)	(9.02)	(21.12)	(33.49)	(26.11)	(22.08)
Europe
AAA	85.89	9.09	0.31	0.00	0.00	0.00	0.00	0.00	4.70
	(15.65)	(12.25)	(2.29)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(8.86)
AA	0.28	86.15	10.02	0.34	0.00	0.00	0.00	0.00	3.21
	(1.27)	(10.13)	(9.94)	(1.02)	(0.00)	(0.00)	(0.00)	(0.00)	(3.15)
A	0.03	2.12	88.13	4.09	0.19	0.00	0.00	0.05	5.39
	(0.13)	(2.78)	(7.61)	(5.27)	(0.77)	(0.00)	(0.00)	(0.18)	(3.32)
BBB	0.00	0.19	5.72	80.55	4.01	0.13	0.06	0.00	9.35
	(0.00)	(2.65)	(4.21)	(10.61)	(6.85)	(0.49)	(0.40)	(0.00)	(5.53)
BB	0.00	0.00	0.00	8.59	71.29	4.30	0.78	0.00	15.04
	(0.00)	(0.00)	(0.00)	(8.47)	(15.36)	(6.43)	(4.92)	(0.00)	(10.57)
B	0.00	0.00	0.00	2.42	13.94	64.85	1.21	3.03	14.55
	(0.00)	(0.00)	(0.00)	(6.31)	(15.31)	(22.94)	(4.68)	(7.48)	(19.57)
CCC/C	0.00	0.00	0.00	0.00	0.00	22.22	59.26	14.81	3.70
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(40.46)	(49.20)	(37.98)	(20.19)
Emerging and frontier markets
AAA	92.31	0.00	0.00	0.00	0.00	0.00	0.00	0.00	7.69
	27.74	0.00	0.00	0.00	0.00	0.00	0.00	0.00	27.74
AA	0.00	89.47	8.42	0.00	0.00	0.00	0.00	0.00	2.11
	(0.00)	(16.59)	(16.35)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(6.68)
A	0.00	0.96	93.05	3.96	0.00	0.00	0.00	0.00	2.03
	(0.00)	(1.74)	(7.45)	(7.36)	(0.00)	(0.00)	(0.00)	(0.00)	(1.88)
BBB	0.00	0.05	1.84	89.38	4.37	0.23	0.00	0.05	4.09
	(0.00)	(0.27)	(3.21)	(7.51)	(5.83)	(1.78)	(0.00)	(0.22)	(2.78)
BB	0.00	0.00	0.00	4.23	83.32	4.59	0.15	0.46	7.24
	(0.00)	(0.00)	(0.00)	(4.42)	(7.92)	(4.67)	(1.05)	(2.26)	(5.41)
B	0.00	0.00	0.00	0.16	5.79	81.74	2.55	1.86	7.91
	(0.00)	(0.00)	(0.00)	(0.50)	(6.18)	(6.85)	(3.67)	(3.75)	(4.42)
CCC/C	0.00	0.00	0.00	0.00	0.00	21.21	59.31	5.63	13.85
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(18.13)	(25.63)	(10.61)	(14.97)
Other developed
AAA	82.54	15.87	1.59	0.00	0.00	0.00	0.00	0.00	0.00
	(33.91)	(32.26)	(12.72)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
AA	0.53	90.36	5.81	0.00	0.00	0.00	0.00	0.00	3.30
	(2.63)	(7.99)	(6.64)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.88)
A	0.00	1.47	91.56	3.39	0.06	0.06	0.00	0.00	3.45
	(0.00)	(2.56)	(8.43)	(6.86)	(0.42)	(0.40)	(0.00)	(0.00)	(3.44)
BBB	0.00	0.24	6.93	85.78	1.22	0.36	0.00	0.00	5.47
	(0.00)	(2.58)	(11.80)	(12.72)	(5.06)	(1.55)	(0.00)	(0.00)	(5.22)
BB	0.00	0.00	0.00	11.63	71.32	1.55	0.00	0.78	14.73
	(0.00)	(0.00)	(0.00)	(14.92)	(25.49)	(5.40)	(0.00)	(6.30)	(14.93)
B	0.00	0.00	0.00	0.00	22.58	61.29	3.23	0.00	12.90
	(0.00)	(0.00)	(0.00)	(0.00)	(33.19)	(39.13)	(10.10)	(0.00)	(29.01)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	50.00	50.00	0.00
	0.00	0.00	0.00	0.00	0.00	0.00	70.71	70.71	0.00
Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 22

Average cumulative default rates for global banks (1981- 2024) (%)
	--Time horizon (years)--
Rating	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10	Y11	Y12	Y13	Y14	Y15
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	0.00	0.03	0.08	0.16	0.25	0.30	0.36	0.36	0.39	0.39	0.39	0.39	0.39	0.39
A	0.03	0.09	0.17	0.24	0.33	0.42	0.49	0.58	0.66	0.75	0.81	0.87	0.94	0.99	1.05
BBB	0.15	0.42	0.70	1.05	1.31	1.60	1.89	2.13	2.37	2.60	2.89	3.21	3.52	3.88	4.27
BB	0.50	1.16	1.88	2.52	3.23	3.86	4.12	4.22	4.27	4.38	4.44	4.51	4.51	4.51	4.51
B	2.41	4.59	6.08	7.39	8.46	9.26	10.07	10.94	11.88	12.76	13.63	14.21	14.63	15.09	15.47
CCC/C	10.26	14.01	16.56	19.28	20.95	21.79	22.21	23.10	23.57	24.06	24.06	25.27	27.15	28.43	29.08
Investment grade	0.06	0.18	0.31	0.47	0.61	0.76	0.89	1.02	1.13	1.24	1.35	1.47	1.58	1.70	1.83
Speculative grade	1.82	3.26	4.39	5.41	6.32	7.02	7.51	7.95	8.38	8.81	9.18	9.51	9.79	10.06	10.25
All rated	0.44	0.83	1.18	1.51	1.81	2.07	2.28	2.46	2.63	2.80	2.95	3.10	3.24	3.38	3.52
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 23

Average cumulative default rates for global banks by rating modifier (1981-2024) (%)
	--Time horizon (years)--
Rating	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10	Y11	Y12	Y13	Y14	Y15
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	0.00	0.00	0.00	0.09	0.18	0.35	0.44	0.44	0.54	0.54	0.54	0.54	0.54	0.54
AA-	0.00	0.00	0.05	0.14	0.23	0.33	0.33	0.38	0.38	0.38	0.38	0.38	0.38	0.38	0.38
A+	0.00	0.00	0.08	0.11	0.16	0.16	0.16	0.20	0.25	0.29	0.34	0.39	0.44	0.50	0.62
A	0.06	0.14	0.20	0.27	0.30	0.43	0.53	0.60	0.71	0.79	0.79	0.83	0.88	0.93	0.93
A-	0.03	0.11	0.22	0.33	0.53	0.65	0.78	0.91	1.00	1.15	1.30	1.40	1.51	1.57	1.63
BBB+	0.11	0.31	0.39	0.52	0.56	0.66	0.96	1.17	1.40	1.59	1.91	2.26	2.71	3.19	3.61
BBB	0.17	0.39	0.53	0.82	1.13	1.62	1.84	2.08	2.34	2.54	2.75	2.97	3.05	3.23	3.41
BBB-	0.16	0.61	1.37	2.09	2.60	2.93	3.27	3.56	3.79	4.11	4.46	4.83	5.25	5.69	6.30
BB+	0.60	0.91	1.55	1.99	2.45	2.92	3.05	3.05	3.05	3.05	3.05	3.05	3.05	3.05	3.05
BB	0.21	0.89	1.35	1.70	2.57	2.95	2.95	3.09	3.09	3.09	3.09	3.29	3.29	3.29	3.29
BB-	0.66	1.63	2.66	3.77	4.61	5.64	6.35	6.50	6.66	7.02	7.22	7.22	7.22	7.22	7.22
B+	1.92	3.90	5.45	6.26	6.84	7.29	7.62	7.97	8.34	8.34	8.34	8.34	8.34	8.34	8.34
B	1.77	3.61	4.33	5.24	5.88	6.58	7.54	9.00	10.58	12.28	12.55	12.55	12.55	12.55	12.55
B-	3.73	6.53	8.80	11.19	13.37	14.74	15.99	16.89	17.91	19.04	21.79	23.79	25.30	26.96	28.34
CCC/C	10.26	14.01	16.56	19.28	20.95	21.79	22.21	23.10	23.57	24.06	24.06	25.27	27.15	28.43	29.08
Investment grade	0.06	0.18	0.31	0.47	0.61	0.76	0.89	1.02	1.13	1.24	1.35	1.47	1.58	1.70	1.83
Speculative grade	1.82	3.26	4.39	5.41	6.32	7.02	7.51	7.95	8.38	8.81	9.18	9.51	9.79	10.06	10.25
All rated	0.44	0.83	1.18	1.51	1.81	2.07	2.28	2.46	2.63	2.80	2.95	3.10	3.24	3.38	3.52
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 24

Time to default from original rating for global bank defaulters (1981-2024)
Original rating	Defaults	Average years from original rating*	Median years from original rating	Standard deviation of years from original rating
AAA	1	28.00	28.00
AA	5	12.10	7.81	9.34
A	8	12.24	6.37	10.08
BBB	24	9.50	8.59	6.23
BB	33	7.09	5.49	6.47
B	48	3.73	2.40	4.11
CCC/C	18	4.51	1.88	5.29
*Or Dec. 31, 1980, whichever is later. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®

