Press Release - OCTOBER 13, 2017
A.M. Best Releases Updated Best’s Credit Rating Methodology and Related Criteria Procedures
FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 13, 2017
A.M. Best published its first request for comment related to this revision process on March 10, 2016. Subsequently, A.M. Best published four additional requests for comment: Nov. 14, 2016; April 27, 2017; June 30, 2017; and July 26, 2017.
The updated BCRM is a reorganization of the previous methodology, utilizing a building block approach to provide greater detail and clarity to the rating analysis. The BCRM offers a forum for discussion with analytical staff and also will provide greater clarity in the rating process. While the methodology has been updated, the core components of the analytical process—balance sheet strength, operating performance, business profile and enterprise risk management—remain the key pillars of the analysis and thus do not represent a fundamental change to the rating analysis. In addition to reflecting the building block approach, some of the revised criteria procedures are amalgamations of previously in-use criteria procedures. Those that relate to the rating of specialty insurers emphasize what is unique or different between the analysis of the specialty insurer and the analytical process as outlined in the updated BCRM.
Some of the most significant areas of refinement are highlighted as follows:
The revisions to the methodology and criteria procedures are expected to result in rating changes to a small portion of A.M. Best’s outstanding ratings. Each rating potentially impacted by the updated BCRM will be subject to the full committee process under the revised criteria. A review of the affected ratings will be completed within six months from the effective date of the criteria. A.M. Best expects that less than 5% of its published ratings will be affected.
A.M. Best is publishing 80 comments received during the five public consultation periods. A.M. Best would like to thank all respondents that participated in the consultation periods by submitting comments. The results of the comments are published here: http://www.ambest.com/ratings/consultationresults.html .
This publication concludes A.M. Best’s criteria refinement exercise that began in March 2016. Please note that all criteria procedures are available in the methodology section of A.M. Best’s website.
For more information related to the BCRM, A.M. Best has prepared a list of questions and answers. To see the Best’s Briefing, please visit: http://www3.ambest.com/bestweek/purchase.asp?record_code=266995 .
For brief overviews of the BCRM release and its related criteria procedures, please see the following video interviews:
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