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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 06, 2015 11:15 AM (EDT)
A.M. Best is requesting comments from market participants in the insurance industry and other interested parties on the draft criteria report, “A.M. Best’s Perspective on Operating Leverage” (updates version dated Jan. 17, 2012).
The proposed changes include the reduction in the maximum operating company threshold to 20% from 50% of reserves on a stand-alone operating company basis; however, the holding company (consolidated view) remains unchanged at 30% of GAAP liabilities. The changes also clarify operating leverage treatment related to redundant reserves (AXX and XXX) while reflecting more recent types of financing and makes a minor change in the definition of qualifying reserves. Additionally, the criteria now will apply to life/health and property/casualty companies. Lastly, the criteria provides additional clarification on the requirements for treating FHLB borrowings as operating leverage.
This draft criteria report is available at ambest.com/ratings/methodology.
These updates are part of A.M. Best’s continual review of its rating methodology and are not expected to affect ratings. Written comments should be submitted by e-mail to methodology.commentary@ambest.com no later than Nov. 6, 2015. The details of any comments received may be made public unless specifically requested to be kept confidential.
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