Evaluate credit ratings: Factor 1: focus on Alleghany’s cash flows from investing, rather than its cash flows from financing activities, as the best measure of its ability to service debt. Factor 2: look favorably on the fact that most of Alleghany’s senior management compensation is performance based. Answer is Factor 1. Which i also feel is right. But im confused as to how factor 2 helps in credit ratings. I mean senior management will tend to take on more risk to achieve better performence, which shuld in turn increase volatility on earnings, So i thought credit ratings will go down.