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Best's Credit Rating Methodology (BCRM)

Our rating process involves a comprehensive quantitative and qualitative analysis of a company's balance sheet strength, operating performance and business profile. This includes comparisons to peers and industry standards as well as assessments of operating plans, philosophy and management. Where the rating is assigned to a debt security, it also includes a review of the specific nature and details of the security.

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 Reports which describe the criteria employed in determining Best's Financial Strength, Issuer Credit and Debt Ratings within the insurance industry.

The Introduction and Insurance Criteria Reports are listed as separate pdf documents below. In addition, the entire BCRM is available as one pdf document. (Select Complete BCRM). Parts of the BCRM marked "Draft" are in a public comment period when market participants in the insurance industry and other interested parties are invited to email comments to rating.methodology@ambest.com (see results of consultation).


Table of Contents
Global Life & Non-Life Insurance Edition
Last Updated: 9/05/2014

I. Introduction
II. Insurance Criteria Reports
A. Universal Criteria Reports
  • 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 Apr. 02, 2014
  • Equity Credit for Hybrid Securities Apr. 02, 2014
  • Understanding Universal BCAR Apr. 02, 2014
  • 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 Reports
  • Understanding BCAR for U.S. and Canadian Life/Health Insurers Apr. 02, 2014
  • A.M. Best's Liquidity Model for U.S. Life Insurers Aug. 01, 2013
  • Rating Funding Agreement-Backed Securities Nov. 02, 2011
  • C. Property/Casualty Criteria Reports
  • Understanding BCAR for Property/Casualty Insurers Apr. 02, 2014
  • Understanding BCAR for Canadian Property/Casualty Insurers Apr. 02, 2014
  • The Treatment of Terrorism Risk in the Rating Evaluation Nov. 27, 2013
  • D. Specialty Insurers Criteria Reports
  • 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 Apr. 02, 2014
  • Rating Title Insurance Companies Mar. 02, 2012
  • Rating Lloyd's Syndicates Feb. 07, 2011
  • Rating Monoline Financial Guarantors in the Public Finance Sector Apr. 08, 2013
  • Rating Reinsurance Pools Aug. 02, 2013
  • Rating Reinsurance/Insurance Transformer Vehicles Sep. 19, 2014
  • E. Insurance-Linked Securities Criteria Reports
  • Draft: Insurance-Linked Fund Ratings Sep. 29, 2014
  • Securitization of Annuities Apr. 05, 2012
  • Rating Surplus Note And Insurance Trust-Preferred CDOs Feb. 23, 2012
  • Assessing the "Tail Risk" of Sidecars Aug. 23, 2012
  • Rating Natural Catastrophe Bonds Aug. 23, 2012
  • Rating Sidecars Jan. 17, 2012
  • Rating Life-Related Premium Financing Loan Securitizations May 02, 2012
  • Rating Closed-Block Monetizations Sep. 29, 2011
  • Life Settlement Securitization Feb. 21, 2014
  • Securitization of Period-Certain and Life-Contingent Structured Settlements Sep. 29, 2011
  • Best's Idealized Default Matrix Dec. 05, 2007
  • Securitization of Reinsurance Recoverables Jun. 16, 2011
  • Gauging the Basis Risk of Catastrophe Bonds Aug. 23, 2012