Nonbank financial institutions rating action trends and ratings performance

Table 25

Summary of annual NBFI rating action trends (%)
Year	Issuers as of Jan. 1 (#)	Upgrades	Downgrades*	Defaults	Withdrawn ratings	Changed ratings	Unchanged ratings	Downgrade-to-upgrade ratio
1981	35	11.43	17.14	0.00	5.71	34.29	65.71	1.50
1982	36	8.33	19.44	2.78	5.56	36.11	63.89	2.33
1983	38	2.63	10.53	0.00	5.26	18.42	81.58	4.00
1984	43	9.30	13.95	0.00	0.00	23.26	76.74	1.50
1985	45	8.89	6.67	0.00	13.33	28.89	71.11	0.75
1986	47	10.64	10.64	0.00	6.38	27.66	72.34	1.00
1987	53	11.32	20.75	0.00	0.00	32.08	67.92	1.83
1988	57	8.77	15.79	0.00	8.77	33.33	66.67	1.80
1989	58	12.07	6.90	6.90	1.72	27.59	72.41	0.57
1990	60	6.67	15.00	0.00	3.33	25.00	75.00	2.25
1991	64	6.25	12.50	0.00	1.56	20.31	79.69	2.00
1992	65	6.15	20.00	0.00	3.08	29.23	70.77	3.25
1993	73	6.85	5.48	0.00	2.74	15.07	84.93	0.80
1994	93	5.38	15.05	0.00	6.45	26.88	73.12	2.80
1995	113	6.19	10.62	1.77	0.88	19.47	80.53	1.71
1996	134	5.97	2.24	0.00	8.21	16.42	83.58	0.38
1997	158	6.96	8.23	1.27	6.33	22.78	77.22	1.18
1998	178	2.81	12.92	1.69	8.43	25.84	74.16	4.60
1999	175	5.14	7.43	0.57	15.43	28.57	71.43	1.44
2000	186	7.53	9.14	0.54	7.53	24.73	75.27	1.21
2001	195	5.13	8.72	3.08	7.69	24.62	75.38	1.70
2002	216	9.72	12.50	0.93	5.56	28.70	71.30	1.29
2003	232	5.60	6.90	1.29	12.07	25.86	74.14	1.23
2004	234	5.98	4.27	0.00	8.97	19.23	80.77	0.71
2005	239	12.55	4.18	0.42	8.79	25.94	74.06	0.33
2006	252	14.68	1.59	0.00	13.89	30.16	69.84	0.11
2007	275	14.91	8.36	1.09	6.91	31.27	68.73	0.56
2008	311	9.32	16.72	2.57	9.32	37.94	62.06	1.79
2009	323	2.79	15.79	3.72	12.69	34.98	65.02	5.67
2010	317	6.94	5.68	2.84	9.15	24.61	75.39	0.82
2011	339	9.14	14.45	1.18	9.44	34.22	65.78	1.58
2012	351	3.99	8.83	0.85	9.69	23.36	76.64	2.21
2013	359	8.36	9.47	0.28	7.80	25.91	74.09	1.13
2014	398	8.29	10.30	0.50	10.80	29.90	70.10	1.24
2015	421	5.70	8.79	0.00	5.23	19.71	80.29	1.54
2016	455	8.35	8.13	1.76	7.47	25.71	74.29	0.97
2017	483	9.73	8.07	0.83	7.66	26.29	73.71	0.83
2018	493	7.91	6.90	1.01	9.13	24.95	75.05	0.87
2019	494	7.49	4.86	0.81	5.47	18.62	81.38	0.65
2020	500	1.20	17.80	0.60	6.20	25.80	74.20	14.83
2021	508	8.27	4.33	0.20	6.10	18.90	81.10	0.52
2022	531	4.14	7.53	0.75	7.53	19.96	80.04	1.82
2023	518	5.21	5.02	0.97	5.79	16.99	83.01	0.96
2024	517	7.74	4.26	1.16	4.06	17.21	82.79	0.55
Weighted average		7.22	8.78	1.01	7.66	24.67	75.33	1.97
Average		7.56	10.09	0.96	7.00	25.61	74.39	1.84
Median		7.51	8.81	0.59	7.19	25.82	74.18	1.26
Standard deviation		3.01	4.97	1.33	3.55	5.72	5.72	2.29
Minimum		1.20	1.59	0.00	0.00	15.07	62.06	0.11
Maximum		14.91	20.75	6.90	15.43	37.94	84.93	14.83
This table compares the net change in ratings from the first to the last day of each year. All intermediate ratings are disregarded. *Excludes downgrades to 'D', which are shown separately in the "Defaults" column. NBFI--Nonbank financial institution. N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®

Table 26

Global 2024 one-year transition rates for NBFI by region (%)
From / to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Global
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	95.12	2.44	0.00	0.00	0.00	0.00	0.00	2.44
A	0.00	0.88	96.46	0.88	0.00	0.00	0.00	0.00	1.77
BBB	0.00	0.00	4.79	92.02	0.53	0.00	0.00	0.00	2.66
BB	0.00	0.00	0.00	1.96	87.25	2.94	0.98	0.00	6.86
B	0.00	0.00	0.00	0.00	3.39	86.44	1.69	1.69	6.78
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	41.67	41.67	16.67
U.S. and tax havens
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	92.00	4.00	0.00	0.00	0.00	0.00	0.00	4.00
A	0.00	0.00	95.45	0.00	0.00	0.00	0.00	0.00	4.55
BBB	0.00	0.00	1.47	94.12	1.47	0.00	0.00	0.00	2.94
BB	0.00	0.00	0.00	1.89	84.91	3.77	0.00	0.00	9.43
B	0.00	0.00	0.00	0.00	0.00	88.57	2.86	2.86	5.71
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	33.33	33.33	33.33
Europe
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
A	0.00	3.13	96.88	0.00	0.00	0.00	0.00	0.00	0.00
BBB	0.00	0.00	17.65	82.35	0.00	0.00	0.00	0.00	0.00
BB	0.00	0.00	0.00	9.09	63.64	0.00	9.09	0.00	18.18
B	0.00	0.00	0.00	0.00	25.00	62.50	0.00	0.00	12.50
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	50.00	50.00	0.00
Emerging and frontier markets
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
A	0.00	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00
BBB	0.00	0.00	4.44	92.22	0.00	0.00	0.00	0.00	3.33
BB	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00
B	0.00	0.00	0.00	0.00	8.33	83.33	0.00	0.00	8.33
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	66.67	33.33	0.00
Other developed
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
A	0.00	0.00	95.45	4.55	0.00	0.00	0.00	0.00	0.00
BBB	0.00	0.00	7.69	92.31	0.00	0.00	0.00	0.00	0.00
BB	0.00	0.00	0.00	0.00	88.89	11.11	0.00	0.00	0.00
B	0.00	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	100.00	0.00
NBFI--Nonbank financial institutions. N/A--Not applicable. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 27

Global average transition rates for NBFI (1981-2024) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One-year
AAA	89.16	6.34	0.00	0.20	0.00	0.00	0.00	0.00	4.29
	(17.47)	(16.34)	(0.00)	(2.63)	(0.00)	(0.00)	(0.00)	(0.00)	(6.37)
AA	0.54	90.10	5.67	0.18	0.00	0.00	0.00	0.09	3.42
	(1.84)	(9.16)	(7.26)	(0.99)	(0.00)	(0.00)	(0.00)	(0.47)	(4.46)
A	0.08	1.07	89.41	3.74	0.00	0.04	0.04	0.12	5.49
	(0.46)	(2.80)	(5.91)	(3.40)	(0.00)	(0.29)	(0.30)	(0.67)	(4.83)
BBB	0.03	0.10	2.76	88.12	2.53	0.37	0.10	0.33	5.66
	(0.31)	(1.16)	(2.26)	(6.32)	(3.05)	(0.95)	(0.68)	(1.01)	(3.21)
BB	0.00	0.00	0.10	3.40	80.04	4.22	0.46	0.67	11.11
	(0.00)	(0.00)	(0.47)	(5.33)	(8.13)	(4.45)	(1.38)	(1.35)	(6.07)
B	0.00	0.00	0.00	0.42	5.65	73.99	4.03	2.47	13.43
	(0.00)	(0.00)	(0.00)	(1.75)	(4.36)	(9.55)	(3.77)	(4.61)	(6.94)
CCC/C	0.00	0.00	0.00	0.00	0.51	10.77	42.56	23.59	22.56
	(0.00)	(0.00)	(0.00)	(0.00)	(2.37)	(13.12)	(18.93)	(21.86)	(18.96)
Three-year
AAA	69.90	16.91	0.00	0.21	0.00	0.00	0.00	0.00	12.99
	(26.72)	(26.86)	(0.00)	(2.65)	(0.00)	(0.00)	(0.00)	(0.00)	(11.34)
AA	1.36	73.61	13.63	0.78	0.19	0.00	0.00	0.29	10.13
	(2.85)	(17.60)	(12.68)	(2.20)	(0.79)	(0.00)	(0.00)	(0.97)	(8.10)
A	0.26	2.40	71.67	9.37	0.22	0.17	0.09	0.48	15.34
	(0.83)	(3.92)	(11.45)	(5.50)	(0.96)	(0.55)	(0.63)	(1.32)	(10.39)
BBB	0.11	0.19	6.83	69.04	4.70	1.02	0.11	1.33	16.65
	(0.64)	(1.61)	(4.25)	(10.47)	(3.62)	(1.54)	(0.39)	(2.60)	(5.89)
BB	0.00	0.00	0.41	7.52	52.55	6.25	1.04	2.89	29.34
	(0.00)	(0.00)	(1.27)	(7.17)	(12.06)	(4.72)	(3.35)	(4.05)	(8.96)
B	0.00	0.00	0.00	1.55	10.98	43.93	4.18	8.74	30.63
	(0.00)	(0.00)	(0.00)	(3.82)	(5.91)	(11.18)	(3.22)	(7.97)	(10.34)
CCC/C	0.00	0.00	0.00	0.00	0.57	16.67	6.90	32.18	43.68
	(0.00)	(0.00)	(0.00)	(0.00)	(2.51)	(13.78)	(14.00)	(22.45)	(25.33)
Five-year
AAA	53.22	26.61	0.00	0.21	0.00	0.00	0.00	0.00	19.96
	(28.56)	(30.38)	(0.00)	(2.66)	(0.00)	(0.00)	(0.00)	(0.00)	(12.98)
AA	1.91	60.04	19.55	1.17	0.21	0.00	0.00	0.32	16.79
	(3.28)	(21.97)	(14.40)	(3.17)	(0.74)	(0.00)	(0.00)	(1.01)	(12.84)
A	0.38	2.93	59.08	12.15	0.58	0.29	0.14	1.01	23.44
	(1.07)	(3.05)	(12.15)	(5.50)	(1.85)	(0.71)	(0.70)	(1.82)	(12.83)
BBB	0.30	0.35	8.30	55.00	4.87	1.09	0.09	2.48	27.54
	(1.12)	(2.18)	(4.64)	(10.94)	(3.09)	(1.49)	(0.36)	(3.85)	(7.02)
BB	0.00	0.00	0.53	9.36	35.90	5.75	0.40	4.95	43.11
	(0.00)	(0.00)	(2.50)	(6.70)	(11.54)	(3.55)	(1.54)	(5.21)	(8.43)
B	0.00	0.00	0.00	1.94	11.65	28.60	3.00	12.27	42.54
	(0.00)	(0.00)	(0.00)	(5.50)	(6.27)	(9.75)	(3.17)	(9.00)	(12.74)
CCC/C	0.00	0.00	0.00	1.23	1.23	12.88	1.84	35.58	47.24
	(0.00)	(0.00)	(0.00)	(3.18)	(3.83)	(11.26)	(4.55)	(24.23)	(25.55)
10-Year
AAA	25.21	42.95	0.00	0.00	0.00	0.00	0.00	0.00	31.84
	(23.04)	(31.35)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(17.27)
AA	2.82	33.05	25.71	2.82	0.00	0.14	0.00	0.71	34.75
	(4.43)	(20.80)	(13.20)	(4.90)	(0.00)	(0.97)	(0.00)	(1.69)	(18.03)
A	0.63	4.31	40.23	9.01	1.27	0.44	0.06	2.60	41.43
	(1.61)	(3.49)	(12.21)	(4.48)	(2.43)	(0.84)	(0.35)	(2.68)	(12.45)
BBB	0.32	0.51	6.90	34.52	3.80	1.84	0.06	5.32	46.74
	(1.23)	(3.29)	(5.38)	(10.90)	(2.60)	(1.64)	(0.37)	(5.62)	(7.14)
BB	0.21	0.00	0.83	12.95	14.20	3.63	0.31	7.77	60.10
	(1.63)	(0.00)	(2.78)	(7.18)	(7.98)	(4.62)	(1.36)	(5.92)	(9.32)
B	0.00	0.00	0.40	2.00	6.13	11.32	0.67	18.38	61.12
	(0.00)	(0.00)	(4.77)	(6.01)	(4.92)	(5.52)	(1.50)	(11.99)	(11.85)
CCC/C	0.00	0.00	0.00	2.38	4.76	1.59	1.59	33.33	56.35
	(0.00)	(0.00)	(0.00)	(4.79)	(7.14)	(4.31)	(4.58)	(18.72)	(15.25)
Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NBFI--Nonbank financial institutions. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 28

