“I'm a 'triple-A' locked in an 'A-minus' body. It's very frustrating.” That's how Donald Kramer, chief executive officer of Ariel Re, began his answer to a question about rating agency activity during a session of the World Insurance Forum in Bermuda last month.

The context of the statement and the follow-up discussion to the remark invite us to reexamine how we use ratings in this industry, and why cuts to certain acceptable ratings levels are death knells for property-casualty insurance businesses, prompting them to unravel into runoff and sales.

With his comment, Mr. Kramer was referring to the fact that start-ups such as his firm cannot garner ratings higher than “A-minus” from rating agencies. The remark preceded his answer to a question about whether rating agencies have overreacted to two years of storms with changes to catastrophe-related capital charges in their rating formulas.