FOR IMMEDIATE RELEASE
OLDWICK - JANUARY 18, 2024 08:35 AM (EST)
AM Best has released its revised Best’s Credit Rating Methodology (BCRM) and the criteria procedure, “Available Capital and Insurance Holding Company Analysis” (formerly known as “Available Capital and Holding Company Analysis”). AM Best published its request for comments related to BCRM and the “Available Capital and Insurance Holding Company Analysis” criteria procedure on Feb. 28, 2023, and followed with a comment period that closed on April 28, 2023.
The main revisions to BCRM focus on Part 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 changes are primarily related to the notching used to derive the Long-Term Issuer Credit Rating (Long-Term ICR) of an insurance holding company.
The revisions to the updated BCRM include the following:
Updates on the criteria procedure, “Available Capital and Insurance Holding Company Analysis,” focus on clarification and increased transparency. Revisions consider the latest capital structures, instruments and features inherent in the insurance market and include the following:
The revisions to the BCRM are expected to result in a recalibration of less than 5% of AM Best’s published credit ratings; rating changes that are made as a result of this recalibration, in and of itself, will not be reflective of a change in credit quality of the organization. A review of the affected ratings will be completed within six months from the effective date of the methodology. AM Best does not expect that the implementation of the revisions to “Available Capital and Insurance Holding Company Analysis” will result in changes to any published ratings.
AM Best received five comments related to BCRM and the criteria procedure, “Available Capital and Insurance Holding Company Analysis,” during the public consultation period through the methodology in-box. AM Best would like to thank all the respondents who participated in the consultation period. A summary of the ‘Response to Comment’ document that address key themes and questions is published here: https://bit.ly/3u14Cht .
BCRM and this criteria procedure are available at https://www.ambest.com/ratings/methodology.asp .
A video discussion on this subject with Mathilde Jakobsen, senior director, analytics, and Tony Silverman, director, Credit Rating Criteria, Research and Analytics, both of AM Best, is available at http://www.ambest.com/v.asp?v=ambbcrmholdcocriteria124 .
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.