Average one-year transition rates for global NBFI by rating modifier (1981-2024) (%)
Rating	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C	D	NR
AAA	89.16	5.52	0.61	0.20	0.00	0.00	0.00	0.00	0.20	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.29
	(17.47)	(15.74)	(3.61)	(2.28)	(0.00)	(0.00)	(0.00)	(0.00)	(2.63)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(6.37)
AA+	0.93	90.34	4.98	1.25	0.31	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.18
	(3.43)	(17.33)	(11.09)	(6.94)	(2.29)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(6.34)
AA	0.96	2.25	81.03	7.07	1.93	0.64	0.32	0.32	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	5.47
	(4.01)	(6.36)	(15.98)	(10.74)	(4.55)	(2.49)	(2.14)	(2.85)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(8.01)
AA-	0.00	0.21	2.92	82.46	9.19	1.67	0.21	0.21	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.21	2.92
	(0.00)	(1.38)	(7.56)	(16.55)	(10.62)	(5.25)	(0.92)	(1.32)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(1.10)	(5.61)
A+	0.00	0.00	0.25	2.66	82.78	7.34	0.51	0.38	0.25	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.13	5.70
	(0.00)	(0.00)	(1.19)	(6.30)	(12.05)	(7.45)	(1.65)	(1.32)	(1.17)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.77)	(6.31)
A	0.00	0.00	0.00	0.20	4.91	82.25	4.71	1.81	0.40	0.10	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	5.62
	(0.00)	(0.00)	(0.00)	(1.32)	(6.98)	(12.07)	(6.15)	(3.92)	(1.89)	(1.01)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(5.38)
A-	0.28	0.00	0.00	0.28	0.28	6.34	78.07	7.03	1.52	0.55	0.00	0.00	0.00	0.00	0.14	0.00	0.14	0.28	5.10
	(1.96)	(0.00)	(0.00)	(1.22)	(1.17)	(7.33)	(12.89)	(7.86)	(3.46)	(2.61)	(0.00)	(0.00)	(0.00)	(0.00)	(0.99)	(0.00)	(1.03)	(1.89)	(7.49)
BBB+	0.00	0.00	0.00	0.21	0.31	0.42	6.36	78.83	7.72	1.46	0.10	0.10	0.10	0.00	0.10	0.00	0.21	0.21	3.86
	(0.00)	(0.00)	(0.00)	(2.06)	(1.11)	(2.62)	(4.48)	(12.04)	(8.31)	(3.96)	(0.43)	(0.67)	(0.55)	(0.00)	(0.87)	(0.00)	(1.72)	(1.84)	(5.55)
BBB	0.00	0.00	0.00	0.09	0.26	0.26	0.52	7.56	78.95	4.90	0.60	0.26	0.26	0.26	0.00	0.09	0.09	0.34	5.58
	(0.00)	(0.00)	(0.00)	(2.09)	(1.80)	(1.69)	(1.87)	(6.93)	(11.44)	(5.58)	(2.17)	(1.53)	(1.54)	(0.82)	(0.00)	(0.49)	(0.55)	(1.45)	(4.31)
BBB-	0.11	0.00	0.00	0.00	0.11	0.11	0.11	0.34	7.59	75.99	4.76	1.47	0.57	0.45	0.00	0.23	0.00	0.45	7.70
	(1.28)	(0.00)	(0.00)	(0.00)	(0.84)	(1.39)	(0.45)	(1.01)	(6.81)	(12.55)	(6.24)	(3.88)	(2.79)	(2.07)	(0.00)	(1.01)	(0.00)	(1.66)	(6.82)
BB+	0.00	0.00	0.00	0.00	0.18	0.00	0.00	0.00	0.88	6.87	72.54	6.87	1.06	0.70	0.18	0.00	0.53	0.35	9.86
	(0.00)	(0.00)	(0.00)	(0.00)	(1.41)	(0.00)	(0.00)	(0.00)	(2.84)	(11.86)	(13.23)	(7.51)	(2.81)	(2.65)	(0.93)	(0.00)	(2.87)	(1.33)	(7.43)
BB	0.00	0.00	0.00	0.00	0.00	0.00	0.17	0.52	0.86	1.72	6.72	68.10	7.24	1.38	0.69	0.00	0.69	0.69	11.21
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.72)	(2.53)	(7.35)	(4.52)	(7.81)	(15.38)	(8.61)	(3.19)	(5.02)	(0.00)	(2.84)	(2.44)	(9.53)
BB-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.13	0.38	0.63	7.79	69.85	5.78	2.01	0.38	0.25	0.88	11.93
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.89)	(2.18)	(2.45)	(7.98)	(12.48)	(6.63)	(4.64)	(2.04)	(1.85)	(1.88)	(8.29)
B+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.53	0.00	1.05	11.73	61.47	9.63	1.58	1.05	1.23	11.73
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.34)	(0.00)	(3.60)	(9.13)	(14.31)	(6.93)	(4.09)	(2.57)	(2.57)	(7.55)
B	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.38	0.00	0.19	0.76	9.13	57.98	8.56	4.94	3.42	14.64
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(1.05)	(0.00)	(1.21)	(2.86)	(8.70)	(13.12)	(7.07)	(5.38)	(7.02)	(10.82)
B-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.31	0.00	0.31	0.00	0.31	1.26	9.12	63.21	7.86	3.14	14.47
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(2.31)	(0.00)	(1.99)	(0.00)	(1.77)	(3.43)	(10.91)	(17.65)	(9.96)	(9.65)	(10.86)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.51	1.03	1.03	8.72	42.56	23.59	22.56
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(2.37)	(4.25)	(3.33)	(12.59)	(18.93)	(21.86)	(18.96)
Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NBFI--Nonbank financial institutions. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 29

Average one-year transition rates by major region for NBFI (1981-2024)
Rating	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
U.S.
AAA	88.95	7.27	0.00	0.29	0.00	0.00	0.00	0.00	3.49
	(23.13)	(21.43)	(0.00)	(3.15)	(0.00)	(0.00)	(0.00)	(0.00)	(6.41)
AA	0.54	90.86	5.20	0.00	0.00	0.00	0.00	0.18	3.23
	(2.90)	(13.09)	(9.69)	(0.00)	(0.00)	(0.00)	(0.00)	(1.17)	(7.90)
A	0.17	1.09	89.87	4.36	0.00	0.08	0.08	0.17	4.19
	(0.81)	(3.32)	(8.57)	(5.44)	(0.00)	(0.52)	(0.56)	(1.07)	(5.09)
BBB	0.07	0.21	2.95	87.51	2.40	0.55	0.21	0.34	5.77
	(0.55)	(1.66)	(3.40)	(8.07)	(3.92)	(1.74)	(1.18)	(1.17)	(4.34)
BB	0.00	0.00	0.24	3.88	79.91	5.64	0.71	0.71	8.93
	(0.00)	(0.00)	(1.16)	(7.63)	(12.64)	(6.79)	(2.42)	(2.13)	(6.31)
B	0.00	0.00	0.00	0.51	5.07	77.57	4.44	2.79	9.63
	(0.00)	(0.00)	(0.00)	(2.83)	(6.19)	(11.65)	(4.36)	(6.29)	(7.54)
CCC/C	0.00	0.00	0.00	0.00	0.95	14.29	40.95	27.62	16.19
	(0.00)	(0.00)	(0.00)	(0.00)	(3.63)	(17.77)	(26.26)	(27.63)	(25.58)
Europe
AAA	91.76	3.53	0.00	0.00	0.00	0.00	0.00	0.00	4.71
	(14.72)	(10.60)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(11.78)
AA	0.28	88.98	6.78	0.56	0.00	0.00	0.00	0.00	3.39
	(1.28)	(11.73)	(9.47)	(2.81)	(0.00)	(0.00)	(0.00)	(0.00)	(5.63)
A	0.00	1.36	88.25	2.56	0.00	0.00	0.00	0.00	7.84
	(0.00)	(3.93)	(8.48)	(4.18)	(0.00)	(0.00)	(0.00)	(0.00)	(8.72)
BBB	0.00	0.00	5.14	82.64	3.22	0.00	0.00	0.00	9.00
	(0.00)	(0.00)	(7.04)	(15.23)	(5.35)	(0.00)	(0.00)	(0.00)	(11.48)
BB	0.00	0.00	0.00	3.31	72.19	5.96	0.66	0.66	17.22
	(0.00)	(0.00)	(0.00)	(7.71)	(21.58)	(8.94)	(2.41)	(1.96)	(19.60)
B	0.00	0.00	0.00	0.00	8.07	71.43	2.48	1.24	16.77
	(0.00)	(0.00)	(0.00)	(0.00)	(7.28)	(20.41)	(3.78)	(2.68)	(19.56)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	41.67	41.67	16.67
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(43.17)	(37.11)	(33.68)
Emerging and frontier markets
AAA	85.71	14.29	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	(37.80)	(37.80)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
AA	4.55	90.91	0.00	0.00	0.00	0.00	0.00	0.00	4.55
	(21.37)	(29.49)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(21.37)
A	0.00	0.49	91.13	6.40	0.00	0.00	0.00	0.00	1.97
	(0.00)	(1.61)	(11.54)	(10.63)	(0.00)	(0.00)	(0.00)	(0.00)	(5.50)
BBB	0.00	0.00	1.17	92.01	2.88	0.21	0.00	0.21	3.51
	(0.00)	(0.00)	(1.72)	(7.85)	(5.76)	(0.47)	(0.00)	(2.34)	(3.51)
BB	0.00	0.00	0.00	3.13	81.13	2.63	0.25	0.50	12.38
	(0.00)	(0.00)	(0.00)	(3.55)	(9.22)	(3.33)	(1.11)	(1.14)	(9.39)
B	0.00	0.00	0.00	0.48	6.43	69.52	3.57	1.43	18.57
	(0.00)	(0.00)	(0.00)	(1.39)	(5.90)	(14.77)	(8.14)	(2.73)	(12.38)
CCC/C	0.00	0.00	0.00	0.00	0.00	8.33	50.00	6.67	35.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(18.76)	(25.03)	(14.53)	(26.18)
Other developed
AAA	86.79	3.77	0.00	0.00	0.00	0.00	0.00	0.00	9.43
	(27.46)	(16.65)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(23.46)
AA	0.56	89.83	5.65	0.00	0.00	0.00	0.00	0.00	3.95
	(3.05)	(17.66)	(12.10)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(13.20)
A	0.00	0.95	89.02	2.65	0.00	0.00	0.00	0.19	7.20
	(0.00)	(3.07)	(11.05)	(4.57)	(0.00)	(0.00)	(0.00)	(3.11)	(9.82)
BBB	0.00	0.00	4.35	84.62	1.34	0.33	0.00	1.00	8.36
	(0.00)	(0.00)	(6.90)	(14.64)	(4.55)	(2.37)	(0.00)	(3.15)	(10.77)
BB	0.00	0.00	0.00	1.95	81.82	3.25	0.00	1.30	11.69
	(0.00)	(0.00)	(0.00)	(4.59)	(19.50)	(10.07)	(0.00)	(5.31)	(16.95)
B	0.00	0.00	0.00	0.00	4.40	71.43	3.30	6.59	14.29
	(0.00)	(0.00)	(0.00)	(0.00)	(8.33)	(27.51)	(7.69)	(19.32)	(25.06)
CCC/C	0.00	0.00	0.00	0.00	0.00	5.26	26.32	42.11	26.32
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(15.97)	(42.61)	(40.88)	(33.64)
Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NBFI--Nonbank financial institutions. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 30

