CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK - JULY 11, 2014 11:01 AM (EDT)
A.M. Best is requesting comments from market participants in the insurance industry and other interested parties on the new draft criteria report, "A.M. Best Ratings on a National Scale."
The draft publication describes the new national ratings scale, which provides a relative opinion of financial strength within a single country. This new scale will be subject to the same methodology as any Best's Issuer Credit Rating (ICR) and the final result will be an ICR that is on a scale specific to the insurer's country of domicile and relative to other insurers in that domicile.
The national scale was created as the global scale often results in ratings that are grouped tightly, creating less differentiation among peers, particularly in emerging markets. These phenomena reflect country-specific limiting factors the industry faces, including economic, political and financial system risk and lack of maturity in the insurance industry. The national scale rating allows for maximum differentiation among insurers operating in a given country. At this time, the national scale ratings will only be offered in a limited number of select Country Risk Tiers (CRT) 3-5 countries for which there is adequate available market data to establish national scale mapping, and the national scale ratings already are accepted as meeting a regulatory rating requirement or currently used within the country by market participants.
The process of assigning a national scale rating to an insurer begins with the assignment of an ICR.
All companies that enter the A.M. Best national scale rating process will be assigned an A.M. Best global rating first. This process involves the same comprehensive, quantitative and qualitative analysis of a company's balance sheet strength, operating performance and business profile, as well as the company's risk management and the impact of country risk factors that apply to all companies rated by A.M. Best.
This new criteria report is not expected to affect existing ratings. Written comments should be submitted by email to rating.methodology@ambest.com no later than Aug. 11, 2014. The details of any comments received may be made public unless specifically requested to be kept confidential. For an in-depth discussion of the financial analysis undertaken at the insurance entity level, please see Best's Credit Rating Methodology, which provides additional details on this process, at www.ambest.com/ratings/methodology .
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.