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TMCNet:  A.M. Best Details Potential Further Modifications to Its Planned Best's Credit Rating Methodology

[April 07, 2017]

A.M. Best Details Potential Further Modifications to Its Planned Best's Credit Rating Methodology

A.M. Best continues to refine its proposed Best's Credit Rating Methodology (BCRM) to further increase transparency and consistency, and in the coming months, intends to release drafts of all of its BCRM-related criteria procedures, according to a new Best's Briefing, titled, "Criteria Update: The Comment Process, Potential BCRM Modifications, and Draft BCRM Criteria Procedures Update."

In addition, the briefing outlines potential points of modification to the process outlined in the November 2016 version of BCRM (full descriptions can found in the briefing):

  • Business profile and enterprise risk management (ERM) notching limitation: A.M. Best is considering limiting the calculation of notches between the Business Profile and ERM building blocks to two total notches while still recognizing the sophistication of ERM programs at companies with global and complex business profiles.
  • Non-insurance ultimate parents and lift: A.M. Best is considering, in certain cases, capturing additional impact from a non-insurance ultimate parent in the rating lift/drag assessment.
  • Adding a "Marginal" assessment descriptor for ERM: A.M. Best is considering adding the assessment descriptor "Marginal" (-1) in order to provide greater gradation.
  • Modifications to stress BCAR: A.M. Best is considering the use of catastrophe probable maximum losses on an after-tax basis for the adjustment to capital in the stressed Best's Capital Adequacy Ratio (BCAR) calculations.

To access the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=260406.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.


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