Average cumulative default rates for NBFI (1981-2024) (%)
	--Time horizon (years)--
Rating	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10	Y11	Y12	Y13	Y14	Y15
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.09	0.18	0.28	0.28	0.28	0.28	0.28	0.28	0.41	0.55	0.71	0.87	1.05	1.24	1.24
A	0.12	0.29	0.46	0.69	0.93	1.18	1.45	1.68	1.86	2.05	2.19	2.33	2.49	2.65	2.83
BBB	0.33	0.72	1.25	1.78	2.18	2.46	2.71	3.03	3.33	3.65	4.00	4.38	4.71	5.06	5.35
BB	0.67	1.65	2.75	3.93	4.87	5.60	6.31	6.74	7.02	7.34	7.68	8.05	8.18	8.18	8.18
B	2.47	6.01	8.87	10.84	12.52	14.30	15.22	16.32	17.52	18.59	19.32	19.82	20.19	20.40	20.40
CCC/C	23.59	30.05	34.49	36.20	37.39	39.20	41.63	42.86	43.50	44.16	44.16	44.16	44.16	44.16	44.16
Investment grade	0.20	0.43	0.73	1.02	1.26	1.46	1.66	1.86	2.06	2.27	2.47	2.68	2.87	3.09	3.25
Speculative grade	2.64	4.95	6.95	8.49	9.74	10.97	11.89	12.66	13.35	14.00	14.48	14.87	15.09	15.17	15.17
All rated	1.01	1.94	2.80	3.50	4.07	4.60	5.02	5.40	5.75	6.09	6.37	6.63	6.83	7.01	7.13
NBFI--Nonbank financial institutions. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 31

Average cumulative default rates for NBFI by rating modifier (1981- 2024) (%)
	--Time horizon (years)--
Rating	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10	Y11	Y12	Y13	Y14	Y15
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA-	0.21	0.43	0.65	0.65	0.65	0.65	0.65	0.65	0.97	1.30	1.67	2.05	2.47	2.91	2.91
A+	0.13	0.26	0.40	0.55	0.70	0.86	1.04	1.40	1.59	1.79	1.99	2.21	2.43	2.68	2.94
A	0.00	0.00	0.00	0.11	0.23	0.47	0.73	0.86	1.01	1.16	1.33	1.51	1.70	1.90	2.12
A-	0.28	0.72	1.18	1.68	2.20	2.57	2.97	3.18	3.41	3.65	3.65	3.65	3.65	3.65	3.65
BBB+	0.21	0.43	0.90	1.53	1.94	2.39	2.55	2.74	2.93	3.58	4.28	4.53	4.53	4.53	4.84
BBB	0.34	0.80	1.10	1.42	1.88	2.12	2.51	3.06	3.36	3.36	3.36	3.72	4.31	4.52	4.52
BBB-	0.45	0.94	1.84	2.53	2.82	2.97	3.13	3.31	3.70	4.14	4.63	5.17	5.47	6.43	7.13
BB+	0.35	0.54	1.52	2.35	3.02	3.25	3.77	4.06	4.06	4.06	4.44	4.85	5.31	5.31	5.31
BB	0.69	2.14	3.69	4.31	4.75	5.23	6.29	7.15	8.09	8.77	8.77	8.77	8.77	8.77	8.77
BB-	0.88	2.08	2.94	4.81	6.34	7.63	8.23	8.45	8.45	8.72	9.30	9.95	9.95	9.95	9.95
B+	1.23	3.60	5.67	7.47	8.53	10.12	11.84	13.45	14.90	16.18	17.22	18.01	18.88	19.37	19.37
B	3.42	7.39	10.93	13.15	15.05	17.31	17.84	18.69	19.93	20.96	21.36	21.36	21.36	21.36	21.36
B-	3.14	8.10	11.27	13.14	15.60	16.95	16.95	17.50	18.12	18.79	19.50	20.27	20.27	20.27	20.27
CCC/C	23.59	30.05	34.49	36.20	37.39	39.20	41.63	42.86	43.50	44.16	44.16	44.16	44.16	44.16	44.16
Investment grade	0.20	0.43	0.73	1.02	1.26	1.46	1.66	1.86	2.06	2.27	2.47	2.68	2.87	3.09	3.25
Speculative grade	2.64	4.95	6.95	8.49	9.74	10.97	11.89	12.66	13.35	14.00	14.48	14.87	15.09	15.17	15.17
All rated	1.01	1.94	2.80	3.50	4.07	4.60	5.02	5.40	5.75	6.09	6.37	6.63	6.83	7.01	7.13
NBFI--Nonbank financial institutions. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 32

Time to default from original rating for global NBFI defaulters (1981-2024)
Original rating	Defaults	Average years from original rating*	Median years from original rating	Standard deviation of years from original rating
AAA
AA	4	15.89	19.03	10.57
A	1	10.84	10.84
BBB	19	7.07	4.42	5.98
BB	34	5.08	4.21	3.67
B	48	4.98	3.84	3.55
CCC/C	21	2.12	1.03	2.29
Or Dec. 31, 1980, whichever is later. NBFI--Nonbank financial institution. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®

Insurance rating action trends and ratings performance

Table 33

Summary of annual insurance rating action trends (%)
Year	Issuers as of Jan. 1 (#)	Upgrades	Downgrades*	Defaults	Withdrawn ratings	Changed ratings	Unchanged ratings	Downgrade-to-upgrade ratio
1981	34	11.76	5.88	0.00	2.94	20.59	79.41	0.50
1982	34	8.82	11.76	2.94	0.00	23.53	76.47	1.33
1983	42	4.76	4.76	4.76	2.38	16.67	83.33	1.00
1984	53	3.77	3.77	0.00	1.89	9.43	90.57	1.00
1985	67	4.48	5.97	1.49	0.00	11.94	88.06	1.33
1986	93	5.38	7.53	0.00	5.38	18.28	81.72	1.40
1987	124	5.65	4.03	0.00	2.42	12.10	87.90	0.71
1988	139	2.88	12.23	0.00	1.44	16.55	83.45	4.25
1989	173	5.20	5.78	0.58	1.16	12.72	87.28	1.11
1990	201	3.48	9.95	0.00	0.50	13.93	86.07	2.86
1991	222	3.60	20.72	1.35	1.80	27.48	72.52	5.75
1992	277	6.14	16.25	0.72	1.08	24.19	75.81	2.65
1993	314	6.37	7.01	0.32	3.18	16.88	83.12	1.10
1994	345	8.12	14.78	0.29	2.03	25.22	74.78	1.82
1995	381	7.09	16.27	0.26	1.84	25.46	74.54	2.30
1996	414	13.53	10.63	0.00	3.86	28.02	71.98	0.79
1997	465	9.89	4.30	0.22	6.67	21.08	78.92	0.43
1998	560	8.93	8.39	0.00	4.82	22.14	77.86	0.94
1999	608	8.55	10.53	0.66	4.77	24.51	75.49	1.23
2000	627	6.06	11.16	1.44	7.50	26.16	73.84	1.84
2001	613	3.92	19.58	0.16	6.69	30.34	69.66	5.00
2002	626	3.99	25.40	0.48	8.15	38.02	61.98	6.36
2003	622	3.70	21.54	0.48	5.31	31.03	68.97	5.83
2004	636	7.08	7.86	0.47	5.50	20.91	79.09	1.11
2005	665	11.88	5.86	0.00	3.16	20.90	79.10	0.49
2006	718	11.28	4.46	0.28	4.04	20.06	79.94	0.40
2007	784	13.39	4.46	0.00	6.25	24.11	75.89	0.33
2008	821	6.58	13.40	0.37	5.72	26.07	73.93	2.04
2009	853	5.04	17.82	0.47	7.74	31.07	68.93	3.53
2010	831	7.46	9.87	0.24	4.21	21.78	78.22	1.32
2011	844	5.57	10.19	0.36	6.04	22.16	77.84	1.83
2012	830	6.87	10.72	0.12	4.70	22.41	77.59	1.56
2013	842	13.06	4.75	0.00	6.29	24.11	75.89	0.36
2014	837	10.39	5.26	0.00	4.66	20.31	79.69	0.51
2015	864	7.18	7.06	0.12	5.90	20.25	79.75	0.98
2016	876	4.91	5.37	0.11	6.51	16.89	83.11	1.09
2017	875	4.57	5.94	0.00	7.77	18.29	81.71	1.30
2018	847	7.08	4.84	0.00	6.14	18.06	81.94	0.68
2019	827	6.29	2.66	0.12	4.84	13.91	86.09	0.42
2020	828	2.66	4.71	0.12	5.68	13.16	86.84	1.77
2021	824	5.46	1.82	0.00	5.34	12.62	87.38	0.33
2022	804	5.85	1.49	0.00	4.73	12.06	87.94	0.26
2023	782	3.71	2.43	0.00	2.69	8.82	91.18	0.66
2024	782	7.80	2.30	0.00	2.56	12.66	87.34	0.30
Weighted average		7.04	8.51	0.23	5.10	20.88	79.12	1.53
Average		6.82	8.90	0.43	4.23	20.38	79.62	1.65
Median		6.21	7.03	0.12	4.71	20.75	79.25	1.11
Standard deviation		2.92	5.82	0.87	2.22	6.45	6.45	1.57
Minimum		2.66	1.49	0.00	0.00	8.82	61.98	0.26
Maximum		13.53	25.40	4.76	8.15	38.02	91.18	6.36
This table compares the net change in ratings from the first to the last day of each year. All intermediate ratings are disregarded. *Excludes downgrades to 'D', which are shown separately in the "Defaults" column. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®

