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Best's Credit Rating Methodology (BCRM)

The rating process used to develop a Best's Credit Rating opinion represents a comprehensive analysis consisting of a quantitative and qualitative evaluation of balance sheet strength, operating performance and business profile or, where appropriate, the specific nature and details of a security. The analysis may include comparisons to peers, industry standards and proprietary benchmarks as well as assessments of operating plans, philosophy, management, risk appetite and the implicit or explicit support of a parent or affiliate. The analysis is completed considering applicable BCRM criteria procedures or models.

A.M. Best's Credit Rating Methodology (BCRM) is divided into two parts: 1) the Introduction which contains a description of the rating process, information requirements, an overview of the credit rating evaluation, assumptions & economic factors, and key quantitative and qualitative rating factors and 2) the Insurance Criteria Procedure Reports which describe the criteria employed. The Introduction and Insurance Criteria Procedure Reports are listed as separate pdf documents below. In addition, the entire BCRM is available as one pdf document. (Select Complete BCRM).

Call for Public Comment

Any BCRM criteria procedure report marked as "Draft" below is in a public comment period. Market participants and other interested parties are invited to provide formal comments regarding draft BCRM criteria procedures wherever posted. In addition, formal comments may be submitted at any time on any other existing (i.e. published in-use) BCRM criteria procedure report listed below.

Formal Comments on draft or in-use BCRM criteria procedures should be emailed to methodology.commentary@ambest.com. Please indicate in your formal BCRM criteria procedure comment submission if the comments provided should be kept confidential. Any formal BCRM criteria procedure comments received that do not indicate a request for confidential treatment will be published in the results of consultation section of this website. (results of consultation).

Best's Credit Rating Methodology
Global Life & Non-Life Insurance Edition
Last Revised: August 16, 2016
I. Introduction
II. Insurance Criteria Reports
A. Universal Criteria Procedures
  • A.M. Best Ratings On a National Scale Sep. 05, 2014
  • Risk Management and the Rating Process for Insurance Companies Apr. 02, 2013
  • Rating Members of Insurance Groups Dec. 15, 2014
  • Equity Credit for Hybrid Securities Apr. 02, 2014
  • Understanding Universal BCAR Apr. 28, 2016
  • Measuring Transfer and Convertibility Risk May 02, 2012
  • Insurance Holding Company and Debt Ratings May 06, 2014
  • Evaluating Country Risk May 02, 2012
  • A.M. Best's Perspective on Operating Leverage Jan. 17, 2012
  • Analyzing Contingent Capital Facilities Feb. 23, 2012
  • Analyzing Insurance Holding Company Liquidity Mar. 25, 2013
  • Evaluating Non-Insurance Ultimate Parents Feb. 24, 2012
  • Catastrophe Analysis in A.M. Best Ratings Nov. 03, 2011
  • Evaluating U.S. Surplus Notes Apr. 02, 2014
  • B. Life/Health Criteria Procedures
  • Understanding BCAR for U.S. and Canadian Life/Health Insurers Apr. 11, 2016
  • A.M. Best's Stress Liquidity Ratio for US Life Insurers Dec. 18, 2015
  • Rating Funding Agreement-Backed Securities Nov. 02, 2011
  • C. Property/Casualty Criteria Procedures
  • Understanding BCAR for U.S. Property/Casualty Insurers Apr. 07, 2016
  • Understanding BCAR for Canadian Property/Casualty Insurers Jun. 24, 2016
  • The Treatment of Terrorism Risk in the Rating Evaluation Apr. 28, 2016
  • D. Specialty Insurers Criteria Procedures
  • Rating New Company Formations Jun. 06, 2011
  • Alternative Risk Transfer (ART) Dec. 27, 2011
  • Rating Surety Companies Aug. 13, 2014
  • Rating Run-Off Insurers and Specialists Mar. 25, 2013
  • Analyzing Perpetual Insurers Aug. 01, 2013
  • Rating Protected Cell Companies Mar. 01, 2012
  • Takaful (Shari'a Compliant) Insurance Companies Jan. 10, 2012
  • BCAR For Title Insurance Companies Aug. 03, 2016
  • Rating Title Insurance Companies Aug. 03, 2016
  • Rating Lloyd's Syndicates Feb. 07, 2011
  • Rating Monoline Financial Guarantors in the Public Finance Sector Aug. 16, 2016
  • Rating Reinsurance Pools Aug. 02, 2013
  • Rating Reinsurance/Insurance Transformer Vehicles Aug. 16, 2016

  • Note: Effective June 15, 2015, A.M. Best Company, Inc. and its credit rating agency subsidiaries (AMB) released a guide for the use of credit rating opinions produced by AMB titled "Understanding Best's Credit Ratings" (UBCR). This new document aggregates existing information (processes, terminology, scales and other rating-related information) historically found in various locations throughout the AMB website or in print publications. UBCR was created to provide a clear and concise central source of information for the users of Best's Credit Rating opinions. In addition, UBCR amended terminology which includes, in some cases, the renaming of an existing term.

    Effective with the release of UBCR, the term "Debt Rating" was renamed using the term "Issue Rating". Historically, the term "Debt Rating" reflected the assignment of an AMB credit rating opinion that could be applied to various issues that included both debt and other securities such as commercial paper or types of preferred securities with debt-like characteristics, but are not technically debt instruments. The move to the "Issue Rating" terminology provides additional clarity for the use and assignment of a debt or securities rating, i.e. "Issue Rating", as the broad connotation of the term "Issue" more accurately reflects its development and industry usage. In conjunction with the release of UBCR, AMB initiated an exercise to revise previously published terminology that has been affected though the release of the revisions included in UBCR. It is likely that, in some AMB publications or displays, including but not limited to web displays, rating criteria, rating policy, special reports or other publications, the term "Debt Rating" may still be displayed. If present, the term "Debt Rating" should be construed to be the term "Issue Rating" as defined in UBCR.