FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 28, 2023 09:56 AM (EST)
AM Best is requesting comments from market participants in the insurance industry and other interested parties on the draft updates for Best’s Credit Rating Methodology (BCRM) and the criteria procedure “Available Capital and Holding Company Analysis” (to be known as “Available Capital and Insurance Holding Company Analysis”).
These draft documents are available in the methodology section of AM Best’s website. Comments are requested by no later than March 31, 2023.
The main updates to BCRM focus on Section IV: Insurance Holding Company and Issue Credit Ratings. There are no changes to the core components of the analytical process—balance sheet strength, operating performance, business profile and enterprise risk management—which remain the key pillars of the analysis. The proposed changes are primarily related to the notching used to derive the Long-Term Issuer Credit Rating (Long-Term ICR) of an insurance holding company.
Changes into the draft of the updated BCRM include the following:
In the draft of the updated criteria procedure, “Available Capital and Insurance Holding Company Analysis,” AM Best has made revisions for purposes of clarification and increased transparency. The revisions consider the latest capital structures, instruments and features inherent in the insurance market. The clarifications in criteria do not change AM Best’s approach to ratings analysis.
Changes in the draft of the updated “Available Capital and Insurance Holding Company Analysis” criteria procedure include the following:
The revisions to the BCRM are expected to result in a recalibration of a small portion of AM Best’s credit ratings. Each rating potentially impacted by the updated BCRM will be subject to the full rating committee process under the revised criteria. A review of the affected ratings will be completed within six months from the effective date of the methodology. AM Best expects that less than 5% of its published ratings will be affected. Any ratings that are ultimately recalibrated as a result of these revisions to the BCRM will not reflect a change in credit quality.
AM Best does not expect that the implementation of the proposed revisions to “Available Capital and Insurance Holding Company Analysis” will result in changes to any published ratings.
This draft criteria procedure is available at https://web.ambest.com/ratings-services/rating-methodologies .
When submitting comments to the methodology in-box, commenters can select one of the following three options: Allow my comments to be made public and include my contact information; allow my comments to be made public but keep my contact information anonymous; or do not publish my comments (confidential). Written comments should be submitted no later than March 31, 2023, by e-mail to one of the following email addresses based on your selection:
A video discussion on this subject with Mahesh Mistry, senior director, credit rating criteria, and Mathilde Jakobsen, director, analytics, both of AM Best, is available at http://www.ambest.com/v.asp?v=ambholdingscocriteria223 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.