Table 34

Global 2024 one-year transition rates for insurance companies (%)
From / to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Global
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	94.78	0.87	0.00	0.00	0.00	0.00	0.00	4.35
A	0.00	1.13	97.29	0.23	0.00	0.00	0.00	0.00	1.35
BBB	0.00	0.00	5.63	90.14	1.41	0.00	0.00	0.00	2.82
BB	0.00	0.00	0.00	7.50	82.50	2.50	0.00	0.00	7.50
B	0.00	0.00	0.00	0.00	5.13	87.18	2.56	0.00	5.13
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	100.00	0.00	0.00
U.S. and tax havens
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	95.45	0.00	0.00	0.00	0.00	0.00	0.00	4.55
A	0.00	1.50	98.00	0.50	0.00	0.00	0.00	0.00	0.00
BBB	0.00	0.00	8.24	87.06	2.35	0.00	0.00	0.00	2.35
BB	0.00	0.00	0.00	23.08	69.23	0.00	0.00	0.00	7.69
B	0.00	0.00	0.00	0.00	0.00	89.66	3.45	0.00	6.90
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	100.00	0.00	0.00
Europe
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	92.31	0.00	0.00	0.00	0.00	0.00	0.00	7.69
A	0.00	0.87	94.78	0.00	0.00	0.00	0.00	0.00	4.35
BBB	0.00	0.00	0.00	92.86	0.00	0.00	0.00	0.00	7.14
BB	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00
B	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	100.00	0.00	0.00
Emerging and frontier markets
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
A	0.00	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00
BBB	0.00	0.00	2.86	94.29	0.00	0.00	0.00	0.00	2.86
BB	0.00	0.00	0.00	0.00	88.00	4.00	0.00	0.00	8.00
B	0.00	0.00	0.00	0.00	22.22	77.78	0.00	0.00	0.00
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	100.00	0.00	0.00
Other developed
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	94.12	5.88	0.00	0.00	0.00	0.00	0.00	0.00
A	0.00	1.59	96.83	0.00	0.00	0.00	0.00	0.00	1.59
BBB	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00	0.00
BB	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00
B	0.00	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00
CCC/C	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
N/A--Not applicable. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 35

Global average transition rates for insurance companies (1981-2024) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One-year
AAA	88.09	9.77	0.27	0.00	0.07	0.07	0.13	0.00	1.61
	(11.88)	(11.27)	(1.28)	(0.00)	(0.29)	(0.42)	(0.84)	(0.00)	(2.34)
AA	0.49	88.45	6.84	0.32	0.04	0.04	0.06	0.04	3.74
	(0.95)	(6.47)	(5.55)	(0.86)	(0.14)	(0.13)	(0.44)	(0.14)	(2.10)
A	0.01	2.06	91.32	2.41	0.14	0.06	0.01	0.08	3.92
	(0.06)	(2.13)	(4.68)	(2.44)	(0.45)	(0.21)	(0.05)	(0.23)	(1.90)
BBB	0.00	0.14	5.24	84.52	2.29	0.28	0.21	0.16	7.16
	(0.00)	(0.65)	(3.42)	(5.30)	(2.46)	(0.91)	(0.66)	(0.62)	(3.01)
BB	0.00	0.08	0.50	7.70	75.23	3.35	1.00	0.50	11.63
	(0.00)	(0.78)	(1.94)	(8.28)	(11.82)	(4.16)	(2.85)	(1.95)	(6.84)
B	0.00	0.11	0.23	0.56	5.86	76.80	2.03	1.35	13.06
	(0.00)	(0.93)	(2.16)	(2.41)	(7.07)	(11.29)	(3.64)	(4.21)	(6.36)
CCC/C	0.00	0.00	0.00	0.00	3.53	11.76	40.00	23.53	21.18
	(0.00)	(0.00)	(0.00)	(0.00)	(11.79)	(21.32)	(32.82)	(28.29)	(29.28)
Three-year
AAA	66.62	25.28	1.81	0.07	0.13	0.13	0.27	0.33	5.35
	(18.44)	(17.17)	(2.62)	(0.42)	(0.52)	(0.60)	(1.00)	(0.83)	(5.70)
AA	1.11	70.36	15.68	1.52	0.16	0.20	0.06	0.23	10.68
	(1.92)	(10.89)	(7.16)	(2.09)	(0.46)	(0.53)	(0.18)	(0.40)	(3.79)
A	0.04	4.69	77.34	4.69	0.51	0.10	0.09	0.35	12.20
	(0.14)	(4.35)	(9.55)	(3.28)	(1.14)	(0.57)	(0.21)	(0.84)	(4.26)
BBB	0.00	0.50	12.64	63.21	3.48	0.70	0.30	0.82	18.37
	(0.00)	(1.38)	(5.91)	(9.27)	(2.77)	(0.91)	(0.93)	(1.62)	(4.83)
BB	0.00	0.09	1.80	15.80	44.79	4.49	1.17	1.89	29.98
	(0.00)	(0.81)	(3.78)	(10.54)	(14.62)	(4.14)	(3.68)	(4.49)	(10.30)
B	0.00	0.00	1.12	2.37	11.08	47.45	1.74	4.23	32.00
	(0.00)	(0.00)	(4.22)	(6.77)	(9.74)	(11.91)	(2.44)	(7.61)	(11.00)
CCC/C	0.00	0.00	1.22	2.44	4.88	14.63	12.20	31.71	32.93
	(0.00)	(0.00)	(11.16)	(10.95)	(11.26)	(23.14)	(14.90)	(30.52)	(31.80)
Five-year
AAA	49.30	33.71	4.95	0.40	0.07	0.27	0.20	0.87	10.23
	(18.65)	(17.26)	(4.92)	(0.94)	(0.42)	(0.83)	(0.66)	(1.28)	(8.14)
AA	1.39	57.62	20.81	2.19	0.29	0.35	0.06	0.63	16.66
	(2.20)	(10.76)	(6.89)	(2.42)	(0.57)	(0.76)	(0.19)	(0.90)	(3.86)
A	0.09	5.94	66.95	5.28	0.73	0.15	0.18	0.64	20.04
	(0.55)	(5.35)	(11.38)	(3.35)	(1.25)	(0.48)	(0.57)	(1.21)	(5.16)
BBB	0.00	0.70	16.05	50.46	3.03	0.59	0.40	1.40	27.38
	(0.00)	(1.92)	(5.48)	(8.64)	(2.06)	(0.74)	(1.09)	(2.30)	(5.84)
BB	0.00	0.68	2.54	18.10	29.45	4.11	0.88	3.23	41.00
	(0.00)	(2.14)	(4.50)	(8.89)	(11.05)	(3.40)	(3.10)	(6.32)	(11.97)
B	0.00	0.00	2.02	3.32	11.54	31.02	1.30	6.64	44.16
	(0.00)	(0.00)	(5.93)	(7.60)	(9.93)	(9.45)	(2.05)	(9.11)	(13.79)
CCC/C	0.00	0.00	1.25	0.00	10.00	10.00	2.50	32.50	43.75
	(0.00)	(0.00)	(11.31)	(0.00)	(16.37)	(14.92)	(7.64)	(30.50)	(29.78)
10-Year
AAA	24.08	41.14	9.43	1.74	0.13	0.47	0.13	1.54	21.34
	(14.66)	(15.25)	(6.40)	(2.60)	(0.46)	(1.13)	(0.53)	(1.62)	(10.67)
AA	1.27	37.10	26.43	3.09	0.47	0.47	0.05	1.53	29.59
	(2.15)	(9.10)	(6.69)	(2.50)	(0.68)	(0.69)	(0.14)	(1.24)	(5.15)
A	0.14	6.76	49.91	5.43	0.98	0.26	0.21	1.44	34.88
	(1.01)	(4.33)	(10.42)	(2.96)	(1.59)	(0.36)	(0.43)	(1.75)	(5.69)
BBB	0.00	1.37	18.74	31.41	1.85	0.48	0.14	2.57	43.44
	(0.00)	(3.51)	(5.43)	(4.29)	(1.97)	(0.39)	(0.56)	(3.82)	(3.65)
BB	0.00	0.51	4.93	16.06	11.00	3.29	0.00	8.60	55.63
	(0.00)	(1.37)	(6.35)	(6.91)	(6.11)	(3.09)	(0.00)	(13.93)	(16.31)
B	0.00	0.00	3.83	11.24	8.37	12.20	0.48	11.96	51.91
	(0.00)	(0.00)	(9.98)	(14.09)	(9.62)	(8.01)	(4.27)	(11.00)	(17.83)
CCC/C	0.00	0.00	1.30	0.00	9.09	0.00	0.00	35.06	54.55
	(0.00)	(0.00)	(11.56)	(0.00)	(15.78)	(0.00)	(0.00)	(31.66)	(29.96)
Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 36

Average one-year transition rates for global insurance companies by rating modifier (1981-2024) (%)
Rating	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C	D	NR
AAA	88.09	7.16	1.74	0.87	0.07	0.20	0.00	0.00	0.00	0.00	0.00	0.07	0.00	0.00	0.07	0.00	0.13	0.00	1.61
	(11.88)	(11.14)	(1.93)	(1.57)	(0.42)	(0.88)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.29)	(0.00)	(0.00)	(0.42)	(0.00)	(0.84)	(0.00)	(2.34)
AA+	1.69	78.96	11.49	3.63	0.73	0.36	0.24	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.90
	(2.73)	(19.15)	(13.57)	(5.86)	(4.48)	(1.50)	(1.20)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.83)
AA	0.45	0.95	82.49	8.50	2.30	0.85	0.45	0.15	0.25	0.00	0.05	0.05	0.00	0.00	0.00	0.00	0.15	0.05	3.30
	(1.27)	(1.74)	(12.49)	(9.62)	(3.01)	(1.49)	(1.47)	(0.50)	(1.09)	(0.00)	(0.26)	(0.23)	(0.00)	(0.00)	(0.00)	(0.00)	(0.78)	(0.24)	(2.61)
AA-	0.12	0.20	3.45	80.19	9.47	1.11	0.63	0.20	0.16	0.00	0.00	0.00	0.00	0.04	0.04	0.00	0.00	0.04	4.36
	(0.42)	(0.56)	(5.06)	(10.20)	(7.78)	(2.56)	(1.53)	(0.71)	(0.59)	(0.00)	(0.00)	(0.00)	(0.00)	(0.22)	(0.22)	(0.00)	(0.00)	(0.22)	(3.04)
A+	0.00	0.17	0.33	4.54	82.97	5.82	1.34	0.47	0.22	0.06	0.00	0.06	0.00	0.00	0.00	0.00	0.00	0.03	4.01
	(0.00)	(0.58)	(1.85)	(3.43)	(8.56)	(4.32)	(2.15)	(1.10)	(0.98)	(0.23)	(0.00)	(0.25)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.30)	(2.61)
A	0.03	0.08	0.27	0.49	6.51	82.01	5.00	0.77	0.60	0.19	0.05	0.08	0.00	0.00	0.05	0.00	0.03	0.14	3.69
	(0.16)	(0.53)	(1.61)	(1.06)	(4.13)	(8.48)	(3.65)	(1.83)	(1.12)	(0.94)	(0.66)	(0.29)	(0.00)	(0.00)	(0.36)	(0.00)	(0.15)	(0.37)	(2.74)
A-	0.00	0.03	0.06	0.15	0.53	7.39	82.30	3.65	1.08	0.32	0.06	0.09	0.09	0.09	0.03	0.00	0.00	0.09	4.06
	(0.00)	(0.23)	(0.28)	(0.65)	(1.14)	(4.52)	(8.12)	(2.88)	(2.52)	(1.06)	(0.24)	(0.43)	(0.43)	(0.31)	(0.23)	(0.00)	(0.00)	(0.35)	(2.59)
BBB+	0.00	0.00	0.11	0.05	0.60	0.87	9.28	76.02	5.13	1.04	0.27	0.11	0.11	0.05	0.05	0.00	0.11	0.00	6.17
	(0.00)	(0.00)	(0.39)	(0.44)	(1.30)	(2.92)	(6.68)	(10.17)	(4.86)	(1.84)	(1.45)	(0.53)	(1.73)	(0.26)	(1.36)	(0.00)	(1.26)	(0.00)	(3.58)
BBB	0.00	0.00	0.06	0.06	0.19	0.52	0.91	9.52	73.77	4.66	1.42	0.39	0.19	0.19	0.13	0.00	0.19	0.19	7.58
	(0.00)	(0.00)	(0.62)	(1.15)	(0.72)	(1.44)	(1.81)	(6.52)	(10.97)	(4.31)	(3.33)	(1.66)	(0.89)	(0.78)	(0.66)	(0.00)	(0.68)	(0.69)	(4.96)
BBB-	0.00	0.00	0.11	0.00	0.00	0.11	0.32	1.70	10.84	70.88	4.99	0.85	0.43	0.32	0.21	0.00	0.43	0.43	8.40
	(0.00)	(0.00)	(0.52)	(0.00)	(0.00)	(0.52)	(0.86)	(2.53)	(6.09)	(10.45)	(6.02)	(2.87)	(1.46)	(2.09)	(0.78)	(0.00)	(1.28)	(3.51)	(6.36)
BB+	0.00	0.00	0.00	0.00	0.19	0.39	0.39	0.19	2.13	11.03	64.80	4.45	3.87	0.77	0.19	0.19	0.39	0.77	10.25
	(0.00)	(0.00)	(0.00)	(0.00)	(1.00)	(3.55)	(2.79)	(1.67)	(4.07)	(9.28)	(16.88)	(8.43)	(6.56)	(3.97)	(1.06)	(1.06)	(1.79)	(3.67)	(8.33)
BB	0.00	0.00	0.25	0.00	0.00	0.00	0.25	0.25	1.01	4.04	11.11	62.12	4.29	1.01	1.26	0.00	1.52	0.51	12.37
	(0.00)	(0.00)	(2.26)	(0.00)	(0.00)	(0.00)	(1.45)	(1.33)	(4.79)	(8.94)	(10.94)	(16.81)	(7.02)	(3.05)	(4.13)	(0.00)	(5.53)	(2.63)	(10.12)
BB-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.35	0.00	0.35	4.96	12.06	58.87	4.96	2.13	1.77	1.42	0.00	13.12
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(3.46)	(0.00)	(4.25)	(9.83)	(13.04)	(20.84)	(11.96)	(6.52)	(3.88)	(5.98)	(0.00)	(14.47)
B+	0.00	0.00	0.00	0.00	0.00	0.00	0.36	0.00	0.00	0.00	0.72	5.73	8.24	62.37	6.45	2.15	1.79	2.15	10.04
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.27)	(0.00)	(0.00)	(0.00)	(4.04)	(10.49)	(9.93)	(20.51)	(9.12)	(5.16)	(6.82)	(6.67)	(10.44)
B	0.00	0.00	0.00	0.22	0.00	0.22	0.00	0.22	0.22	0.22	0.22	0.22	1.77	7.51	69.76	4.42	1.10	0.88	13.02
	(0.00)	(0.00)	(0.00)	(1.93)	(0.00)	(1.93)	(0.00)	(2.74)	(1.49)	(1.49)	(1.07)	(0.85)	(4.82)	(10.80)	(13.48)	(5.24)	(3.08)	(2.69)	(9.58)
B-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.64	0.64	0.00	0.00	0.00	0.64	1.92	13.46	57.69	5.13	1.28	18.59
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(5.74)	(2.81)	(0.00)	(0.00)	(0.00)	(4.67)	(5.11)	(15.49)	(19.12)	(9.67)	(8.85)	(19.61)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.35	1.18	0.00	2.35	9.41	40.00	23.53	21.18
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(10.76)	(5.38)	(0.00)	(7.42)	(21.10)	(32.82)	(28.29)	(29.28)
Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 37

Average one-year transition rates by major region for insurance companies (1981-2024) (%)
Rating	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
U.S.
AAA	89.30	8.70	0.26	0.00	0.09	0.09	0.09	0.00	1.48
	(12.65)	(11.99)	(1.59)	(0.00)	(0.39)	(0.53)	(0.53)	(0.00)	(2.41)
AA	0.62	88.73	6.52	0.34	0.06	0.06	0.08	0.06	3.54
	(1.21)	(7.45)	(5.60)	(0.88)	(0.22)	(0.19)	(0.60)	(0.21)	(2.58)
A	0.02	2.18	90.86	2.60	0.21	0.09	0.02	0.12	3.92
	(0.10)	(2.55)	(5.51)	(2.65)	(0.59)	(0.33)	(0.09)	(0.29)	(2.50)
BBB	0.00	0.20	4.61	85.71	2.45	0.41	0.33	0.20	6.08
	(0.00)	(0.89)	(3.75)	(7.02)	(3.20)	(1.36)	(0.88)	(0.85)	(3.73)
BB	0.00	0.15	0.46	10.32	72.42	4.01	1.39	0.92	10.32
	(0.00)	(1.19)	(2.00)	(11.71)	(13.41)	(5.38)	(3.75)	(2.63)	(7.83)
B	0.00	0.14	0.28	0.42	5.10	79.75	2.12	1.13	11.05
	(0.00)	(1.09)	(2.44)	(2.36)	(8.28)	(11.52)	(4.12)	(4.29)	(7.33)
CCC/C	0.00	0.00	0.00	0.00	3.17	12.70	36.51	30.16	17.46
	(0.00)	(0.00)	(0.00)	(0.00)	(12.43)	(25.21)	(32.64)	(31.52)	(25.63)
Europe
AAA	85.02	12.56	0.48	0.00	0.00	0.00	0.48	0.00	1.45
	(19.05)	(16.73)	(2.08)	(0.00)	(0.00)	(0.00)	(3.13)	(0.00)	(3.78)
AA	0.28	87.05	7.79	0.47	0.00	0.00	0.00	0.00	4.41
	(1.31)	(11.43)	(10.76)	(1.91)	(0.00)	(0.00)	(0.00)	(0.00)	(4.67)
A	0.00	2.14	90.77	2.66	0.07	0.00	0.00	0.04	4.32
	(0.00)	(2.69)	(5.41)	(4.07)	(0.43)	(0.00)	(0.00)	(0.32)	(2.88)
BBB	0.00	0.14	8.95	79.30	1.26	0.28	0.14	0.14	9.79
	(0.00)	(0.63)	(7.06)	(10.66)	(3.02)	(1.27)	(1.14)	(0.84)	(9.07)
BB	0.00	0.00	2.47	6.17	61.73	0.00	1.23	0.00	28.40
	(0.00)	(0.00)	(10.05)	(12.98)	(22.10)	(0.00)	(7.93)	(0.00)	(21.56)
B	0.00	0.00	0.00	8.70	13.04	39.13	0.00	0.00	39.13
	(0.00)	(0.00)	(0.00)	(29.33)	(27.53)	(37.97)	(0.00)	(0.00)	(43.74)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	28.57	14.29	57.14
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(49.49)	(38.33)	(54.21)
Emerging and frontier markets
AAA	50.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	50.00
	(70.71)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(70.71)
AA	0.00	88.33	8.33	0.00	0.00	0.00	0.00	0.00	3.33
	(0.00)	(24.06)	(17.27)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(14.91)
A	0.00	0.64	94.37	2.44	0.00	0.11	0.00	0.00	2.44
	(0.00)	(1.49)	(5.63)	(4.54)	(0.00)	(0.48)	(0.00)	(0.00)	(2.26)
BBB	0.00	0.00	3.58	86.37	2.77	0.00	0.00	0.12	7.16
	(0.00)	(0.00)	(3.09)	(7.45)	(3.52)	(0.00)	(0.00)	(0.49)	(5.12)
BB	0.00	0.00	0.00	3.86	82.01	2.83	0.26	0.00	11.05
	(0.00)	(0.00)	(0.00)	(7.16)	(12.80)	(3.67)	(0.96)	(0.00)	(8.74)
B	0.00	0.00	0.00	0.00	9.42	73.19	1.45	0.72	15.22
	(0.00)	(0.00)	(0.00)	(0.00)	(11.20)	(17.93)	(3.72)	(2.81)	(17.57)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	50.00	0.00	50.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(54.77)	(0.00)	(54.77)
Other developed
AAA	83.09	14.71	0.00	0.00	0.00	0.00	0.00	0.00	2.21
	(22.62)	(22.95)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.23)
AA	0.14	89.19	6.92	0.00	0.00	0.00	0.00	0.00	3.75
	(0.79)	(9.84)	(9.48)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.22)
A	0.00	2.36	92.50	0.90	0.08	0.00	0.00	0.08	4.07
	(0.00)	(3.55)	(6.64)	(3.09)	(0.77)	(0.00)	(0.00)	(1.29)	(3.68)
BBB	0.00	0.00	5.81	81.94	1.94	0.00	0.00	0.00	10.32
	(0.00)	(0.00)	(9.08)	(11.83)	(5.50)	(0.00)	(0.00)	(0.00)	(9.47)
BB	0.00	0.00	1.14	5.68	79.55	3.41	2.27	0.00	7.95
	(0.00)	(0.00)	(6.17)	(13.53)	(24.27)	(10.49)	(6.62)	(0.00)	(10.46)
B	0.00	0.00	0.00	0.00	4.55	40.91	4.55	13.64	36.36
	(0.00)	(0.00)	(0.00)	(0.00)	(11.84)	(42.17)	(14.88)	(26.34)	(44.64)
CCC/C	0.00	0.00	0.00	0.00	9.09	18.18	63.64	0.00	9.09
	(0.00)	(0.00)	(0.00)	(0.00)	(30.49)	(34.09)	(39.76)	(0.00)	(20.45)
Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 38

Average cumulative default rates for insurance companies (1981-2024) (%)
	--Time horizon (years)--
Rating	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10	Y11	Y12	Y13	Y14	Y15
AAA	0.00	0.07	0.33	0.60	0.87	1.14	1.27	1.40	1.47	1.54	1.61	1.67	1.74	1.81	1.87
AA	0.04	0.13	0.23	0.43	0.61	0.80	0.93	1.09	1.25	1.37	1.46	1.54	1.62	1.70	1.79
A	0.08	0.19	0.33	0.47	0.59	0.70	0.85	0.93	0.99	1.08	1.18	1.23	1.29	1.33	1.40
BBB	0.16	0.50	0.80	1.05	1.30	1.49	1.64	1.79	1.95	2.02	2.06	2.06	2.14	2.24	2.29
BB	0.50	1.19	1.82	2.39	2.98	3.90	4.76	5.56	6.40	6.91	7.61	8.05	8.21	8.39	8.59
B	1.35	2.65	4.02	4.95	5.68	6.33	6.86	7.26	7.48	7.98	8.81	9.12	9.46	9.84	10.25
CCC/C	23.53	29.70	30.93	30.93	30.93	30.93	32.21	33.49	33.49	33.49	33.49	33.49	33.49	33.49	33.49
Investment grade	0.08	0.23	0.40	0.59	0.76	0.92	1.06	1.18	1.29	1.38	1.46	1.51	1.58	1.65	1.72
Speculative grade	1.75	2.90	3.86	4.54	5.16	5.94	6.70	7.39	7.98	8.46	9.16	9.54	9.74	9.97	10.22
All rated	0.23	0.47	0.71	0.94	1.15	1.36	1.56	1.72	1.87	1.99	2.12	2.19	2.27	2.35	2.43
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 39

Average cumulative default rates for insurance companies by rating modifier (1981-2024) (%)
	--Time horizon (years)--
Rating	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10	Y11	Y12	Y13	Y14	Y15
AAA	0.00	0.07	0.33	0.60	0.87	1.14	1.27	1.40	1.47	1.54	1.61	1.67	1.74	1.81	1.87
AA+	0.00	0.12	0.12	0.12	0.12	0.12	0.12	0.26	0.41	0.55	0.70	0.85	1.01	1.17	1.34
AA	0.05	0.10	0.26	0.63	0.95	1.22	1.45	1.67	1.91	2.03	2.15	2.27	2.40	2.53	2.66
AA-	0.04	0.16	0.24	0.37	0.51	0.69	0.78	0.88	0.98	1.09	1.14	1.14	1.14	1.14	1.14
A+	0.03	0.03	0.12	0.18	0.25	0.32	0.43	0.47	0.51	0.56	0.61	0.66	0.71	0.77	0.84
A	0.14	0.34	0.55	0.80	0.93	1.07	1.26	1.33	1.46	1.64	1.74	1.79	1.84	1.90	2.03
A-	0.09	0.21	0.33	0.43	0.57	0.72	0.87	0.99	0.99	1.04	1.19	1.25	1.31	1.31	1.31
BBB+	0.00	0.11	0.29	0.47	0.66	0.79	0.93	1.08	1.24	1.24	1.24	1.24	1.24	1.24	1.24
BBB	0.19	0.66	1.02	1.31	1.54	1.86	2.03	2.12	2.21	2.31	2.41	2.41	2.41	2.41	2.55
BBB-	0.43	0.97	1.42	1.76	2.12	2.24	2.37	2.63	2.90	3.04	3.04	3.04	3.40	3.79	3.79
BB+	0.77	1.37	1.99	3.06	4.17	5.55	7.00	7.52	8.06	8.64	9.26	9.59	9.59	9.59	9.59
BB	0.51	1.03	1.56	1.56	1.56	2.18	2.50	3.17	4.23	4.99	5.82	6.26	6.26	6.26	6.26
BB-	0.00	1.12	1.90	2.31	2.75	3.21	3.70	5.26	6.36	6.36	7.00	7.69	8.43	9.25	10.21
B+	2.15	4.03	6.42	7.26	7.70	7.70	7.70	7.70	7.70	8.93	10.23	10.91	11.64	12.44	13.30
B	0.88	1.34	2.07	2.85	3.42	4.38	4.73	5.53	6.00	6.00	6.64	6.64	6.64	6.64	6.64
B-	1.28	4.01	5.46	7.02	8.81	9.84	12.27	12.27	12.27	12.27	12.27	12.27	12.27	12.27	12.27
CCC/C	23.53	29.70	30.93	30.93	30.93	30.93	32.21	33.49	33.49	33.49	33.49	33.49	33.49	33.49	33.49
Investment grade	0.08	0.23	0.40	0.59	0.76	0.92	1.06	1.18	1.29	1.38	1.46	1.51	1.58	1.65	1.72
Speculative grade	1.75	2.90	3.86	4.54	5.16	5.94	6.70	7.39	7.98	8.46	9.16	9.54	9.74	9.97	10.22
All rated	0.23	0.47	0.71	0.94	1.15	1.36	1.56	1.72	1.87	1.99	2.12	2.19	2.27	2.35	2.43
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 40

Time to default from original rating for global insurance defaulters (1981-2024)
Original rating	Defaults	Average years from original rating*	Median years from original rating	Standard deviation of years from original rating
AAA	4	12.30	7.11	11.07
AA	11	13.37	9.97	8.87
A	20	7.41	6.84	4.02
BBB	14	7.38	6.54	4.80
BB	8	6.76	5.81	5.35
B	15	5.98	5.01	5.06
CCC/C	3	0.74	0.67	0.48
*Or Dec. 31, 1980, whichever is later. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®

Appendix II: Methodology And Definitions

This long-term corporate default and rating transition study uses the CreditPro database of long-term local currency issuer credit ratings. The analysis excludes public information ("pi") ratings and ratings based on the guarantee of another company or government entity. The 'pi' qualifier was used to indicate ratings that were based on an analysis of an issuer's published financial information, as well as additional information in the public domain. We discontinued use of 'pi' ratings as of December 2014.

We also do not include short-term issuer ratings. S&P Global Ratings does not require all issuers with rated debt to have an issuer credit rating. Therefore, if an issuer has rated debt but not an issuer credit rating, we assign a proxy rating so that the CreditPro corporate dataset accurately represents the complete universe of ratings. The local currency senior unsecured rating is the preferred debt-level rating used for the proxy because this rating is usually consistent with the issuer credit rating. In a small number of cases, we use the subordinated debt rating or the senior secured rating as the proxy.

An S&P Global Ratings issuer credit rating is a forward-looking opinion about an obligor's overall creditworthiness. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due. It does not apply to any specific financial obligation because it does not consider the nature and provisions of any single obligation, its standing in bankruptcy or liquidation, statutory preferences, or the legality and enforceability of the obligation. Counterparty credit ratings, corporate credit ratings, and sovereign credit ratings are all forms of issuer credit ratings. Issuer credit ratings can be either long-term or short-term.

Our ongoing enhancement of the database used to generate this study could lead to outcomes that differ to some degree from those reported in previous studies. However, this poses no continuity problem because each study reports statistics back to Dec. 31, 1980. Therefore, each is self-contained and effectively supersedes all previous versions.

Issuers included in this study

This study analyzes the rating histories of 5845 financial institutions that S&P Global Ratings rated as of Dec. 31, 1980, or that were first rated between that date and Dec. 31, 2024. These include banks, nonbank financial institutions, and insurance companies around the world with long-term local currency ratings. Structured finance vehicles, public-sector issuers, and sovereign issuers are the subjects of separate default and transition studies, and we exclude them from this study.

In this study, we review the defaults, rating transitions, and ratings performance of financial services broadly, in the following sectors:

• Banks: bank holding companies, bank subsidiaries, savings and loans, credit unions, and government-related entities;
• Nonbank financial institutions (NBFIs): a loose grouping of highly diverse companies, including broker-dealers, asset managers, finance companies, financial market infrastructure companies, and other financial entities that share some common features; and
• Insurance: life insurance, health insurance, property/casualty insurance, reinsurance, bond insurance, mortgage insurance, insurance brokers, and title insurance, as well as insurance-related service providers.

We calculated default and transition rates based on the number of issuers in the sample period. The default rates we refer to as weighted averages in this study use the number of issuers at the beginning of each year as the basis for each year's weight.

To avoid overcounting, we exclude subsidiaries with debt that is fully guaranteed by a parent or with default risk that is considered identical to that of a parent. The latter are companies with obligations that are not legally guaranteed by a parent but that have operating or financing activities that are so inextricably entwined with those of the parent that it would be impossible to imagine the default of one and not the other. At times, however, some of these subsidiaries might not yet have been covered by a parent's guarantee, or the relationship that combines the default risk of parent and subsidiary might have come to an end or might not have begun. We included such subsidiaries for the period during which they had a distinct and separate risk of default.

Issuers with withdrawn ratings

S&P Global Ratings withdraws ratings when an entity's entire debt is paid off or when the program or programs rated are terminated and the relevant debt extinguished. For the purposes of this study, a corporate rating may also be withdrawn as a result of mergers and acquisitions. Others are withdrawn because of a lack of cooperation, particularly when a company is experiencing financial difficulties and refuses to provide all the information needed to continue surveillance on the ratings, or at the entity's request.

Definition of default

An obligor rated 'SD' (selective default) or 'D' (default) is in default on one or more of its financial obligations, including rated and unrated financial obligations, excluding hybrid instruments classified as regulatory capital or in nonpayment according to terms. An obligor is considered to be in default unless S&P Global Ratings believes that such payments will be made within five business days of the due date in the absence of a stated grace period, or within the earlier of the stated grace period or 30 calendar days.

A 'D' rating is assigned when S&P Global Ratings believes that the default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. An 'SD' rating is assigned when S&P Global Ratings believes that the obligor has selectively defaulted on a specific issue or class of obligations but will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. S&P Global Ratings lowers its rating on an obligor to 'D' or 'SD' if the obligor is conducting a distressed exchange offer.

'R' (regulatory intervention) indicates that an obligor is under regulatory supervision owing to its financial condition. This does not necessarily indicate a default event, but during the period of regulatory supervision, the regulators may have the power to favor one class of obligations over others or to pay some obligations and not others. While the 'R' rating was in place during the many of the years covered in this study, it was removed from all ratings scales on July 5, 2019 (see "S&P Global Ratings Definitions," Nov. 10, 2021).

We deem 'D', 'SD', and 'R' issuer ratings to be defaults for the purposes of this study. A default is assumed to take place on the earliest of:

• The date S&P Global Ratings revised the rating(s) to 'D', 'SD', or 'R';
• The date a debt payment was missed;
• The date a distressed exchange offer was announced; or
• The date the debtor filed for, or was forced into, bankruptcy.

When an issuer defaults, it is not uncommon for S&P Global Ratings to subsequently withdraw the 'D' rating. For the purposes of this study, if an issuer defaults, we end its rating history at 'D'. If any defaulting entity reemerges from bankruptcy--or otherwise restructures its defaulted debt instruments, thereby reestablishing regular, timely payment of all its debts--we reenter this issuer into the database as a new entity. Its rating history after the default event is included in all calculations as entirely separate from its experience leading up to its earlier default.

Many practitioners use statistics from this default study to estimate the "probability of default" and "probability of rating transition." It is important to note that S&P Global Ratings' credit ratings do not imply a specific probability of default.

Regional definitions

Within this study, tables and charts often present specific geographic regions. Like most of our studies, issuer ratings included in this study are classified by the geographic location in which each entity is incorporated. Some countries can be included in multiple regions, and S&P Global Ratings does not have corporate ratings within every country. The regions covered in this study are:

U.S. and tax havens:  the U.S., Bermuda, and the Cayman Islands

Other developed:  Australia, Brunei Darussalam, Canada, Israel, Japan, Republic of Korea, New Zealand, and Singapore

Europe:  Austria, Belgium, British Virgin Islands, Bulgaria, Channel Islands, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Republic of Moldova, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, and the U.K.

Emerging markets:

Asia-Pacific.  Bangladesh, Bhutan, China, Fiji, Hong Kong, India, Indonesia, Macao Special Administrative Region of China, Malaysia, Mongolia, Pakistan, Papua New Guinea, Philippines, Sri Lanka, Taiwan, Thailand, British Indian Ocean Territory, and Vietnam

EMEA (Europe, the Middle East, and Africa).  Angola, Armenia, Azerbaijan, Bahrain, Belarus, Bosnia and Herzegovina, Bulgaria, Cote d'Ivoire, Croatia, Cyprus, Egypt, Estonia, Gabon, Georgia, Ghana, Hungary, Jordan, Kazakhstan, Kenya, Kuwait, Latvia, Lebanon, Lithuania, Mauritius, Montenegro, Morocco, Namibia, Nigeria, Oman, Poland, Qatar, Republic of Moldova, Romania, Russia, Saudi Arabia, Slovakia, South Africa, Tunisia, Turkiye, Ukraine, United Arab Emirates, and Uzbekistan

Latin America and Caribbean.  Argentina, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Honduras, Jamaica, Mexico, Panama, Paraguay, Peru, Trinidad and Tobago, and Uruguay

Frontier markets:

Asia-Pacific.  Cambodia and Marshall Islands

EMEA.   Liberia, Syrian Arab Republic, Togo, Benin, Iraq and Serbia

Latin America and Caribbean.  Aruba, Bahamas, Curacao, Netherlands Antilles (dissolved in 2010), Turks and Caicos Islands, and Venezuela

Calculations

Static pool methodology.   S&P Global Ratings Credit Research & Insights conducts its default studies on the basis of groupings called static pools. For the purposes of this study, we form static pools by grouping issuers (by rating category, for example) at the beginning of each year, quarter, or month that the database covers. Each static pool is followed from that point forward. All companies included in the study are assigned to one or more static pools. When an issuer defaults, we assign that default back to all of the static pools to which the issuer belonged.

We use the static pools to avoid certain pitfalls in estimating default rates, ensuring that default rates account for rating migration and can be calculated across multiperiod time horizons. Some methods for calculating default and rating transition rates might charge defaults against only the initial rating on the issuer, ignoring more recent rating changes that supply more current information. Other methods may calculate default rates using only the most recent year's default and rating data, which may yield comparatively low default rates during periods of high rating activity because they ignore prior years' default activity.

The pools are static in the sense that their membership remains constant over time. Each static pool can be interpreted as a buy-and-hold portfolio. Because errors, if any, are corrected by every new update and because the criteria for inclusion or exclusion of companies in the default study are subject to minor revisions as time goes by, it is not possible to compare static pools across different studies. Therefore, every update revises results back to the same starting date of Dec. 31, 1980, so as to avoid continuity problems.

Entities that have had ratings withdrawn--that is, revised to not rated--are surveilled with the aim of capturing a potential default. Because static pools only include entities with active ratings as of the beginning date of a given pool, we exclude companies with withdrawn ratings, as well as those that have defaulted, from subsequent static pools. If the rating on an entity is withdrawn after the start date of a particular static pool and the entity subsequently defaults, we will include it in that static pool as a default and categorize it in the rating category of which it was a member at that time.

For instance, the 1981 static pool consists of all companies rated as of 12:00:01 a.m. on Jan. 1, 1981. Adding those companies first rated in 1981 to the surviving members of the 1981 static pool forms the 1982 static pool. All rating changes that took place are reflected in the newly formed 1982 static pool through the ratings on these entities as of 12:00:01 a.m. on Jan. 1, 1982. We used the same method to form static pools for 1983-2024. From Jan. 1, 1981, to Dec. 31, 2024, a total of 5,845 first-time-rated financial services entities were added to form new static pools, while we excluded 339 defaulting companies and 3,379 companies that were no longer rated.

Consider the following example: An issuer is originally rated 'BB' in mid-1986 and is downgraded to 'B' in 1988. This is followed by a rating withdrawal in 1990 and a default in 1993. We would include this hypothetical company in the 1987 and 1988 pools with the 'BB' rating, which was the rating on the issuer at the beginning of those years. Likewise, it would be included in the 1989 and 1990 pools with the 'B' rating. It would not be part of the 1986 pool because it was not rated as of the first day of that year, and it would not be included in any pool after the last day of 1990 because the rating had been withdrawn by then. Yet each of the four pools in which this company was included (1987-1990) would record its 1993 default at the appropriate time horizon.

Default rate calculation.   We calculated annual default rates for each static pool, first in units and later as percentages with respect to the number of issuers in each rating category. We combined these percentages to obtain cumulative default rates for the 44 years the study covers (see chart 11 and tables 13-15, 22-23, 30-31, and 38-39).

Issuer-weighted default rates.   All default rates that appear in this study are based on the number of issuers rather than the dollar amounts affected by defaults or rating changes. Although dollar amounts provide information about the portion of the market that is affected by defaults or rating changes, issuer-weighted averages are more useful measures of the performance of ratings.

Average cumulative default rate calculation.  The cumulative default rates in this study average the experience of all static pools by first calculating marginal default rates for each possible time horizon and for each static pool, weight-averaging the marginal default rates conditional on survival (survivors being nondefaulters) and accumulating the average conditional marginal default rates. We calculated conditional default rates by dividing the number of issuers in a static pool that default at a specific time horizon by the number of issuers that survived (did not default) to that point in time. Weights are based on the number of issuers in each static pool. Cumulative default rates are one minus the product of the proportion of survivors (nondefaulters).

Transition analysis

Transition rates compare issuer ratings at the beginning of a period with ratings at the end of the period. To compute one-year rating transition rates by rating category, we compared the rating on each entity at the end of a particular year with the rating at the beginning of the same year. An issuer that remained rated for more than one year was counted as many times as the number of years it was rated. For instance, an issuer continually rated from the middle of 1984 to the middle of 1991 would appear in the seven consecutive one-year transition matrices from 1985 to 1991. If the rating on the issuer was withdrawn in the middle of 1991, it would be included in the column representing transitions to not rated ("NR") in the 1991 transition matrix. Similarly, if it defaulted in the middle of 1991, it would be included in the column representing transitions to 'D' in the 1991 one-year transition matrix.

All 1981 static pool members still rated on Jan. 1, 2024, had 44 one-year transitions, while companies first rated on Jan. 1, 2024, had only one. Table 6 displays the summary of one-year transitions in the investment-grade and speculative-grade rating categories in 2024. Each one-year transition matrix displays all rating movements between letter categories from the beginning of the year through year-end. For each rating listed in the matrix's leftmost column, there are nine ratios listed in the rows, corresponding to the ratings from 'AAA' to 'D', plus an entry for "NR" (see table 12).

The only ratings considered in these calculations are those on entities at the beginning of each static pool and those at the end. All rating changes that occur in between are ignored. For example, if an entity rated 'A' on Jan. 1, 2024, was downgraded to 'BBB' in the middle of the year and then upgraded to 'A' later in the year (with no other subsequent rating changes), this entity would be included only in the percentage of issuers that began the year at 'A' and ended the year at 'A'. This also applies to transition matrices that span longer time horizons. If an issuer defaults or if the issuer rating is withdrawn in the middle of the year, then it would be considered rated 'D' or not rated as of Dec. 31 of that particular year.

Multiyear transitions

Multiyear transitions were also calculated for periods of two up to 10 years. In this case, we compared the rating at the beginning of the multiyear period with the rating at the end. For example, three-year transition matrices were the result of comparing ratings at the beginning of the years 1981-2022 with the ratings at the end of the years 1983-2024. Otherwise, our approach was identical to that used for single-year transitions.

We calculated average transition matrices on the basis of the multiyear matrices just described. These average matrices are a true summary, the ratios of which represent the historical incidence of the ratings listed in the first column changing to the ones listed in the top row over the course of the multiyear period (see tables 10, 19, 27, and 35). Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages.

Rating modifiers

We use rating modifiers (plus and minus signs) to calculate upgrade and downgrade percentages, as well as the magnitude of rating changes, throughout this study. However, some transition tables may use full rating categories for practical reasons. In other words, the use of a rating category suggests that transitions to, for example, 'AA-' from 'AA' or to 'BBB-' from 'BBB+' are not considered to be rating transitions because the rating remained within the rating category.

Standard deviations

Many of the tables and charts in this study display averages of default rates, transition rates, and Gini ratios. Often these are issuer-weighted averages. Prior studies have shown that fluctuations in default rates and transitions can vary greatly depending on many circumstances specific to particular time frames, industries, and geographic regions. As a supplement to many of the averages and time series presented in this study, standard deviations are also shown to provide a gauge of the dispersion of data behind these averages.

Time sample

This update limits the reporting of default rates to the 15-year time horizon. However, we gathered the data for 44 years, and all calculations are based on the rating experience of that period. In addition, average default statistics become less reliable at longer time horizons as the sample size becomes smaller and the cyclical nature of default rates has a bigger effect on averages.

Appendix III: Gini Methodology

To measure relative ratings performance, we utilize the Lorenz curve as a graphical representation of the proportionality of a distribution, and we summarize this via the Gini coefficient. For this study, the Lorenz curve is plotted with the x-axis showing the cumulative share of issuers, arranged by rating, while the y-axis represents the cumulative share of defaulters, also arranged by rating. For both axes of the Lorenz curve, the observations are ordered from the low end of the ratings scale ('CCC'/'C') to the high end ('AAA').

As an example, if 'CCC'/'C' rated entities made up 10% of the total population of issuers at the start of the time frame examined (x-axis) and 50% of the defaulters (y-axis), then the coordinate (10, 50) would be the first point on the curve. If S&P Global Ratings' corporate ratings only randomly approximated default risk, the Lorenz curve would fall along the diagonal. Its Gini coefficient--which is a summary statistic of the Lorenz curve--would thus be zero. If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated entities, the curve would capture all of the area above the diagonal on the graph (the ideal curve), and its Gini coefficient would be 1 (see chart 25).

The procedure for calculating the Gini coefficients is illustrated in chart 25: Area B is bounded by the random curve and the Lorenz curve, while area A is bounded by the Lorenz curve and the ideal curve. The Gini coefficient is defined as area B divided by the total of area A plus area B. In other words, the Gini coefficient captures the extent to which actual ratings accuracy diverges from the random scenario and aspires to the ideal scenario.

Related Criteria

• Insurer Risk-Based Capital Adequacy Criteria, Nov 15, 2023
• Banking Industry Country Risk Assessment Methodology And Assumptions, Dec. 9, 2021
• Financial Institutions Rating Methodology, Dec. 9, 2021
• S&P Global Ratings Definitions, Nov. 10, 2021
• Insurers Rating Methodology, July 1, 2019

Related Research

• Default, Transition, and Recovery: 2024 Annual Global Corporate Default And Rating Transition Study , March 27, 2025
• Curo Group Holdings Corp. Downgraded To 'D' On Chapter 11 Bankruptcy Filing; Ratings Withdrawn At Company's Request, March 28, 2024
• Resolute Investment Managers Inc. Downgraded To 'D' From 'CC' Following Completion Of Distressed Exchange, Jan. 3, 2024
• Avison Young (Canada) Inc. Downgraded To 'SD' Following Missed Term Loan Payments; Term Loan Rating Lowered To 'D', Feb. 24, 2024
• AFE S.A. Downgraded To 'SD' From 'CC' On Completed Debt Restructuring; Secured Note Rating Lowered To 'D', Feb. 15, 2024
• IQera Downgraded To 'SD' From 'CCC-' On Missed Principal Payment; Defaulted Senior Secured Note Rating Lowered To 'D', Oct. 2, 2024
• Operadora de Servicios Mega S.A. de C.V. SOFOM E.R. Downgraded To 'SD' On Missed Interest Payment, Sept. 12, 2024

Credit Research & Insights:	Ekaterina Tolstova, Frankfurt +49 173 6591385; ekaterina.tolstova@spglobal.com
	Nick W Kraemer, FRM, New York + 1 (212) 438 1698; nick.kraemer@spglobal.com
Research Contributor:	Vaishali Singh, CRISIL Global Analytical Center, an S&P affiliate, Mumbai